<PAGE>
<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>
<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 offices of Proskauer Rose Goetz & Mendelsohn
LLP, 1585 Broadway, 26th floor, New York, New York 10036 on Friday, June 14,
1996, at 1:00 p.m., local time, for the following purposes:
1. to elect seven directors;
2. to consider and act upon a proposal to approve the amendment of the
Corporation's 1992 Long-Term Incentive Plan to continue to qualify it under
Section 162(m) of the Internal Revenue Code of 1986, as amended, and
regulations thereunder;
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 properly come before the
meeting and at any adjournment thereof.
The Board of Directors has fixed the close of business on Friday, April 26,
1996 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.
By order of the Board of Directors
JOHN W. JACKSON
Chairman of the Board and
Chief Executive Officer
May 13, 1996
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>
<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 14, 1996, and at any
adjournment 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 14, 1996.
Only stockholders of record at the close of business on April 26, 1996, 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 9,111,133 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, amendment of the 1992 Long-Term Incentive Plan and the confirmation
of the appointment of the independent certified public accountants of the
Corporation for the current 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 the
approval of the amendment of the Corporation's 1992 Long-Term Incentive 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 cast may be
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 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.
<PAGE>
<PAGE>
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 amendment of the 1992 Long-Term Incentive Plan but will be
considered present for purposes of determining a quorum.
PRINCIPAL STOCKHOLDERS
The only persons known by the Board of Directors to be the beneficial
owners of more than five percent of the outstanding shares of Common Stock, as
of March 31, 1996, are indicated below:
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT
BENEFICIAL OWNER OWNERSHIP OF CLASS
- -------------------------------------------------------------------- ---------- --------
<S> <C> <C>
Donald P. Moriarty ................................................. 773,500(1) 8.49%
c/o McGrath, Doyle & Phair
150 Broadway
New York, New York 10038
Dimensional Fund Advisors Inc. ..................................... 602,300(2) 6.61%
1299 Ocean Avenue
Santa Monica, CA 90401
</TABLE>
- ------------
(1) Information regarding Donald P. Moriarty was obtained from a Schedule 13D
filed by him with the Securities and Exchange Commission. Such Schedule 13D
states that Mr. Moriarty is deemed to be the beneficial ownership of and
have sole dispositive power over the 773,500 shares of Common Stock and that
such shares are held by Mr. Moriarty, his family members, and Twin Oaks
Partners, a partnership in which he is a general partner.
(2) Information regarding Dimensional Fund Advisors Inc. ('Dimensional') was
obtained from a Schedule 13G, as amended, filed by it with the Securities
and Exchange Commission. Such Schedule 13G states that Dimensional, a
registered investment advisor, is deemed to be the beneficial ownership of
and have sole dispositive power over the 602,300 shares of Common Stock;
that 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') or in a series of the DFA Investment Trust Company,
a Delaware business trust (the 'Trust'), or DFA Group Trust and DFA
Participating Group Trust, investment vehicles for qualified employee
benefit plans, as to all of which Dimensional serves as investment manager;
that Dimensional disclaims beneficial ownership of such shares; that persons
who are officers of Dimensional also serve as officers of the Fund and the
Trust; and that in their capacity as officers of the Fund and the Trust,
these persons vote 227,800 shares owned by the Fund and 4,800 shares owned
by the Trust (a total of 369,700 shares), and Dimensional is deemed to have
sole voting power over such shares.
2
<PAGE>
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
At the meeting, seven 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. Each nominee has consented to
being named as a nominee in this Proxy Statement and to serve if elected. 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.
There are no family relationships between any of the directors and executive
officers of the Company. 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>
John W. Jackson.................. 51 Chairman of the Board and Chief Executive Officer of the 1996
Corporation since January, 1996. Founder and President of
Gemini Medical, a consulting firm which specialized in
services to start-up medical device and biotechnology
companies and investment advice, from February 1991 to
January 1996; President of the worldwide Medical Device
Division of American Cyanamid from February 1986 to
January 1991; various international positions, including
Vice President-International for American Cyanamid from
1978 to 1986; several human health marketing positions at
Merck & Company from 1971 to 1978.
Sol J. Barer..................... 49 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; and Vice
President -- Technology of the Corporation from September
1987 to October 1990.
Frank T. Cary.................... 75 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 Cygnus
Therapeutic Systems, ICOS Corporation, Lincare Inc., SPS
Transaction Services, Inc., Lexmark International, SEER
Technologies, Inc., ONCORx and Teltrend, Inc.
</TABLE>
3
<PAGE>
<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>
Arthur Hull Hayes, Jr............ 62 President and chief operating officer of MediScience 1995
Associates, Inc., a consulting organization that works
with pharmaceutical firms, biomedical companies and
foreign governments, since July 1991; partner in
IssueSphere, a public affairs firm that focuses on health
science issues, since November 1995; professor in
medicine, pharmacology and family and community medicine
at New York Medical College; clinical professor of
medicine and pharmacology at the Pennsylvania State
University College of Medicine; President and Chief
Executive Officer of E.M. Pharmaceuticals, a unit of E.
Merck AG, from 1986 to 1990; Commissioner of the U.S. Food
and Drug Administration from 1981 to 1983; director of
Myriad Genetics, Inc. and NaPro BioTherapeutics, Inc.
Richard C. E. Morgan............. 51 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, Chief Executive
Officer, and director of Lasertechnics, Inc.; Chairman and
director of MediSense, Inc.; director of SEQUUS
Pharmaceuticals, Inc.; and Chairman and director of Quidel
Corp.
Walter L. Robb................... 68 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................. 67 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 Pharmaceutical, Inc.,
Ascent Pharmaceuticals, and Interneuron Pharmaceuticals,
Inc.
</TABLE>
4
<PAGE>
<PAGE>
BENEFICIAL OWNERSHIP OF DIRECTORS AND MANAGEMENT
The table below sets forth the beneficial ownership of the Common Stock as
of March 31, 1996 (i) by each director, (ii) by each of the executive officers
named in the 'Summary Compensation Table,' and (iii) by all directors and
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, 1996 OF CLASS
- ------------------------------------ ----------------------------------------- ----------------------- --------
<S> <C> <C> <C>
John W. Jackson..................... Chairman of the Board and Chief Executive 83,733(1)(2) *
Officer
Sol J. Barer........................ President, Chief Operating Officer, and a 153,334(1) 1.7%
Director
Frank T. Cary....................... Director 65,000(1) *
Arthur Hull Hayes, Jr............... Director -- (1) *
Richard C.E. Morgan................. Director 292,055(1)(3) 3.2%
Walter L. Robb...................... Director 21,000(1) *
Lee J. Schroeder.................... Director 5,000(1) *
Richard G. Wright................... Former Chairman of the Board and Chief 150,000(1) 1.6%
Executive Officer
All directors and current executive
officers of the Corporation as a group (seven persons)....................... 620,122(4) 6.8%
</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, 1996, as follows: John W. Jackson -- 83,333; Sol J.
Barer -- 153,334 shares; Frank T. Cary -- 40,000 shares; Richard C.E.
Morgan -- 35,000 shares; Walter L. Robb -- 13,000 shares; and Richard G.
Wright -- 150,000 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, 1996, as
follows: John W. Jackson -- 166,667; Sol J. Barer -- 94,486; Frank T.
Cary -- 21,000; Arthur Hull Hayes, Jr. -- 20,000; Richard C.E.
Morgan -- 21,000 shares; Walter L. Robb -- 21,000; and Lee
Schroeder -- 21,000 shares. Includes as to Walter L. Robb, 4,000 shares of
Common Stock subject to restricted stock awards, 1,334 of which shares were
subject to forfeiture as of March 31, 1996.
