CELGENE CORP /DE/, DEF 14A, 1997-05-30

CELGENE CORP /DE/
DEF 14A, 1997-05-30
INDUSTRIAL ORGANIC CHEMICALS

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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 "Company")
will be held at the offices of Proskauer Rose Goetz & Mendelsohn LLP, 1585
Broadway, 26th floor, New York, New York 10036 on Tuesday, June 24, 1997, 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 amend the Celgene
Corporation 1992 Long-Term Incentive Plan to increase the number of shares
of the Company's common stock that may be issued pursuant to stock
incentives granted under such Plan from 1,000,000 to 1,400,000;

3. to consider and act upon a proposal to amend the Celgene
Corporation 1995 Non-Employee Directors' Plan to increase the number of
shares of the Company's common stock that may be issued pursuant to stock
incentives granted under such Plan from 250,000 to 350,000;

4. to consider and act upon a proposal to confirm the appointment of
KPMG Peat Marwick LLP as the independent certified public accountants of
the Company for the current fiscal year; and

5. 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 May 20, 1997 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 30, 1997

-----------------------------------------------------
YOUR VOTE IS IMPORTANT

Please mark, sign, and date the enclosed
proxy card and return it promptly
in the enclosed self-addressed, stamped envelope.

-----------------------------------------------------

<PAGE>

CELGENE CORPORATION

7 Powder Horn Drive
Warren, New Jersey 07059

------------------------

PROXY STATEMENT

------------------------

This Proxy Statement is furnished to the stockholders of Celgene
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the annual meeting
of stockholders of the Company to be held on June 24, 1997, 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 30, 1997.

Only stockholders of record at the close of business on May 20, 1997, the
record date for the meeting, will be entitled to notice of and to vote at the
meeting. On the record date the Company had outstanding 11,921,971 shares of
common stock, par value $.01 per share (the "Common Stock"), which are the only
securities of the Company 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 Company 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, the amendment of the Company's 1992 Long-Term Incentive Plan and the
Company's 1995 Non-Employee Directors' Incentive Plan to increase the number of
shares of common stock available for issuance pursuant to incentives granted
under such plans, and the confirmation of the appointment of the independent
certified public accountants of the Company 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 Company 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 Company
(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 Company will reimburse them for their
expenses. In addition, the Company has retained D.F. King & Co., Inc. of New
York, New York, a proxy solicitation organization, to assist in the solicitation
of proxies. D.F. King's fee is estimated to be $7,000, plus reasonable
out-of-pocket 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 Company intend to vote FOR the
nominees for election as directors of the Company listed herein, FOR the
amendment of the Company's 1992 Long-Term Incentive Plan to increase the number
of stock incentives available under such plan, FOR the amendment of the
Company's 1995 Non-Employee Directors' Plan to increase the number of stock
incentives available under such plan, and FOR the confirmation of the
appointment of KPMG Peat Marwick LLP as independent certified public accountants
of the Company 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>

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 abstention will have no effect on the
outcome of the election of directors but will be considered present for purposes
of determining a quorum, and will be the equivalent of a vote against the
amendment of the 1992 Long-Term Incentive Plan, the amendment of the 1995
Non-Employee Directors' Plan and the confirmation of auditors. A broker non-vote
will be counted towards a quorum but will not be counted for any purpose in
determining whether a matter has been approved.

<PAGE>

PROPOSAL ONE
ELECTION OF DIRECTORS

At the meeting, seven Directors are to be elected, each to hold office
(subject to the Company'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 Company.

Name Age Position
- ---- --- --------
<S> <C> <C>
John W. Jackson ............... 52 Chairman of the Board and Chief Executive Officer
Sol J. Barer, Ph.D. ........... 49 President, Chief Operating Officer, and a Director
Frank T. Cary ................. 76 Director
Arthur Hull Hayes, Jr., M.D.... 64 Director
Richard C.E. Morgan ........... 52 Director
Walter L. Robb, Ph.D. ......... 69 Director
Lee J. Schroeder .............. 68 Director
</TABLE>

- ------------
John W. Jackson has been Chairman of the Board and Chief Executive Officer
of the Company since January 1996. Mr. Jackson was founder and President of
Gemini Medical, a consulting firm which specialized in services and investment
advice to start-up medical device and biotechnology companies, from February
1991 to January 1996. Previously, Mr. Jackson had been President of the
worldwide Medical Device Division of American Cyanamid, a major pharmaceutical
company, from February 1986 to January 1991 and served in various international
positions, including Vice President-International for American Cyanamid from
1978 to 1986. Mr. Jackson served in several human health marketing positions at
Merck & Company, a major pharmaceutical company, from 1971 to 1978.

Sol J. Barer has been President of the Company since October 1993 and Chief
Operating Officer and a director of the Company since March 1994. Dr. Barer was
Senior Vice President--Science and Technology and Vice President/General
Manager--Chiral Products of the Company from October 1990 to October 1993 and
Vice President--Technology of the Company from September 1987 to October 1990.
Dr. Barer received a Ph.D. in organic and physical chemistry from Rutgers
University.

Frank T. Cary has been Chairman of the Executive Committee of the Board of
Directors of the Company since July 1990 and has been a director of the Company
since 1989. From 1973 to 1981, Mr. Cary was Chairman of the Board and Chief
Executive Officer of International Business Machines Corporation. Mr. Cary also
is a director of Cygnus Therapeutic Systems Inc., ICOS Corporation, Lincare
Inc., SPS Transaction Services, Inc., Lexmark International Inc., SEER
Technologies, Inc., Vion Pharmaceuticals Inc. and Teltrend, Inc.