(2) Includes 400 shares owned by Donald M. Jackson, the son of Mr. Jackson, as
to which shares Mr. Jackson disclaims beneficial ownership.
(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.
5
<PAGE>
<PAGE>
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
Non-Employee Directors' Plan (the '1995 Directors' Plan').
The 1995 Directors' Plan was adopted by the Board of Directors on April 5,
1995, and approved by Corporation's stockholders at the 1995 Annual Meeting of
Stockholders. The 1995 Directors' Plan provides for the granting to Non-Employee
Directors of non-qualified options to purchase an aggregate of not more than
250,000 shares (subject to adjustment in certain circumstances) of Common Stock.
Under the 1995 Directors' Plan, each Non-Employee Director as of April 5,
1995 was granted a non-qualified option to purchase 20,000 shares of Common
Stock, and each new Non-Employee Director upon the date of his election or
appointment will be granted a non-qualified option to purchase 20,000 shares of
Common Stock. These initial options vest in four equal annual installments
commencing on the first anniversary of the date of grant, assuming the
Non-Employee Director remains a director.
Upon the date of the 1995 Annual Meeting of Stockholders, each Non-Employee
Director was also granted 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 will be granted 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). These options 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 is a director on that date.
All options granted pursuant to the 1995 Directors' Plan will expire no
later than 10 years from the date of grant and no options may be granted after
June 16, 2005. If a Non-Employee Director terminates his service on the Board of
Directors for any reason, options which were exercisable on the date of
termination and which have not expired may be exercised at any time until the
date of expiration of such options. In addition, if there is a change of control
and within two years thereafter, a director is removed without cause (as
defined) or is not nominated for election by the Corporation's stockholders, all
unvested portions of a stock option will automatically vest.
In 1995, pursuant to the 1995 Directors' Plan, each of Messrs. Cary,
Morgan, Robb and Schroeder received an option to purchase 20,000 shares of
Common Stock at an exercise price of $5.75 per share, the fair market value of
the stock on the date of the grant, and each also received an option to purchase
6,000 shares of Common Stock at an exercise price of $8.125 per share, the fair
market value of the stock on the date of the grant. Upon his election as a
director in December 1995, Mr. Hayes received an option to purchase 20,000
shares of Common Stock at an exercise price of $10.50 per share, the fair market
value of the stock on the date of the grant.
BOARD COMMITTEES AND MEMBERSHIP
The Corporation has an Executive Committee of the Board of Directors, whose
current members are Frank T. Cary, Chairman, Sol J. Barer, John W. Jackson and
Richard C. E. Morgan. The Executive Committee held no meetings in 1995. 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.
6
<PAGE>
<PAGE>
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 1995. 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 1995. 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 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 ten meetings during 1995. During 1995, 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 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 1995 except for the Initial Statement of
Beneficial Ownership on Form 3 for Dr. Hayes, which report was filed
approximately three weeks late.
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, 1995 to the Chief Executive Officer of the Corporation and each of
the most highly paid executive officers of the Corporation who earned more than
$100,000.
7
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
---------------------------
AWARDS
ANNUAL ---------------------------
COMPENSATION RESTRICTED
------------ STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY ($) AWARD(S) ($)(1) SARS (#)
- -------------------------------------------------------------- ---- ------------ --------------- --------
<S> <C> <C> <C> <C>
Richard G. Wright ............................................ 1995 $486,250(2) -- 0
Former Chief Executive Officer and 1994 195,288(3) -- 150,000
Chairman of the Board 1993 -- -- --
Sol J. Barer ................................................. 1995 $200,000 -- 0
President and Chief Operating Officer 1994 197,000 -- 54,080
1993 180,000 -- 30,000
</TABLE>
- ------------
(1) No restricted stock awards were granted to either Mr. Wright or Dr. Barer
during the last three years, and neither Mr. Wright nor Dr. Barer held any
shares of Common Stock subject to restricted stock awards at December 31,
1995.
(2) Pursuant to his employment arrangement with the Corporation, in 1995 Mr.
Wright was paid a salary of $236,250. Mr. Wright retired from the
Corporation on December 31, 1995 and received a lump-sum payment of $250,000
in January, 1996. The Board of Directors also amended Mr. Wright's stock
option agreement to permit him to retain 50,000 options, which vested as
scheduled in March 1996 and which otherwise would have been canceled, and to
permit Mr. Wright to exercise all of his options over the ten year life of
the original grant, rather than within three months of the date of his
retirement as provided for originally in his option agreement.
(3) Mr. Wright commenced his employment with the Corporation in March 1994.
Accordingly, the 1994 number reflects a partial year's salary and a
relocation allowance in the amount of $18,750.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
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
$200,000, subject to increase upon annual review. Except under certain
circumstances, the Corporation may not terminate this agreement without 12
months' prior notice to Dr. Barer. Additionally, pursuant to Dr. Barer's
employment agreement, he will be entitled to receive a cash payment equal to
2.99 times his base salary in the event of the termination of Dr. Barer's
employment as a result of (i) his disability, (ii) the occurrence of certain
events subsequent to a change in control of the Corporation (as defined in such
agreement), or (iii) certain material breaches by the Corporation of such
agreement.
If during the two-year period following a change in control (as defined in
the Corporation's 1992 Long-Term Incentive Plan) of the Corporation, (i) there
is a change in an employee's title or a significant change in the nature or
scope of his employment or duties and such person terminates his employment
within 90 days following such change or (ii) an employee's employment by the
Corporation is terminated without cause (as defined), then all of the options
held by such employee then outstanding will become immediately and fully
exercisable, and all restrictions applicable to restricted stock automatically
will terminate.
8
<PAGE>
<PAGE>
STOCK OPTIONS
No stock options or stock appreciation rights ('SARs') were granted to the
named executive officers during the year ended December 31, 1995 and there were
no options or SARs exercised by such officers during 1995. As of December 31,
1995 no SARs were outstanding.
The following table sets forth information with respect to options held as
of December 31, 1995 by each of the named executive officers.
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END (#) AT FISCAL YEAR-END ($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Richard G. Wright........................................ 100,000 50,000 $ 650,000 $ 325,000
Sol J. Barer............................................. 126,974 48,346 637,078 266,262
</TABLE>
- ------------
(1) Represents the difference between the closing market price of the Common
Stock as reported by NASDAQ on December 31, 1995 of $13.375 per share and
the exercise price per share of in-the-money options multiplied by the
number of shares underlying the in-the-money options.
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
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 long-term value to be derived from such grants
will be consistent with stockholder gains.
9
<PAGE>
<PAGE>
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 1995 incentive program, it was agreed, subject to
the achievement of certain goals in 1995 by the Corporation, that the
Corporation would grant at a future date options to purchase shares of common
stock. A similar incentive program has been designed for 1996 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. Pursuant to Mr. Wright's arrangement
with the Corporation entered into on March 18, 1994, Mr. Wright received a
salary of $236,250 for 1995. Mr. Wright did not participate in the 1995
Incentive Program. Mr. Wright's long-term incentive derived from the grant of
stock options to purchase 150,000 shares of Common Stock awarded to him at the
time he began serving as Chief Executive Officer. In consideration of his
service to the Corporation, the Board of Directors also approved a payment to
Mr. Wright of $250,000 upon his retirement from the Corporation at December 31,
1995. The Board of Directors also amended Mr. Wright's stock option agreement to
permit him to retain 50,000 options, which vested as scheduled in March 1996 and
which otherwise would have been canceled, and to permit Mr. Wright to exercise
all of his options over the ten year life of the original grant, rather than
within three months of the date of his retirement as provided for originally in
his option agreement.
Members of the Management Compensation
and Development Committee
RICHARD C. E. MORGAN, Chairman
FRANK T. CARY
WALTER L. ROBB
LEE J. SCHROEDER
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.