Arthur Hull Hayes, Jr., a director of the Company since 1995, has been
President and chief operating officer of MediScience Associates, Inc., a
consulting organization that works with pharmaceutical firms, biomedical
companies and foreign governments, since July 1991. Dr. Hayes has also been a
partner in IssueSphere, a public affairs firm that focuses on health science
issues, since November 1995, as well as a professor in medicine, pharmacology
and family and community medicine at New York Medical College and clinical
professor of medicine and pharmacology at the Pennsylvania State University
College of Medicine. From 1986 to 1990, Dr. Hayes was President and Chief
Executive Officer of E.M. Pharmaceuticals, a unit of E. Merck AG and from 1981
to 1983 was

<PAGE>

Commissioner of the U.S. Food and Drug Administration. Dr. Hayes also is a
director of Myriad Genetics, Inc., NaPro BioTherapeutics, Inc. and Premier
Research Worldwide.

Richard C.E. Morgan, a director of the Company since 1987, is a founding
member of Jackson Hole Management Company, Inc. and has been the Managing
General Partner of Wolfensohn Partners, L.P., since 1986. Mr. Morgan also is
Chairman of the Board of Directors and Chief Executive Officer of Lasertechnics,
Inc.; a director of SEQUUS Pharmaceuticals, Inc.; Chairman of the Board of
Directors of Quidel Corp., and a director of Indigo, N.V.

Walter L. Robb, a director of the Company since 1992, has been a private
consultant and President of Vantage Management Inc., a consulting and investor
services company, since January 1993. Mr. Robb was Senior Vice President for
Corporate Research and Development of General Electric Company, and a member of
its Corporate Executive Council from 1986 to December 1992. Mr. Robb also is
Chairman of the Board of Directors of Neopath, Inc. and a director of Marquette
Medical Systems, Inc. and Cree Research Inc.

Lee J. Schroeder, a director of the Company since 1995, has been President
of Lee Schroeder & Associates, Inc., pharmaceutical business consultants, since
1985. Mr. Schroeder was President of Fox Meyer Lincoln from 1983 to 1985, and
was an Executive Vice President of Sandoz, Inc. from 1981 to 1983. Mr. Schroeder
also is a director of Harris Technology Group, Inc., Bryan Memorial Hospital,
MGI Pharmaceutical, Inc., Ascent Pharmaceuticals, and Interneuron
Pharmaceuticals, Inc.

Executive Officers Who Are Not Directors

Robert C. Butler, 66, has been Chief Financial Officer of the Company since
July 1996. From 1988 to 1995, Mr. Butler served as Senior Vice President and
Chief Financial Officer of International Paper Co., a manufacturer of paper,
wood, and allied products. From 1979 to 1987, Mr. Butler served as Group
Executive Vice President of the National Broadcasting Company. Mr. Butler is
also a member of the Board of Directors of Carter Holt Harvey Ltd., a major New
Zealand forest products company.

<PAGE>

Security Ownership of Certain Beneficial Owners and Management

The table below sets forth the beneficial ownership of the Common Stock as
of May 20, 1997 (i) by each director, (ii) by each of the named executive
officers (iii) by all directors and executive officers of the Company as a
group, and (iv) by all persons known by the Board of Directors to be beneficial
owners of more than five percent of the outstanding shares of Common Stock.

Amount and
Nature of
Beneficial Percent
Name Ownership of Class(1)
---- ---------- -----------
John W. Jackson ............................... 184,066(2)(3) 1.5%
Sol J. Barer, Ph.D ............................ 192,001(2)(3) 1.6%
Robert C. Butler .............................. 17,500(2) *
Frank T. Cary ................................. 86,000(2) *
Arthur Hull Hayes, Jr., M.D. .................. 15,000(2) *
Richard C.E. Morgan ........................... 315,055(2)(4) 2.6%
Walter L. Robb, Ph.D. ......................... 62,000(2) *
Lee J. Schroeder .............................. 26,000(2) *
All directors and current executive officers
of the Company as a group (eight persons) ... 897,622(5) 7.2%
Donald P. Moriarty ............................ 925,500(6) 7.8%
c/o McGrath, Doyle & Phair
150 Broadway
New York, New York 10038

- ------------
* Less than one percent (1%).

(1) Based on 11,921,971 shares outstanding as of May 20, 1997.

(2) 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
May 20, 1997, as follows: John W. Jackson--166,666; Sol J. Barer--191,986;
Robert C. Butler--12,500; Frank T. Cary--61,000; Arthur Hull Hayes,
Jr.--15,000; Richard C.E. Morgan--56,000 shares; Walter L. Robb--34,000, and
Lee J. Schroeder--26,000. 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 May 20, 1997, as
follows: John W. Jackson--83,334; Sol J. Barer--55,834; Robert C.
Butler--37,500; Frank T. Cary--10,000; Arthur Hull Hayes, Jr.--15,000;
Richard C.E. Morgan--10,000; Walter L. Robb--10,000, and Lee
Schroeder--10,000.

(3) Includes as to Mr. Jackson 400 shares owned by his son, as to which shares
Mr. Jackson disclaims beneficial ownership; includes as to Dr. Barer 15
shares owned by his daughter, as to which shares Dr. Barer disclaims
beneficial ownership.

(4) 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 these 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.

(5) Includes or excludes, as the case may be, shares of Common Stock as
indicated in the preceding footnotes.

(6) Information regarding Donald P. Moriarty was obtained from a Schedule
13D, as amended, filed by him with the Securities and Exchange
Commission. Such Schedule 13D states that Mr. Moriarty is deemed to be
the beneficial owner of and to have sole dispositive power over the 925,500
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.

<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 Company
("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 each Annual Meeting of Stockholders, each Non-Employee
Director is 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 Company's stockholders, all
unvested portions of a stock option will automatically vest.

In 1996, pursuant to the 1995 Directors' Plan, each of Messrs. Cary, Hayes,
Morgan, Robb and Schroeder received an option to purchase 10,000 shares of
Common Stock at an exercise price of $15.00 per share, the fair market value of
the stock on the date of the grant.

Board Committees and Membership

The Company 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 one meeting in 1996. The
Executive Committee has and may exercise all of the powers and authority of the
full Board of Directors of the Company, subject to certain exceptions.

The Company 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 1996. 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 Company 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 1996. The
Compensation Committee has (i) the full power and authority to interpret the
provisions and supervise the administration of the

<PAGE>

Company'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 Company.

The Company does not have a nominating committee. The Board of Directors
held ten meetings during 1996. During 1996, 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 Company'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 Company, all such required reports were filed
on a timely basis in 1996.

EXECUTIVE COMPENSATION AND OTHER INFORMATION

Summary of Cash and Certain Other Compensation

The following table sets forth information about the compensation paid, or
payable, by the Company for services rendered in all capacities to the Chief
Executive Officer of the Company and each of the most highly paid executive
officers of the Company who earned more than $100,000, for each of the last
three fiscal years in which such officers were executive officers for all or
part of the year.

<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
---------------------------------------- -------------------------
Other Restricted Securities All Other
Name and Annual Stock Underlying Compen-
Principal Position Year Salary ($) Bonus ($) Compensation($) Award(s)($) Options# sation
------------------ ---- ---------- --------- --------------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Jackson 1996 243,429(1) 105,625(2) 4,750(3) 0 250,000 0
Chairman and
Chief Executive Officer

Sol J. Barer, Ph.D 1996 216,667 50,000 4,750(3) 0 72,500
President and Chief 1995 200,000 0 0 0 54,080 0
Operating Officer 1994 197,000 0 0 0 30,000 0
</TABLE>

- -----------
(1) Mr. Jackson commenced his employment with the Company on January 11, 1996.

(2) Mr. Jackson's bonus consisted of $50,000 in cash and 5,000 shares of
unrestricted stock, valued at $55,625 on the date of grant.

(3) Reflects matching contributions under the Company's 401K plan.

Employment Agreements and Termination of Employment Arrangements

Sol J. Barer, President and Chief Operating Officer of the Company, is a
party to an employment agreement with the Company that expired on October 31,
1996. Under such agreement, Dr. Barer is entitled to receive an annual salary
(currently $235,000), subject to increase upon annual review by the Compensation
Committee. The Agreement further provides that except under certain
circumstances, the Company may not terminate this agreement without giving 12
months' prior notice to Dr. Barer. Additionally, pursuant to the Agreement, Dr.
Barer would 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 Company (as defined in such agreement), or (iii) certain
material breaches by the Company of such agreement.

<PAGE>

John W. Jackson, Chairman and Chief Executive Officer of the Company, is
party to a letter agreement with the Company concerning his employment. Pursuant
to such letter agreement, Mr. Jackson currently receives an annual salary of
$270,000, subject to increase upon annual review by the Compensation Committee.
Except under certain circumstances, the Company may not terminate this agreement
without 12 months' prior notice to Mr. Jackson.

If during the two-year period following a change in control (as defined in
the Company's 1992 Long-Term Incentive Plan) of the Company, (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 Company is
terminated without cause (as defined), then all of the options held by such
employee then outstanding will become immediately and fully exercisable, and all
restrictions applicable to restricted stock automatically will terminate.

Stock Options

The following table contains information concerning the grant of options
under the Company's 1992 Long-Term Incentive Plan to each of the named
executive officers of the Company during the year ended December 31, 1996. No
stock appreciation rights ("SARS") were granted in 1996.

<PAGE>

OPTION GRANTS IN LAST FISCAL YEAR

Individual Grants
------------------------------------------------
Percent of Potential Realizable
Number of Total Value at Assumed
Securities Options Annual Rates of
Underlying Granted to Exercise Stock Appreciation
Options Employees in Price Expiration for Option Term
Name Granted(1) Fiscal Year(2) ($/Share) Date(3) 5% 10%
---- ----------- -------------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John W. Jackson ....... 250,000 39.7% $13.06 1/10/06 $2,053,341 $5,203,569
Sol J. Barer .......... 72,500 11.5% $16.75 2/21/06 $ 763,714 $1,935,401
</TABLE>

- -----------
(1) All options granted in 1996 were granted pursuant to the Company's 1992
Long-Term Incentive Plan. The grant to Mr. Jackson is exercisable in annual
increments of 33-1/3% of the total grant, beginning on the date of grant.
The grant to Dr. Barer is also exercisable in annual increments of 33-1/3%
of the total grant, beginning on the first anniversary of the date of grant.
All options were granted at the fair market value of Common Stock on the
effective date of grant.