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received certain demand and 'piggyback' registration rights with respect to the
Common Stock purchased by it under certain conditions.
PERFORMANCE GRAPH
The following graph 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; and (3) the NASDAQ Pharmaceutical Index.
The graph shows the value of $100 invested on December 31, 1995 in the
Corporation's Common Stock or in one of the indexes, as applicable, including
reinvestment of dividends, at December 31 for each of 1991-1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMOUNG CELGENE CORPORATION, THE S & P 500 INDEX
AND THE NASDAQ PHARMACEUTICAL INDEX
INVESTMENT 1990 1991 1992 1993 1994 1995
Celgene Corporation 100 235 202 108 87 206
S&P 500 Index 100 130 140 155 157 215
Nasdaq Pharmaceutical Index 100 266 221 197 148 271
* $100 INVESTED ON 12/31/90 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS,
FISCAL YEAR ENDING DECEMBER 31.
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PROPOSAL TWO
APPROVAL OF AMENDMENTS TO THE 1992
LONG-TERM INCENTIVE PLAN
The stockholders of the Corporation are asked to approve certain amendments
to the Corporation's 1992 Long-Term Incentive Plan (the '1992 Incentive Plan')
to ensure that stock options and stock appreciation rights granted thereunder
continue to qualify as performance-based compensation for purposes of Section
162(m) of the Internal Revenue Code of 1986, as amended (the 'Code'). The Board
of Directors approved these amendments to the 1992 Incentive Plan at a meeting
of the Board of Directors on January 8, 1996, subject to the approval of
stockholders. 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 amendment of the 1992 Incentive Plan. THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE THEIR SHARES FOR THE
PROPOSAL TO APPROVE THE AMENDMENT OF THE 1992 INCENTIVE PLAN.
BACKGROUND OF THE PROPOSAL TO AMEND THE 1992 INCENTIVE PLAN
The final Treasury Department regulations under Section 162(m) of the Code
were issued on December 20, 1995. Under Section 162(m), an employer's deduction
for compensation paid to certain 'covered employees' (defined as the Chief
Executive Officer and the four most highly compensated officers other than the
Chief Executive Officer for the taxable year and who are employed on the last
day of the taxable year) of publicly held corporations is limited to $1 million
in a taxable year. Certain types of compensation such as 'qualified performance
based compensation,' however, are not subject to the deduction limit and are not
taken into account in determining whether an executive's compensation exceeds $1
million.
Compensation qualifies for the exception for performance based compensation
if the following requirements are met: (a) it is paid solely on account of the
attainment of one or more performance goals; (b) the relevant performance goal
is preestablished by a committee consisting of two or more 'outside directors'
(as defined in Code Section 162(m) and the Treasury Department Regulation
thereunder) (the 'Compensation Committee'); (c) the material terms under which
the compensation is to be paid, including the performance goals, are adequately
disclosed to and approved by the shareholders of the publicly held corporation;
and (d) the Compensation Committee certifies that prior to the payment of the
compensation, the performance goals and all other material terms were satisfied.
Generally, compensation attributable to a stock option or a stock
appreciation right is deemed to be qualified performance based compensation if:
(a) the grant or award is made by the Compensation Committee; (b) the plan
states the maximum number of shares with respect to which the stock options or
stock appreciation rights may be granted to any employee during a specified
period; and (c) under the terms of the option or stock appreciation right, the
amount of compensation that an employee may receive under the grant is based
solely on an increase in value of the stock after the date of the grant
(however, if a stock option is granted for less than the fair market value of
the stock at the time of grant, no compensation attributable to that option will
be considered qualified performance based compensation). While it is intended
that the award of stock options and stock appreciation rights under the 1992
Incentive Plan will satisfy the requirements of Section 162(m) of the Code for
performance based compensation so that the income recognized in connection with
such awards will not be included in a 'covered employee's' compensation for the
purpose of determining whether such covered recipient's compensation exceeds
$1,000,000, due to the limited evidence that exists, the effect of
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Section 162(m) on the deductibility of such 'covered employee' compensation
cannot be ascertained with certainty.
SUMMARY OF THE 1992 INCENTIVE PLAN
The following description of the 1992 Incentive Plan is a summary that does
not give effect to any of the proposed amendments. The Plan was adopted by the
Board of Directors on March 13, 1992 and was approved at the Corporation's 1992
Annual Meeting of Stockholders.
Types of Awards and Shares Subject to Plan. The 1992 Incentive Plan
provides for the granting of optional restricted stock awards, stock
appreciation rights ('SARs'), performance awards, and other stock-based awards
(the 'Plan Awards') to employees and officers of the Corporation to purchase not
more than 1,000,000 shares of Common Stock, subject to adjustment under certain
circumstances. As of March 31, 1996, options to purchase 606,146 shares of
Common Stock have been granted under the 1992 Incentive Plan at exercise prices
ranging from $6.875 to $16.75. Of the options granted, 94,707 have been
cancelled, leaving a total of 488,561 available for future grants under the 1992
Incentive Plan. A grant of options to purchase 72,500 shares of Common Stock at
a price of $16.75 to Sol J. Barer in February 1996 is subject to stockholder
approval of the proposed amendments to the 1992 Incentive Plan. As of May 3,
1996, the market value of a share of Common Stock was $15.00.
Purpose. The 1992 Incentive Plan is designed to provide a means of giving
existing and potential selected management and key employees an increased
opportunity to acquire a proprietary interest in the Corporation, thereby
maintaining and strengthening their desire to remain with or join the
Corporation.
Administration. The 1992 Incentive Plan is administered by the Committee
which consists of two or more persons appointed by the Board of Directors.
Subject to any general guidelines established by the Board of Directors, the
Committee has full and final authority to determine the persons to whom, and the
time or times at which, Plan Awards are granted, the number of shares subject to
each Plan Award, the number of options which shall be treated as incentive stock
options, the duration of each option, the specific restrictions applicable to
restricted stock awards and other Plan Awards, and other terms and provisions of
each Plan Award. In determining persons who are to receive options, restricted
stock awards, or SARs and the number of shares to be covered by each option and
restricted stock award, the Committee considers, among other things, the
person's position, responsibilities, service, accomplishments, and such person's
present and future value to the Corporation. The 1992 Incentive Plan became
effective on March 13, 1992. No awards will be granted under the 1992 Incentive
Plan after March 12, 2002, but unless otherwise expressly provided in the 1992
Incentive Plan or an awards agreement, a Plan Award may extend beyond such date.
Stock Options. The term of options granted under the 1992 Incentive Plan
are fixed by the Committee; however, such term may not exceed 10 years from the
date of grant (or in the case of an incentive stock option granted to a 10%
stockholder, 5 years from the date of grant). The purchase price per share of
Common Stock purchasable under any option will not be less than 100% of the fair
market value of the stock on the date of grant of the option (or, in the case of
an incentive stock option granted to a 10% stockholder, 110% of the fair market
value). The Committee may provide that options will be exercisable in full at
any time or from time to time during the option term or provide for the exercise
thereof in such installments at such times as the Committee determines, subject
to the 'Change in Control' provisions of the 1992 Incentive Plan. Options may be
exercised by payment in full of the purchase price, either in cash or, in whole
or in part, in Common Stock having a fair market value on
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the date the option is exercised equal to the option price, provided that no
stock may be used by a participant as payment for the exercise price of an
option unless the stock has been held by the participant for at least six
months. Therefore, the 1992 Incentive Plan permits 'pyramiding' by optionees.
Pyramiding occurs when an optionee exercises stock options in increasing
portions by using each portion and the appreciation inherent in the shares
obtained to exercise a larger portion of the option. Theoretically, by using
this approach, an optionee could purchase one share for cash and continue to use
the shares obtained to exercise the entire option in successively larger
exercises. The result could be that the optionee would receive shares of Common
Stock equal in value to the differential between market price and option
purchase price with only a minimal cash payment.
Stock Appreciation Rights. Upon exercise of an SAR, the holder thereof will
be entitled to receive the excess of the fair market value (calculated as of the
exercise date) of a specified number of shares over the exercise price of the
SAR. The exercise price (which may not be less than the fair market value of the
shares on the date of grant) and other terms of the SAR will be determined by
the Committee. Payment by the Corporation upon exercise of an SAR will be in
cash, stock, or other property, or any combination thereof, as the Committee
determines. Unless otherwise determined by the Committee, any related stock
option will no longer be exercisable to the extent that an SAR has been
exercised, and the exercise or termination of an option will cancel the related
SAR (in the case of the exercise, to the extent thereof).
Restricted Stock. Restricted stock awards may not be disposed of by the
recipient until certain restrictions established by the Committee lapse.
Recipients will not be required to provide cash consideration other than any
minimum amount required by law. Recipients will have with respect to restricted
stock awards all of the rights of a stockholder of the Corporation, including
the right to vote the shares and the right to receive any cash dividends, unless
the Committee otherwise determines. Upon termination of employment during the
restriction period, the restricted stock award will be forfeited, in whole or in
part, subject to such exceptions, if any, as may be authorized by the Committee.
Performance Awards. From time to time, the Committee may select a period
during which performance criteria approved by the Committee will be measured for
the purpose of determining the extent to which a performance award has been
earned. Performance awards may be denominated or payable in Plan Awards, cash,
or other property.
Other Stock-Based Awards. The Committee is also authorized to grant to
participants, either alone or in addition to other Plan Awards granted under the
1992 Incentive Plan, awards of stock and other awards that are valued in whole
or in part by reference to, or are otherwise based on, the Common Stock ('other
stock-based awards'). Other stock-based awards may be paid in Common Stock,
cash, other Plan Awards, or any other form of property as the Committee
determines. Other stock-based awards will contain provisions dealing with the
disposition of the award if a participant's employment terminates before
exercise, realization, or payment of the award.
Adjustments and Amendments of the 1992 Incentive Plan. Adjustments in the
1992 Incentive Plan and in outstanding options will be made to reflect stock
dividends, recapitalization, and similar events. The Board of Directors has the
right to amend, suspend, or terminate the 1992 Incentive 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 1992
Incentive Plan: (a) increasing the total number of shares that may be issued
under the 1992 Incentive Plan; (b) changing the eligibility requirements; (c)
changing the purchase price previously specified for the shares subject to the
options; or (d) extending the period during which Plan Awards may be granted or
exercised under the 1992
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Incentive Plan; or (e) changing the method of calculating payments in respect of
SARs. The 1992 Incentive Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The 1992 Incentive
Plan is not, nor is it intended to be, qualified under Section 401(a) of the
Code.
Change in Control. If during a two-year period following a change in
control of the Corporation (as defined in the 1992 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 in the 1992 Incentive Plan), then all
options, SARs, and performance awards outstanding will become immediately and
fully exercisable, and all restrictions applicable to restricted stock awards
will automatically terminate.
Non-Assignability of Plan Awards. No Plan Award may be assignable or
transferable by the recipient, except by will or by the laws of descent and
distribution, provided that such restriction on the transfer or assignment of a
restricted stock award shall expire upon the date of expiration of the related
restriction period. During the lifetime of a recipient, Plan Awards may be
exercisable only by him or his personal representative or guardian. No Plan
Award or interest therein may be pledged, attached, or otherwise encumbered
other than in favor of the Corporation.
Certain Federal Income Tax Consequences. The principal Federal income tax
consequences with respect to stock options, SARs, and restricted stock awards
granted pursuant to the 1986 Plan, the 1992 Incentive Plan, or the Directors'
Plan are summarized below:
Incentive Stock Options. Certain options granted or to be granted
under the 1986 Plan or the 1992 Incentive Plan will be incentive stock
options as defined in the Code, provided that such options satisfy the
requirements under the Code therefor. In general, neither the grant nor the
exercise of an incentive stock option will result in taxable income to the
optionee or a deduction to the Corporation. The sales of Common Stock
received pursuant to the exercise of an option which satisfied all the
requirements of an incentive stock option, as well as the holding period
requirement described below, will result in a long-term capital gain or
loss to the optionee equal to the difference between the amount realized on
the sale and the option price and will not result in a tax deduction to the
Corporation. To receive incentive stock option treatment, the optionee must
not dispose of the Common Stock purchased pursuant to the exercise of an
option either (i) within two years after the option is granted, or (ii)
within one year after the date of exercise.
If all requirements for incentive stock option treatment other than
the holding period rules are satisfied, the recognition of income by the
optionee is deferred until disposition of the Common Stock, but, in
general, any gain (in an amount equal to the lesser of (i) the fair market
value of the Common Stock on the date of exercise (or, with respect to
officers and directors, the date that sale of such stock would not create
liability ('Section 16(b) liability') under Section 16(b) of the Securities
Exchange Act of 1934) minus the option price or (ii) the amount realized on
the disposition minus the option price) is treated as ordinary income. Any
remaining gain is treated as long-term or short-term capital gain depending
on the optionee's holding period for the stock disposed of. The Corporation
generally will be entitled to a deduction at that time equal to the amount
of ordinary income realized by the optionee.
Each of the 1986 Plan and the 1992 Incentive Plan provides that an
optionee may pay for Common Stock received upon the exercise of an option
(including an incentive stock option) with other shares of Common Stock. In
general, an optionee's transfer stock acquired pursuant to the
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exercise of a 'statutory option,' which includes an incentive stock option,
to acquire other stock in connection with the exercise of an incentive
stock option may result in ordinary income if the transferred stock has not
met the minimum statutory holding period necessary for favorable tax
treatment as an incentive stock option. For example, if an optionee
exercises an incentive stock option and uses the stock so acquired to
exercise another incentive stock option with the two-year or one-year
holding periods discussed above, the optionee may realize ordinary income
under the rules summarized above.
In addition, (i) any entitlement to a tax deduction on the part of the
Corporation is subject to the applicable Federal tax rules (including,
without limitation, Code Section 162(m) regarding the $1,000,000 limitation
on deductible compensation), (ii) the exercise of an ISO may have
implications in the computation of alternative minimum taxable income, and
(iii) in the event that the exercisability or vesting of any Plan Award is
accelerated because of a change in control, payments relating to the Plan
Awards (or a portion thereof), either alone or together with certain other
payments, may constitute parachute payments under Section 280G of the Code,
which excess amounts may be subject to excise taxes.
Non-Qualified Stock Options. Options which do not qualify as incentive
stock options are herein referred to as nonqualified 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.
If the optionee makes an 83(b) election, he 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
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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.
The Corporation generally will be entitled 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.
In addition, (i) any entitlement to a tax deduction on the part of the
Corporation is subject to the applicable Federal tax rules (including,
without limitation, Code Section 162(m) regarding a $1,000,000 limitation
on deductible compensation), and (ii) in the event that the exercisability
or vesting of any Plan Award is accelerated because of a change in control,
payments relating to the Plan Awards (or a portion thereof), either alone
or together with certain other payments, may constitute parachute payments
under Section 280G of the Code, which excess amounts may be subject to
excise taxes.