(2) The total number of options granted to employees in 1996 was 629,037.

(3) Each option is subject to earlier termination if the officer's employment
with the Company is terminated.

The following table sets forth information for each of the named executive
officers with respect to the value of options exercised during the year ended
December 31, 1996 and the value of outstanding and unexercised options held as
of December 31, 1996. There were no SARs exercised during 1996 and none were
outstanding as of December 31, 1996.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

Number of
Securities Underlying Value of Unexercised
Unexercised Options In-the-Money Options
at December 31, 1996 at December 31, 1996(1)
--------------------------- -----------------------------
Shares
Acquired Value
Name on Exercise ($) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
------ ---------------- ------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Jackson -- -- 83,333 166,667 $ 0 $ 0
Sol J. Barer -- -- 167,820 80,000 $512,620 $27,188
</TABLE>

- -----------
(1) Represents the difference between the closing market price of the Common
Stock as reported by Nasdaq on December 31, 1996 of $11.125 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.

Compensation Committee Report

The Compensation Committee determines the Company's executive compensation
policies. The Compensation Committee determines the compensation of the
Company'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 Company'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.

<PAGE>

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 Company has not as yet attained
significant commercial revenues, goals are set which relate to the successful
attainment of strategic events.

The Company 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.

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 Company
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
Company. The size of grants is tied to comparative biotechnology industry
practices. To determine such comparative data, the Company relies on outside
compensation consultants, the Company's auditors, and third party industry
surveys.

Under the Company's 1996 incentive program, it was agreed, subject to the
achievement of certain goals in 1996 by the Company, that the Company would
grant at a future date options to purchase shares of common stock. A similar
incentive program has been designed for 1997 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 Company.

Chief Executive Officer Compensation. Pursuant to Mr. Jackson's arrangement
with the Company entered into on January 11, 1996, Mr. Jackson received an
annualized base salary of $250,000 for 1996. Mr. Jackson also received a bonus
of $105,000 for 1996. Mr. Jackson's long-term incentive derived from the grant
of stock options to purchase 250,000 shares of Common Stock awarded to him at
the time he began serving as Chief Executive Officer. Factors considered in
determining Mr. Jackson's bonus included the successful attainment of several
important milestones in the development of the Company's products, as well
comparisons to total compensation packages of chief executive officers at
corporations within the Company's industry that are of comparable size.

Members of the Compensation 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. Each is an
outside director of the Company.

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Performance Graph

The following graph shows changes over the past five years in the value of
$100 invested in: 1) the Company'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, 1991 in the
Company's Common Stock or in one of the indexes, as applicable, including
reinvestment of dividends, at December 31 for each of 1992-1996.

[GRAPHIC OMITTED]

COMPARISON OF FIVE YEAR CULUMATIVE TOTAL RETURN*
AMONG CELGENE CORPORATION, THE S & P 500 INDEX
AND THE NASDAQ PHARMACEUTICAL INDEX

(in Dollars)

Celgene Corporation S&P NASDAQ Pharmaceutical
------------------- --- ---------------------
12/91 100 100 100
12/92 86 108 83
12/93 46 118 74
12/94 37 120 56
12/95 88 165 102
12/96 73 203 102

* $100 INVESTED ON 12/31/91 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.

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PROPOSAL TWO
APPROVAL OF AN AMENDMENT TO THE 1992
LONG-TERM INCENTIVE PLAN

The stockholders of the Company are asked to approve an amendment to the
Company's 1992 Long-Term Incentive Plan (the "Plan") to increase the number of
shares of the Company's common stock that may be issued upon exercise of options
granted under the Plan from 1,000,000 to 1,400,000. The Board of Directors
approved the amendment of the Plan at a meeting of the Board of Directors on May
23, 1997, 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 Plan. The Board of Directors recommends that the stockholders vote their
shares for the proposal to approve the amendment of the Plan.

Background of the Proposal to Amend the Plan

As of May 20, 1997 fewer than 50,000 shares out of the aggregate of
1,000,000 shares of Common Stock authorized for grant under the Plan remain
available for future grants. The Board of Directors believes that stock options
serve as a powerful inducement in attracting highly skilled candidates for the
significant number of positions that are being created as the Company progresses
towards the marketing of its first pharmaceutical product. Since the beginning
of 1996, the Company has hired a new chief executive officer and has filled the
newly created positions of chief financial officer, director of sales and
marketing, chairman of Celgro and medical affairs director. Stock incentives
were awarded to the individuals hired for each of these positions. The Company
will have to continue to attract highly qualified candidates, and stock
incentives are a key component of the compensation package that the Company must
offer in order to compete with other companies for employees. Accordingly, the
Board of Directors recommends that stockholders approve the amendment of the
Plan as described below.

Summary of the Plan

The following is a brief summary of the principal provisions of the Plan.
This summary does not purport to be complete and is qualified in its entirety by
reference to the text of the Plan set forth as Exhibit A hereto.

The Plan was adopted by the Board of Directors on March 13, 1992 and was
approved at the Company's 1992 Annual Meeting of Stockholders. The Plan was
amended with the approval of the directors and stockholders of the Company in
1996 in order to bring it into compliance with Section 162(m) of the Internal
Revenue Code of 1986, or amended (the "Code").