SARs. No Federal income tax consequences are incurred by the
Corporation or the holder at the time an SAR is granted pursuant to the
1992 Incentive Plan. However, upon the exercise of an SAR, the holder will
realize ordinary income for Federal income tax purposes equal to the amount
of cash or the value of property received by him. The Corporation generally
will be entitled at such time to a deduction for Federal income tax
purposes in the same amount. If the holder of an SAR receives Common Stock
upon the exercise of such right, the holder's basis in such Common Stock
will be its fair market value on the date of receipt and the holding period
will begin on such date. Any gain or loss realized upon the sale of such
Common Stock will be either long-term or short-term capital gain or loss,
depending on the optionee's holding period for the Common Stock.
In addition, (i) any entitlement to a tax deduction on the part of the
Corporation is subject to the applicable Federal tax rules (including,
without limitation, Code Section 162(m) regarding the $1,000,000 limitation
on deductible compensation), and (ii) in the event that the exercisability
or vesting of any Plan Award is accelerated because of a change in control,
payments relating to the Plan Awards (or a portion thereof), either alone
or together with certain other payments, may constitute parachute payments
under Section 280G of the Code, which excess amounts may be subject to
excise taxes.
Restricted Stock Awards. The Federal income tax consequences of a
restricted stock award granted under the 1986 Plan, the 1992 Incentive
Plan, or the Directors' Plan will depend, in large measure, on the
restrictions placed on the stock.
In general, if the stock is 'not transferable' and subject to a
'substantial risk of forfeiture,' as described above, then, unless the
recipient makes an 83(b) election, he will recognize ordinary income equal
to the fair market value of the stock on the first day the stock is either
transferable or not subject to a substantial risk of forfeiture. The
recipient's holding period will begin on that day. If the recipient makes
an 83(b) election, he will recognize ordinary income equal to the fair
market value of the stock at the time of the award and his holding period
will begin on that day. The tax basis of the stock will equal the amount
included in income. 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
recipient's holding period. The Corporation generally will be entitled to a
deduction equal to the amount of ordinary income recognized by the
recipient.
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In addition, (i) officers and directors of the Corporation subject to
Section 16(b) liability may be subject to special rules regarding the
income tax consequences concerning their restricted stock, (ii) any
entitlement to a tax deduction on the part of the corporation is subject to
the applicable Federal tax rules (including, without limitation, Code
Section 162(m) regarding the $1,000,000 limitation on deductible
compensation), and (iii) in the event that the exercisability or vesting of
any Plan Award is accelerated because of a change in control, payments
relating to the Plan Awards (or a portion thereof), either alone or
together with certain other payments, may constitute parachute payments
under Section 280G of the Code, which excess amounts may be subject to
excise taxes. Awards of restricted stock generally do not satisfy the
exception for performance-based compensation under code Section 162(m).
See page 12 of this Proxy Statement for a discussion of Section 162(m) of
the Code.
PROPOSED AMENDMENTS
The proposed amendments to the 1992 Incentive Plan affect the following
aspects of the 1992 Incentive Plan. The following is a summary and is qualified
in its entirety by reference to the 1992 Incentive Plan, a copy of which is
annexed as Exhibit A.
Administration. The amendments provide that the 1992 Incentive Plan shall
henceforth be administered by the Committee as appointed from time to time by
the Board of Directors of the Corporation, which committee shall be comprised
solely of two or more outside directors as defined under Section 162(m) of the
Code and the Treasury Department regulations thereunder.
Interpretation. The amendments stipulate that the 1992 Incentive Plan is
intended to comply with the exception for performance based compensation under
Section 162(m) of the Code and the Treasury Department regulations thereunder
with regard to stock options and stock appreciation rights granted under the
1992 Incentive Plan and shall be limited, construed and interpreted in a manner
so as to comply therewith.
Individual Limitations. The maximum number of shares of Common Stock which
may be subject to any stock option that may be granted to an eligible individual
(as determined pursuant to Section 4 entitled 'Eligibility') shall not exceed
250,000 shares of Common Stock (subject to any increase or decrease pursuant to
Section 10 (entitled 'Adjustments upon Changes in Capitalization')) for each
calendar year during the entire term of the Plan. The maximum number of stock
appreciation rights, whether granted alone or in addition to other Plan Awards
and whether or not related to a specific stock option granted under the Plan,
that may be granted to an eligible individual (as determined pursuant to Section
4) shall not exceed 250,000 (subject to any increase or decrease pursuant to
Section 10) for each calendar year during the entire term of the Plan. To the
extent that shares of Common Stock for which stock options or stock appreciation
rights are permitted to be granted to an eligible individual pursuant to Section
3(b) (entitled 'Individual Limitations') during a calendar year are not covered
by a grant of an option or a stock appreciation right during the calendar year,
such shares of Common Stock shall not be available for grant of stock options or
stock appreciation rights, as applicable, in any subsequent calendar year during
the term of the Plan.
Adjustments. The plan is amended to provide that the Board of Directors
shall have the right to amend, suspend, or terminate the Plan at any time;
provided, however, that no such action shall affect or in any way impair the
rights of a recipient under any Plan Award theretofore granted; and, provided,
further, that unless first duly approved by the stockholders of the Corporation
entitled to vote thereon
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at a meeting (which may be the annual meeting) duly called and held for such
purpose, except as provided in Section 10, or by a consent of stockholders, no
amendment or change shall be made in the Plan: (a) increasing the total number
of shares which may be issued or transferred under the Plan, including but not
limited to the maximum limits for a calendar year under Section 3(b) with regard
to both stock options and stock appreciation rights (except by operation of
Section 10); (b) changing the purchase price hereinbefore specified for the
shares subject to options; (c) changing the provisions of Section 8(a)
(concerning stock appreciation rights); (d) extending the period during which
Plan Awards may be granted or exercised; (e) changing the designation of persons
eligible to receive Plan Awards; or (f) which would require stockholder approval
in order for the Plan to continue to comply with the exception for performance
based compensation under Section 162(m) with regard to stock options and stock
appreciation rights.
PROPOSAL THREE
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.
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 1997
must submit the same in writing so as to be received at the executive office of
the Corporation on or before January 15, 1997. 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,
JOHN W. JACKSON
Chairman of the Board and
Chief Executive Officer
May 13, 1996
STOCKHOLDERS ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT IN
THE ENCLOSED, SELF-ADDRESSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE
UNITED STATES. YOUR PROMPT RESPONSE WILL BE HELPFUL, AND YOUR COOPERATION WILL
BE APPRECIATED.
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EXHIBIT A
(LANGUAGE WHICH IS CHANGED BY THE AMENDMENTS TO THE 1992 LONG-TERM
INCENTIVE PLAN TO BE APPROVED BY STOCKHOLDERS IS IN ITALICS.)
CELGENE CORPORATION
1992 LONG-TERM INCENTIVE PLAN
1. PURPOSE
The purpose of this 1992 Long-Term Incentive Plan (the 'Plan') is to
encourage and enable selected management (excluding non-employee directors) and
other key employees of Celgene Corporation (the 'Company') or a parent or
subsidiary of the Company to acquire a proprietary interest in the Company
through the ownership of common stock, par value $.01 per share (the 'Common
Stock'), of the Company. Such ownership will provide such persons with a more
direct stake in the future welfare of the Company and encourage them to remain
with the Company or a parent or subsidiary of the Company. It is also expected
that the Plan will encourage qualified persons to seek and accept employment
with the Company or a parent or subsidiary of the Company. Pursuant to the Plan,
such persons may be granted stock options, restricted stock awards, stock
appreciation rights, performance awards, and other stock-based awards
(collectively, 'Plan Awards').
As used herein, the term 'parent' or 'subsidiary' shall mean any present or
future corporation which is or would be a 'parent corporation' or 'subsidiary
corporation' of the Company as the term is defined in Section 424 of the
Internal Revenue Code of 1986, as amended (the 'Code') (determined as if the
Company were the employer corporation).
2. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Management Compensation and Development
Committee (the 'Committee') as appointed from time to time by the Board of
Directors of the Company, which committee shall be comprised solely of two or
more outside directors as defined under Section 162(m) of the Code and the
Treasury regulations thereunder. No person while a member of the Committee or
any other committee of the Board of Directors administering the Plan shall be
eligible to receive a Plan Award or shall have received a Plan Award during the
one-year period preceding the commencement of his service on the Committee or
any other such committee.
In administering the Plan, the Committee shall follow any general
guidelines not inconsistent with the Plan established by the Board of Directors
and may adopt rules and regulations for carrying out the Plan. The
interpretation and decision made by the Committee with regard to any question
arising under the Plan shall be final and conclusive on all persons
participating or eligible to participate in the Plan. Subject to the provisions
of the Plan and any guidelines established by the Board of Directors, the
Committee from time to time shall determine the terms and conditions of all Plan
Awards, including, but not limited to, the persons to whom, and the time or
times at which, Plan Awards shall be granted, the number of shares subject to
each Plan Award, the number of options which shall be treated as incentive stock
options (as described in Section 422 of the Code), the duration of each option,
the specific restrictions applicable to restricted stock awards and other Plan
Awards, and other terms and provisions of each Plan Award. This Plan is intended
to comply with the exception for performance based compensation under Section
162(m) of the Code and the Treasury regulations thereunder with regard to stock
options and stock appreciation rights granted hereunder and shall be limited,
construed and interpreted in a manner so as to comply therewith.
3. SHARES OF STOCK SUBJECT TO THE PLAN
(A) GENERAL LIMITATION
Except as provided in Section 10, the aggregate number of shares that may
be issued or transferred pursuant to Plan Awards shall not exceed 1,000,000
shares of Common Stock. Such shares of Common Stock available under the Plan may
be authorized and unissued shares or previously issued shares
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acquired or to be acquired by the Company and held in treasury. Any shares
subject to a Plan Award which for any reason terminates, expires, or is
forfeited without the delivery to the holder of the Plan Award of Common Stock
or other consideration may again be subject to a new Plan Award, except that
shares subject to a restricted stock award that are forfeited after the holder
thereof has received dividends or other benefits of ownership (excluding voting
rights) shall not thereafter be available for grant pursuant to the Plan. If an
option or related stock appreciation right is exercised for stock, the shares
covered by such option shall not thereafter be available for grant pursuant to
the Plan. Any shares of Common Stock that are used by a recipient as full or
partial payment of withholding or other taxes or of the purchase price of shares
of Common Stock acquired on the exercise of an option shall not thereafter be
available for Plan Awards.
(B) INDIVIDUAL LIMITATIONS.
The maximum number of shares of Common Stock which may be subject to any
stock option that may be granted to an eligible individual (as determined
pursuant to Section 4 herein) shall not exceed 250,000 shares of Common Stock
(subject to any increase or decrease pursuant to Section 10) for each calendar
year during the entire term of the Plan. The maximum number of stock
appreciation rights, whether granted alone or in addition to other Plan Awards
and whether or not related to a specific stock option granted under the Plan,
that may be granted to an eligible individual (as determined pursuant to Section
4 herein) shall not exceed 250,000 (subject to any increase or decrease pursuant
to Section 10) for each calendar year during the entire term of the Plan. To the
extent that shares of Common Stock for which stock options or stock appreciation
rights are permitted to be granted to an eligible individual pursuant to this
Section 3(b) during a calendar year are not covered by a grant of an option or a
stock appreciation right during the calendar year, such shares of Common Stock
shall not be available for grant of stock options or stock appreciation rights,
as applicable, in any subsequent calendar year during the term of the Plan.
4. ELIGIBILITY
Plan Awards may be granted to management (excluding non-employee directors)
and other key employees who are employed by the Company or a parent or
subsidiary of the Company.
5. GRANTING OF PLAN AWARDS
All Plan Awards shall be granted within 10 years from March 13, 1992.
6. OPTIONS
Options shall be evidenced by stock option agreements in such form, not
inconsistent with the Plan, as the Committee shall approve from time to time,
which agreements need not be identical, and shall be subject to the following
terms and conditions and such other terms and conditions as the Committee may
prescribe:
(a) Option Price. The purchase price under each stock option shall be
not less than 100% of the fair market value of the Common Stock at the time
the option is granted and not less than the par value of such Common Stock.
In the case of an incentive stock option granted to an employee owning more
than 10% of the total combined voting power of all classes of stock of the
Company or of any parent or subsidiary of the Company (a '10%
Stockholder'), actually or constructively under Section 424(d) of the Code,
the option price shall not be less than 110% of the fair market value of
the Common Stock subject to the option at the time of its grant. The fair
market value of the Common Stock on any date shall be determined by the
Committee in a manner consistent with the requirements of the Code.
(b) Medium and Time of Payment. Stock purchased pursuant to the
exercise of an option shall at the time of purchase be paid for 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
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exercise. Upon receipt of payment and such documentation as the Company may
deem necessary to establish compliance with the Securities Act of 1933, the
Company 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 performance of the Company's obligation to issue or
transfer Common Stock upon exercise of an option or options that the
optionee pay, or make provision satisfactory to the Company for the payment
of, any taxes (other than stock transfer taxes) which the Company is
obligated to collect with respect to the issue or transfer of Common Stock
upon such exercise, including any Federal, state, or local withholding
taxes. At the discretion of the Committee, such taxes may be paid in cash
or by tender of the option holder or withholding by the Company of the
number of shares of Common Stock whose fair market value equals the amount
required to be withheld. At the discretion of the Committee, such taxes may
be paid by the Company.
(c) Waiting Period. The waiting period and time for exercising an
option shall be prescribed by the Committee in each particular case;
provided, however, that no stock option may be exercised after 10 years
from the date it is granted. In the case of an incentive stock option
granted to a 10% Stockholder, such option, by its terms, shall be
exercisable only within five years from the date of grant.
(d) Reload Options. The Committee shall have the authority (but not an
obligation) to include within any option agreement a provision entitling
the optionee to a further option (a 'Reload Option') if the optionee
exercises the option evidenced by the option agreement, in whole or in
part, by surrendering other shares of the Company held by the optionee for
at least six months prior to such date of surrender in accordance with the
Plan and the terms and conditions of the option agreement. Any such Reload
Option shall not be an incentive stock option, shall be for a number of
shares equal to the number of surrendered shares, the exercise price
thereof shall be equal to the fair market value of the Common Stock on the
date of exercise of such original option, shall become exercisable if the
purchased shares are held for a minimum period of time established by the
Committee, and shall be subject to such other terms and conditions as the
Committee may determine.
7. RESTRICTED STOCK AWARDS
Restricted stock awards shall be evidenced by agreements in such form, not
inconsistent with the Plan, as the Committee shall approve from time to time,
which agreements need not be identical, and shall be subject to the following
terms and conditions and such other terms and conditions as the Committee may
prescribe:
(a) Forfeiture Period. The period and time during and the conditions
and restrictions under which a restricted stock award is subject to
forfeiture (the 'Restriction Period') shall be prescribed by the Committee
in each particular case, subject to the provisions of Section 15.
(b) Restrictive Legend and Stock Power. Each certificate evidencing
shares of Common Stock subject to a restricted stock award shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such restricted stock award. The Committee may prescribe that
the certificates evidencing such shares be held in escrow by a bank or
other institution, or that the Company may itself hold such shares in
escrow, until the restrictions thereon shall have lapsed and may require,
as a condition of any restricted stock award, that the recipient shall have
delivered a stock power endorsed in blank relating to the shares of Common
Stock subject to the restricted stock award. Upon the termination of the
Restriction Period with respect to any shares of Common Stock subject to a
restricted stock award, the certificate evidencing such shares will be
delivered out of escrow subject to the satisfaction by the recipient of
applicable Federal and state securities laws and withholding tax
requirements, including any Federal, state, or local withholding taxes. At
the discretion of the Committee, such taxes may be paid in cash or by
tender of the holder of restricted stock or withholding by the Company of
the number of shares of Common Stock whose fair market value equals the
amount required to be withheld. At the discretion of the Committee, such
taxes may be paid by the Company.
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8. STOCK APPRECIATION RIGHTS
(a) A stock appreciation right means a right granted pursuant to the Plan
to receive, upon the exercise of such right up to the excess of (i) the fair
market value of one share of Common Stock on the date of exercise or at any time
during a specified period before the date of exercise, over (ii) the fair market
value of one share of Common Stock on the date of grant. Any payment by the
Company in respect of such right may be made in cash, shares of Common Stock,
other property, or any combination thereof, as the Committee, in its sole
discretion, shall determine.
(b) Stock appreciation rights may be granted either alone or in addition to
other Plan Awards granted under the Plan and may, but need not, relate to a
specific stock option granted under the Plan. The provisions of stock
appreciation rights need not be the same with respect to each participant. Any
stock appreciation right related to a stock option may be granted at the same
time such stock option is granted or at any time thereafter before exercise or
expiration of such stock option. In the case of any stock appreciation right
related to any stock option, the stock appreciation right or applicable portion
thereof shall terminate and no longer be exercisable upon the termination or
exercise of the related stock option, except that a stock appreciation right
granted with respect to less than the full number of shares of Common Stock
covered by a related stock option shall only be reduced when the exercise or
termination of the related stock option exceeds the number of shares not covered
by the stock appreciation right. Any stock option related to any stock
appreciation right shall no longer be exercisable to the extent the related
stock appreciation right has been exercised. Unless otherwise determined by the
Committee, the exercise date may not be earlier than six months after the date
of grant and shall be limited to the period of time beginning on the third
business day following the date of release for publication of the Company's
quarterly or annual summary statements of earnings and ending on the twelfth
business day following such release.
9. PERFORMANCE AWARDS; OTHER STOCK-BASED AWARDS
(a) Performance awards may be granted under the Plan and may consist of
stock options, restricted stock awards, stock appreciation rights, other
stock-based awards, cash, or other property. The Committee shall prescribe the
terms and conditions of such awards, including determining the type of Plan
Award to be granted, the recipient thereof, the performance goals for each
recipient, the time periods within which each performance goal must be attained,
the determination date of the attainment of each goal, and the extent to which
each goal has been attained. The provisions of performance awards need not be
the same with respect to each participant.
(b) The Committee is authorized to grant such other awards denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or
related to, Common Stock (including, without limitation, phantom shares and
securities convertible into shares of Common Stock), as are deemed by the
Committee to be consistent with the purposes of the Plan, provided that such
grants shall comply with applicable law. Subject to the terms of the Plan, the
Committee shall determine the terms and conditions of such awards. Shares of
Common Stock or other securities delivered pursuant to a purchase, exchange, or
conversion right granted under this Section 9(b) shall be issued for such
consideration, which may be paid by such method or methods and in such form or
forms, including, without limitation, cash, shares of Common Stock other
securities, other Plan Awards, or other property, or any combination thereof, as
the Committee shall determine. Agreements relating to other stock-based awards
shall contain provisions dealing with the disposition of such Plan Award in the
event of termination of the participant's employment prior to exercise,
realization, or payment of such Plan Award. The provisions of other stock-based
awards need not be the same with respect to each participant.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
If dividends payable in Common Stock during any fiscal year of the Company
exceed in the aggregate 5% of the Common Stock issued and outstanding at the
beginning of such fiscal year, or if there is during any fiscal year of the
Company 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
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at the beginning of the year, the number of shares available under the Plan
shall be increased or decreased proportionately, as the case may be, the number
of shares subject to stock appreciation rights and the related fair market value
thereof as of the date of grant 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.
In case the Company is merged or consolidated with another corporation, or
in case the property or stock of the Company is acquired by another corporation,
or in case of a reorganization or liquidation of the Company, the Board of
Directors of the Company, or the board of directors of any corporation assuming
the obligations of the Company hereunder, shall either (i) make appropriate
provisions for the protection of any Plan Awards by the substitution on an
equitable basis of appropriate stock or other property of the Company, or
appropriate stock or other property of the merged, consolidated, or otherwise
reorganized corporation, provided only that such substitution of options or
other property shall comply with the requirements of Section 424 of the Code, or
(ii) terminate all restrictions relating to restricted stock awards and give
written notice to optionees that their options and any stock appreciation right
or other Plan Award, which will become immediately exercisable notwithstanding
any waiting period or other restriction otherwise prescribed by the Committee,
must be exercised within 30 days of the date of such notice or they will be
terminated.
11. TERMINATION AND AMENDMENT OF THE PLAN
The Board of Directors shall have the right to amend, suspend, or terminate
the Plan at any time; provided, however, that no such action shall affect or in
any way impair the rights of a recipient under any Plan Award theretofore
granted; and, provided, further, that unless first duly approved by the
stockholders of the Company entitled to vote thereon at a meeting (which may be
the annual meeting) duly called and held for such purpose, except as provided in
Section 10, or by a consent of stockholders, no amendment or change shall be
made in the Plan: (a) increasing the total number of shares which may be issued
or transferred under the Plan, including but not limited to the maximum limits
for a calendar year under Section 3(b) with regard to both stock options and
stock appreciation rights (except by operation of Section 10); (b) changing the
purchase price hereinbefore specified for the shares subject to options; (c)
changing the provisions of Section 8(a); (d) extending the period during which
Plan Awards may be granted or exercised; (e) changing the designation of persons
eligible to receive Plan Awards; or (f) which would require stockholder approval
in order for the Plan to continue to comply with the exception for performance
based compensation under Section 162(m) with regard to stock options and stock
appreciation rights.
12. ADDITIONAL RESTRICTIONS RELATING TO INCENTIVE STOCK OPTIONS
Without the written consent of the Company, no stock acquired by an
optionee upon exercise of an incentive stock option granted hereunder may be
disposed of by the optionee within two years from the date such incentive stock
option was granted, nor within one year after the transfer of such stock to the
optionee; provided, however, that a transfer to a trustee, receiver, or other
fiduciary in any insolvency proceeding, as described in Section 422(c)(3) of the
Code, shall not be deemed to be such a disposition. If Section 422 of the Code
is amended during the term of the Plan, the Committee may modify the Plan
consistently with such amendment.
13. TERMINATION DATE OF THE PLAN
The Plan shall become effective March 13, 1992, the date of its adoption by
the favorable vote of the majority of the Board of Directors of the Company,
subject, however, to approval by the stockholders of the Company within 12
months next following such adoption by the Board of Directors; and if such
approval is not obtained, the Plan and any and all Plan Awards granted during
such interim
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period shall terminate and be of no further force or effect. The Plan shall, in
all events, terminate on March 12, 2002, or on such earlier date as the Board of
Directors of the Company may determine. Any option or stock appreciation right
outstanding at the termination date shall remain outstanding until it has either
expired or has been exercised. Any restricted stock award outstanding at the
termination date shall remain subject to the terms of Plan until the
restrictions thereon shall have lapsed. Any performance award or other
stock-based award outstanding at the termination date shall remain subject to
the terms of the Plan and such award.