Types of Awards and Shares Subject to Plan. The 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 Company to purchase not more than 1,000,000
shares of Common Stock, subject to adjustment under certain circumstances. As of
May 20, 1997, options to purchase 1,046,393 shares of Common Stock have been
granted under the Plan at exercise prices ranging from $5.50 to $16.75. Of the
options granted, 95,270 have been canceled, leaving a total of 48,877 available
for future grants under the Plan. As of May 23, 1997, the closing price of a
share of Common Stock was $7.31.

Purpose. The 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 Company, thereby maintaining and
strengthening their desire to remain with or join the Company.

Administration. The Plan is administered by the Compensation 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 Department regulations
thereunder. Subject to any general guidelines established by the Board of
Directors, the Committee has full and final authority to determine

<PAGE>

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 Company. The Plan became effective on March 13, 1992. No awards
will be granted under the Plan after March 12, 2002, but unless otherwise
expressly provided in the Plan or an awards agreement, a Plan Award may extend
beyond such date.

Stock Options. The term of options granted under the 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 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 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.

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 Company 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 Company, 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.

Individual Limitations. The maximum number of shares of Common Stock which
may be subject to any stock option that may be granted to any eligible
individual is 250,000 (subject to any increase or decrease pursuant to

<PAGE>

Section 10 (entitled "Adjustments upon Changes in Capitalization")) for each
calendar year during the entire term of the Plan. The maximum number of SARs,
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 any eligible individual is 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 SARs
are permitted to be granted to an individual pursuant to Section 3(b) (entitled
"Individual Limitations") during a calendar year are not covered by a grant of
an option or a SAR during the calendar year, such shares of Common Stock are not
available for grant of stock options or SARs, as applicable, in any subsequent
calendar year during the term of the Plan.

Adjustments. The Board of Directors has 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) (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 SARs.

Change in Control. If during a two-year period following a change in
control of the Company (as defined in the 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 Company 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 Company.

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 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 Company. 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 Company.
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,

<PAGE>

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 Company
generally will be entitled to a deduction at that time equal to the amount
of ordinary income realized by the optionee.

The 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 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
Company 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.

<PAGE>

The tax basis of the stock acquired upon the exercise of any option
will be equal to the sum of (i) the exercise price of such option and (ii)
the amount included in income with respect to such option. Any gain or loss
on a subsequent sale of the stock will be either long-term or short-term
capital gain or loss, depending on the optionee's holding period for the
stock disposed of.

The Company 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 Company 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
Company 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 Company
or the holder at the time an SAR is granted pursuant to the Plan. However,
upon the exercise of a 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 Company 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
Company 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 Company generally will be entitled to a
deduction equal to the amount of ordinary income recognized by the
recipient.

In addition, (i) officers and directors of the Company 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 Company 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)

<PAGE>

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).

<PAGE>

PROPOSAL THREE
APPROVAL OF AN AMENDMENT TO
THE 1995 NON-EMPLOYEE DIRECTORS' INCENTIVE PLAN

The stockholders of the Company are asked to approve an amendment to the
Company's 1995 Non-Employee Directors' Incentive Plan (the "Directors' Plan") to
increase the number of shares of the Company's common stock that may be issued
upon exercise of options granted under the Stock Option Plan from 250,000 to
350,000. The Board of Directors approved the amendment of the Directors' Plan at
a meeting of the Board of Directors on May 23, 1997, 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 Directors' Plan. The Board
of Directors recommends that the stockholders vote their shares for the proposal
to approve the amendment of the Directors' Plan.

Background of the Proposal to Amend the Directors' Plan

As of May 20, 1997, 76,000 shares out of the aggregate of 250,000 shares of
Common Stock authorized for grant under the Directors' Plan remain available for
future grants. Options may be granted under the Directors' Plan through June 16,
2005. The Directors' Plan is designed to provide a means of giving existing and
new Non Employee Directors an increased opportunity to acquire an investment in
the Company, thereby maintaining and strengthening their desire to remain with
the Company's Board of Directors and stimulating their efforts on the Company's
behalf. It is also expected that the Directors' Plan will encourage qualified
persons to become directors of the Company. Accordingly, the Board of Directors
recommends that stockholders approve the amendment of the Directors' Plan as
described below.

Summary of the Directors' Plan

The following is a brief summary of the principal provisions of the
Directors' Plan. This summary does not purport to be complete and is qualified
in its entirety by reference to the text of the Incentive Plan set forth in
Exhibit B hereto.

The Directors' Plan was adopted by the Board of Directors on April 5, 1995
and approved by the Company's stockholders at the 1995 Annual Meeting of
Stockholders. The Directors' Plan provides for the granting of non qualified
options to purchase an aggregate of not more than 250,000 shares (subject to
adjustment in certain circumstances) of Common Stock to Non Employee Directors.

Under the 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
was or 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.

All options granted pursuant to the 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

<PAGE>

and within two years thereafter, a director is removed without cause (as
defined) or is not nominated for election by the Company's stockholders, all
unvested portions of a stock option will automatically vest.

The Directors' Plan is administered by the Board of Directors which has the
full and final authority to interpret the Directors' Plan and to adopt and amend
such rules and regulations for the administration of the Directors' Plan as the
Board may deem desirable. In addition, the Board of Directors has the right to
amend, suspend, or terminate the Directors' Plan at any time; provided, however,
that unless first duly approved by the holders of Common Stock entitled to vote
thereon, no amendment or change may be made in the Directors' Plan: (i)
increasing the maximum number of shares for which options may be granted under
the Directors' Plan; (ii) increasing the number of shares subject to an option;
(iii) reducing the purchase price previously specified for the shares subject to
options; (iv) extending the period during which options may be granted or
options exercised under the Directors' Plan; or (v) changing the class of
persons eligible to receive options under the Directors' Plan.