14. DEATH, RETIREMENT, AND TERMINATION OF EMPLOYMENT
(a) An employee's option or stock appreciation right which has not
theretofore expired, shall terminate 30 days after the date of the termination
for any reason, other than for cause (as defined in Section 15(a)(ii)), death,
or Retirement (as hereinafter defined), of the employee's employment with the
Company or a parent or subsidiary of the Company, subject to the condition that
no option or stock appreciation right granted in connection with an option may
be exercised in whole or in part after the expiration date of the option or more
than 10 years after the date of grant of such option or stock appreciation
right.
(b) With respect to non-qualified options and stock appreciation rights,
upon the termination of the employment of any employee due to retirement at age
60 or older or disability (as hereinafter defined) (collectively, 'Retirement'),
the employee may, during a period (the 'Retirement Period') which is the longer
of (i) up to 10 years after the date of grant of such option or stock
appreciation right, such period to be set on a case by case basis by the
Committee, or (ii) three years from the date of such termination, exercise such
stock appreciation right or purchase some or all of the shares covered by the
employee's non-qualified stock option which was exercisable under the Plan
immediately prior to such termination.
(c) With respect to incentive stock options, upon the termination of the
employment of any such employee due to Retirement, the employee may, within
three months after the date of such termination (12 months in the case of
disability), purchase some or all of the shares covered by an incentive stock
option which was exercisable under the Plan immediately prior to such
termination; shares not purchased within three months (12 months in the case of
disability) after the date of termination due to Retirement under such incentive
stock option may be purchased during the Retirement Period, but no longer will
be incentive stock option stock and will be non-qualified stock option stock;
prior to such purchase, the option will remain subject to the provisions of the
Plan governing incentive stock options.
(d) Upon the death of any employee while in active service or of any such
disabled or retired employee within the above-referenced periods, the person or
persons to whom the employee's rights under an option or stock appreciation
right are transferred by will or the laws of descent and distribution may,
within 12 months after the date of the employee's death, exercise such stock
appreciation right or purchase some or all of the shares to which the employee
was entitled pursuant to the exercise of an option under the Plan, on the date
of his death.
(e) Leaves of absence pursuant to Section 16(d) shall not be deemed
terminations or interruptions of employment. For purposes of this Section 14,
'disability' shall have the meaning provided in Section 22(e)(3) of the Code.
(f) If a recipient of a performance award ceases to be an employee for any
reason prior to the date that a determination with respect to the attainment of
his performance goal would otherwise be made, such former employee's performance
award shall terminate and no shares shall be issuable and no amounts shall be
payable at any time, unless the Committee otherwise determines to issue some or
all of the shares subject to such award or to pay some or all of such award to
such former employee or his legal representative.
15. ACCELERATION OF VESTING
(a) Following a Change in Control (as defined in Section 15(c)), an option,
stock appreciation right, restricted stock award, or other Plan Award shall
automatically be vested and immediately exercisable in full and any restrictions
contained in any restricted stock award shall automatically terminate upon the
occurrence of either of the following events:
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(i) change in an employee's title or a significant change in the
nature or scope of the authorities, powers, functions, or duties normally
attached to such employee's position with the Company within a two-year
period after a Change in Control, and such person terminates his employment
with the Company within 90 days after such change in title or duties; or
(ii) termination of the recipient's employment by the Company without
cause within a two-year period after a Change in Control. For purposes of
Section 14(a) and this Section 15(a)(ii), 'cause' is defined as (a) the
conviction by the holder of a Plan Award of a felony or a crime involving
moral turpitude or (b) the commission by the holder of a Plan Award of a
public or notorious act which subjects the Company to public disrespect,
scandal, or ridicule and which adversely affects the value of the services
to the Company of the holder of the Plan Award.
In either of such events, notwithstanding the provisions of Section 14, a
Plan Award holder may, within three years after the date of such termination
(but not more than 10 years after the date of grant), exercise such Plan Award;
provided, however, that upon the death of any such Plan Award holder within this
three-year period, the person or persons to whom the Plan Award holder's rights
are transferred by will or the laws of descent and distribution may, within 12
months after the date of the Plan Award holder's death (but not more than 10
years after the date of grant), exercise such Plan Award to the extent that the
Plan Award holder was entitled to exercise such Plan Award on the date of his
death.
(b) The Committee shall have the authority at any time or from time to time
accelerate the vesting of any Plan Award and to permit any Plan Award not
theretofore exercisable to become immediately exercisable and to permit the
immediate termination of any restrictions contained in any restricted stock
award or other Plan Award.
(c) For 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 Company 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 Company'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 Company's
incumbent Board of Directors or when individuals who are members of the
Company's Board of Directors at any one time shall immediately thereafter
cease to constitute a majority of the Board of Directors.
16. MISCELLANEOUS PROVISIONS
(a) Rights as an Employee. Nothing in the Plan, the grant or holding of a
Plan Award, or in any agreement entered into pursuant to the Plan shall confer
to holders of Plan Awards any right to continue in the employ of the Company or
any parent or subsidiary of the Company or interfere in any way with the right
of the Company or any parent or subsidiary of the Company to terminate the
employment of a recipient at any time.
(b) Rights as a Stockholder. Except as provided in Section 16(c), a
recipient a restricted stock award shall have all of the rights of a stockholder
with respect to all of the shares of Common Stock subject to the restricted
stock award, including, without limitation, the right to vote such shares and to
receive dividends in cash or other property or other distributions or rights in
respect of such shares. A recipient of a Plan Award (other than a restricted
stock award) 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, and, 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.
(c) Non-Assignability of Plan Awards. No Plan Award shall be assignable or
transferable by the recipient, except by will or by the laws of descent and
distribution, provided that such restriction on the transfer or assignment of a
restricted stock award shall expire upon the date of expiration of the related
Restriction Period. During the lifetime of a recipient, Plan Awards shall be
exercisable only by him or
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his personal representative or guardian. No Plan Award or interest therein may
be pledged, attached, or otherwise encumbered other than in favor of the
Company.
(d) Leave of Absence. In the case of a holder of a Plan Award on all
approved leave of absence, the Committee may, if it determines that to do so
would be in the best interests of the Company, provide in a specific case for
continuation of Plan Awards during such leave of absence, such continuation to
be on such terms and conditions as the Committee determines to be appropriate,
except that in no event shall an option or stock appreciation right be
exercisable after 10 years from the date it is granted.
(e) Other Restrictions. Each Plan Award shall be subject to the requirement
that, if at any time the Board of Directors or the Committee shall determine, in
its discretion, that the listing, registration, or qualification of the shares
issuable or transferable upon exercise thereof upon any securities exchange or
under any state or Federal law, or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the granting of such Plan Award or the issue, transfer, or purchase of
shares thereunder, such Plan Award may not be exercised in whole or in part
unless such listing, registration, qualification, consent, or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors. The Company shall not be obligated to sell or issue any
shares of Common Stock in any manner in contravention of the Securities Act of
1933 or any state securities law.
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APPENDIX 1 -- PROXY CARD
CELGENE CORPORATION
PROXY
The undersigned hereby appoints John W. Jackson 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 offices of Proskauer Rose Goetz & Mendelsohn LLP, 26th floor, 1585
Broadway, New York, New York 10036 on Friday, June 14, 1996, 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).
(To be Signed on Reverse Side)
See Reverse Side
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[X] Please mark your
votes as in this
example.
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: John W. Jackson, Sol J. Barer, Frank T. Cary,
Richard C. E. Morgan, Walter L. Robb, Lee J. Schroeder,
Arthur Hull Hayes, Jr.
(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 AMENDMENT TO THE 1992 LONG-TERM 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.
I will attend the meeting.[ ] I will not attend the meeting. [ ]
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
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.
_____________________________________ Date ________________________
Signature
_____________________________________ Date _________________________
Signature if held jointly
Please sign exactly as name appears hereon. Joint owners should each 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.
Please return promptly in the enclosed postage-paid envelope.
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