The Directors' Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The Directors' Plan
is not, nor is it intended to be, qualified under Section 401(a) of the Code.
Options granted under the Directors' Plan are 'non qualified' stock options and
are not intended to qualify as incentive stock options under Section 422A of the
Code.

Certain Federal Income Tax Consequences

The principal Federal income tax consequences with respect to stock options
granted or to be granted pursuant to the Directors' Plan are summarized below.
The following discussion does not set forth any state or local tax consequences
that may be applicable. Individuals are urged to obtain professional advice
regarding the applicability of federal, state, and local tax laws to them.

The options granted or to be granted under the Directors' Plan do not and
will not qualify as incentive stock options and are herein referred to as non
qualified stock options. An optionee will realize no income at the time he is
granted a non qualified stock option. Such conclusion is predicated on the
assumption that, under existing Treasury Department regulations, a non qualified
stock option, at the time of its grant, has no readily ascertainable fair market
value. Except with respect to the exercise of a non qualified stock option for
stock which is 'not transferable' and subject to a 'substantial risk of
forfeiture,' as described below, ordinary income will be realized when a non
qualified stock option is exercised. The amount of such income will be equal to
the excess of the fair market value on the exercise date of the shares of Common
Stock issued to an optionee over the option price. The optionee's holding period
with respect to the shares acquired will begin on the date of exercise.

Special rules are applicable to stock which is 'not transferable' and
subject to a 'substantial risk of forfeiture.' In general, such stock (i) is
subject to a substantial risk of forfeiture if the optionee's right to full
enjoyment of the stock is conditioned upon the future performance of substantial
services and (ii) is not transferable if a transferee would take the stock
subject to the same restrictions. Stock acquired pursuant to the exercise of an
option as to which a service requirement is imposed could be so treated.

Unless the optionee elects to be taxed at the time of exercise (an '83(b)
election'), the optionee will recognize ordinary income on the first day that
the stock is either transferable or not subject to a substantial risk of
forfeiture. In the case of any other stock subject to a service requirement,
this will depend on the individual facts and circumstances. The ordinary income
in such case will be the excess of the fair market value of the stock on such
date over the option price and the optionee's holding period will begin on that
day.

An optionee who makes an 83(b) election will recognize ordinary income on
the date of exercise equal to the excess of the fair market value of such stock
at the time of exercise over the option price. The optionee's holding period
with respect to such stock will begin on the date of exercise.

<PAGE>

sequent 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.

In addition, any officers and directors of the Company subject to Section
16(b) of the Securities Exchange Act of 1934 may be subject to special tax rules
regarding the income tax consequences concerning their non qualified options. A
participant subject to Section 16(b) should consult his or her tax advisor as to
whether, as a result of Section 16(b) of the Securities Exchange Act of 1934 and
Section 83 of the Internal Revenue Code and the regulations thereunder, the
timing of income recognition is deferred to any period following exercise of an
option (e.g., the six month period following such exercise).

The Company will be entitled, subject to rules regarding reasonableness of
compensation, to a deduction for Federal income tax purposes at the same time
and in the same amount as the optionee is considered to have realized ordinary
income in connection with the exercise of the option. The deduction will be
allowed for the taxable year of the Company in which or with which ends the
taxable year of the optionee in which such ordinary income is recognized.

<PAGE>

PROPOSAL FOUR
INDEPENDENT AUDITORS

The Board of Directors has appointed KPMG Peat Marwick LLP, independent
certified public accountants, to audit the books and records of the Company for
the current year, and the Board recommends that the stockholders of the Company
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.

<PAGE>

STOCKHOLDERS PROPOSALS

Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1998
must submit the same in writing so as to be received at the executive office of
the Company on or before January 31, 1998. 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 30, 1997

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.

<PAGE>

EXHIBIT A

(Language which is changed by the amendment 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 2,000,000
shares of Common Stock. Such shares of Common Stock available under the Plan may
be authorized and unissued shares or previously issued shares acquired or to be
acquired by the Com-

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<PAGE>

pany 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 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

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<PAGE>

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.

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

A-3

<PAGE>

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 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

A-4

<PAGE>

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 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.

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<PAGE>

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:

(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

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(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.

(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 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.

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(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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<PAGE>

EXHIBIT B

CELGENE CORPORATION 1995
NON EMPLOYEE DIRECTORS' INCENTIVE PLAN

(Language which is changed by the amendment to the Directors' Plan to be
approved by stockholders is in italics.)

1. Purpose

The purpose of the Celgene Corporation 1995 Non Employee Directors'
Incentive Plan (the 'Plan') is to secure for Celgene Corporation (the
'Corporation') and its stockholders the benefits of the incentive inherent in
increased ownership of common stock, par value $.01 per share (the 'Common
Stock'), of the Corporation by the members of the Board of Directors (the
'Board') of the Corporation who are not employees of the Corporation or any of
its subsidiaries ('Non Employee Directors'). It is expected that such ownership
will provide such Non Employee Directors with a more direct stake in the future
welfare of the Corporation and encourage them to remain directors of the
Corporation. It is also expected that the Plan will encourage qualified persons
to become directors of the Corporation.

2. Administration

The Plan shall be administered by the Board, and in connection therewith,
the Board shall have all the powers vested in it by the terms of the Plan,
including authority (within the limitations described herein) to prescribe the
form of the agreements embodying awards of stock options made under the Plan
(the 'Options'). Subject to the provisions of the Plan, the Board shall have the
power to construe the Plan, to determine all questions arising under the Plan,
and to adopt and amend such rules and regulations for the administration of the
Plan as it may deem desirable. Any decision of the Board in the administration
of the Plan, as described herein, shall be final and conclusive. The Board may
act only by a majority of its members in office, except that the members thereof
may authorize any one or more of their number or the Secretary or any other
officer of the Corporation to execute and deliver documents on behalf of the
Board. No member of the Board shall be liable for anything done or omitted to be
done by such member or by any other member of the Board in connection with the
Plan, except for such member's own willful misconduct or as expressly provided
by statute.

3. Amount of Stock

The stock which may be issued or transferred pursuant to the exercise of
Options granted under the Plan shall not exceed 350,000 shares of Common Stock,
subject to adjustment as provided in Section 9. The Common Stock to be issued
may be either authorized and unissued shares or previously issued shares
acquired or to be acquired by the Corporation and held in treasury. Any shares
subject to an Option which for any reason expires or is terminated unexercised
may again be subject to a new Option.

4. Eligibility

Each Non Employee Director shall be eligible to receive non qualified stock
options in accordance with Section 5. Options granted under the Plan shall each
be evidenced by an agreement in such form as the Board shall prescribe from time
to time in accordance with the Plan.

5. Grant of Options

Each Option automatically shall be granted in accordance with the following
terms and conditions:

(a) upon the date of the approval of this Plan by the Board, each Non
Employee Director shall receive an Option to purchase 20,000 shares of Common
Stock, subject to adjustment as provided in Section 9;

(b) upon the date of initial election or appointment as a member of the
Board, each new Non Employee Director shall receive an Option to purchase 20,000
shares of Common Stock, subject to adjustment as provided in Section 9;

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<PAGE>

(c) upon the date of the Annual Meeting of Stockholders of the Corporation
to be held on June 16, 1995 (the '1995 Annual Meeting') or any adjournment or
adjournments thereof, each Non Employee Director who has been reelected at the
1995 Annual Meeting and is continuing as a member of the Board as of the
completion of the 1995 Annual Meeting shall receive an Option to purchase 6,000
shares of Common Stock, subject to adjustment as provided in Section 9; and

(d) each year after the 1995 Annual Meeting, upon the date of an Annual
Meeting of Stockholders of the Corporation (an 'Annual Meeting') each Non
Employee Director who has been reelected at such Annual Meeting and is
continuing as a member of the Board as of the completion of such Annual Meeting
shall receive an Option to purchase 10,000 shares of Common Stock, subject to
adjustment as provided in Section 9; provided, however, that a Non Employee
Director who has been reelected at such Annual Meeting and is continuing as a
member of the Board as of the completion of such Annual Meeting but has not been
a member of the Board during the entire period between such Annual Meeting and
the prior Annual Meeting shall receive an Option to purchase that number of
shares equal to the product of (i) 10,000 and (ii) a fraction, where the
numerator is the number of days in the 12 month period immediately preceding
such Annual Meeting during which such Non Employee Director was a Non Employee
Director and the denominator is 365.

6. Exercise Price

The Option exercise price per share shall be 100% of the fair market value
of a share of Common Stock on the date of grant, subject to adjustment as
provided in Section 9. As used herein, fair market value shall be the closing
price of the Common Stock on the date of determination (if the Common Stock is
then traded on a national securities exchange or in the NASDAQ National Market
System) or, if not so traded, the average of the closing bid and asked prices
thereof on such day or, if the Common Stock is not traded on the date of
determination, on the last preceding date on which the Common Stock is traded.

7. Exercise of Options

(a) No Option shall be exercisable until and unless the Plan is approved by
the Corporation's stockholders at the 1995 Annual Meeting and, unless the Plan
is so approved, all Options will terminate and be of no further force or effect
on the earlier to occur of (i) the day after the 1995 Annual Meeting and (ii)
April 4, 1996.

(b) The shares subject to an Option granted pursuant to Section 5(a) or
5(b) shall vest in four equal annual installments, with the first installment
vesting on the first anniversary of the date of grant if the holder thereof has
been a Non Employee Director of the Corporation at all times since such date of
grant. The shares subject to an Option granted pursuant to Section 5(c) or 5(d)
shall vest in full on the date of the first Annual Meeting held following the
date of grant if the holder thereof has been a Non

Employee Director of the Corporation at all times from such date of grant
to the date of such Annual Meeting.

(c) If a person shall cease to be a Non Employee Director for any reason
('Termination') while holding an Option that has not expired and has not been
fully exercised, such person, or in the case of his or her death or adjudication
of incompetency, his or her executors, administrators, distributees, guardian,
or legal representative, as the case may be, may, at any time until the
termination of such Option, exercise the Option with respect to any shares of
Common Stock as to which it was exercisable on the date the person ceased to be
such a Non Employee Director.

(d) No Option or any part of an Option shall be exercisable:

(i) after the expiration of 10 years from the date the Option was
granted; and

(ii) unless written notice of the exercise is delivered to the
Corporation specifying the number of shares to be purchased, and payment in
full is made for the shares of Common Stock being acquired thereunder at
the time of exercise.

B-2

<PAGE>

(e) An Option shall not be transferable by the optionee otherwise than by
will or the laws of descent and distribution or pursuant to a qualified domestic
relations order, as defined in the Internal Revenue Code of 1986, as amended
(the 'Code'), and shall be exercisable during this lifetime only by the
optionee, his or her guardian or legal representative, or the recipient thereof
pursuant to a qualified domestic relations order.

8. Acceleration of Vesting

(a) If Termination occurs within two years following a Change in Control
(as defined in Section 8(b) hereof), an Option shall automatically be vested and
immediately exercisable in full. In such event, notwithstanding the provisions
of Section 7, an Option recipient, or in the case of his or her death or
adjudication of incompetency, his or her executors, administrators,
distributees, guardian, or legal representative, as the case may be, may, at any
time until the termination of such Option, purchase some or all of the shares
covered by such recipient's Options.

(b) For the purposes hereof, a change in control (a 'Change in Control')
shall be deemed to occur:

(i) if any person within the meaning of Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, other than the Corporation or any of
its subsidiaries, has become the beneficial owner, within the meaning of
Rule 13d 3 under the Securities Exchange Act of 1934, of 30 percent or more
of the combined voting power of the Corporation's then outstanding voting
securities; or

(ii) when a majority of the directors elected at any special or annual
meeting of stockholders are not individuals nominated by the Corporation's
incumbent Board or when individuals who are members of the Board at any one
time shall immediately thereafter cease to constitute a majority of the
Board.

9. Adjustment Upon Changes in Capitalization

(a) If dividends payable in Common Stock during any fiscal year of the
Corporation exceed in the aggregate 5% of the Common Stock issued and
outstanding at the beginning of such fiscal year, or if there is during any
fiscal year of the Corporation one or more splits, subdivisions, or combinations
of shares of Common Stock resulting in an increase or decrease by more than 5%
of the shares outstanding at the beginning of the year, the number of shares
subject to Options to be granted thereafter to Non Employee Directors pursuant
to Section 5 shall be increased or decreased proportionately, as the case may
be, and the number of shares deliverable upon the exercise thereafter of any
Options theretofore granted shall be increased or decreased proportionately, as
the case may be, without change in the aggregate purchase price. Common Stock
dividends, splits, subdivisions, or combinations during any fiscal year which do
not exceed in the aggregate 5% of the Common Stock issued and outstanding at the
beginning of such year shall be ignored for purposes of the Plan. All
adjustments shall be made as of the day such action necessitating such
adjustment becomes effective.

(b) In case the Corporation is merged or consolidated with another
corporation, or in case all or substantially all of the property or stock of the
Corporation is acquired by another corporation, or in case of a reorganization
or liquidation of the Corporation, the Board, or the board of directors of any
corporation assuming the obligations of the Corporation hereunder, shall either
(i) make appropriate provisions for the protection of any outstanding Options by
the substitution on an equitable basis of appropriate stock of the Corporation,
or appropriate stock of the merged, consolidated, or otherwise reorganized
corporation or (ii) give written notice to optionees that their Options, which
will become immediately exercisable notwithstanding any waiting period otherwise
prescribed by the Board, must be exercised within 30 days of the date of such
notice or they will be terminated.

10. Miscellaneous Provisions

(a) Except as expressly provided for in the Plan, no Non Employee Director
or other person shall have any claim or right to be granted an Option under the
Plan.

(b) Nothing in the Plan or in any Option agreement shall confer any right
to continue as a director of the Corporation or interfere in any way with the
right of the Corporation to remove such option holder or not to nominate such
option holder for election as a director of the Corporation at any time.

B-3

<PAGE>

(c) The Corporation shall not be obligated to deliver any shares of Common
Stock hereunder until there has been qualification under or compliance with such
state or federal laws, rules or regulations as the Corporation may deem
applicable.

(d) Stock purchased pursuant to the exercise of an Option shall at the time
of purchase be paid in full in cash, or with shares of Common Stock, or a
combination of cash and Common Stock to be valued at the fair market value
thereof on the date of such exercise; provided, however, that any shares of
Common Stock so delivered shall have been beneficially owned by the optionee for
a period of not less than six months prior to the date of exercise. Upon receipt
of payment and such documentation as the Corporation may deem necessary to
establish compliance with the Securities Act of 1933, the Corporation shall,
without stock transfer tax to the optionee or other person entitled to exercise
the Option, deliver to the person exercising the Option a certificate or
certificates for such shares. It shall be a condition to the obligations of the
Corporation to issue or transfer shares of Common Stock upon exercise of an
Option, that the optionee (or any person entitled to act under Sections 7(c) and
7(e)) pay to the Corporation, upon its demand, such amount, if any, as may be
requested by the Corporation for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If the amount
requested is not paid, the Corporation may refuse to issue shares of Common
Stock. Such taxes may be paid in cash or by tender of the option holder or the
withholding by the Corporation of the number of shares of Common Stock whose
fair market value equals the amount required to be withheld.

(e) A recipient of Options shall have no rights as a stockholder with
respect to any shares issuable or transferable upon exercise thereof until the
date a stock certificate is issued to him for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.

(f) The expenses of the Plan shall be borne by the Corporation.

(g) If an Option is exercised by the executors, administrators, legatees,
or distributees of the estate of a deceased optionee or by the guardian or legal
representative of an optionee, the Corporation shall be under no obligation to
issue stock thereunder unless and until the Corporation is satisfied that the
person or persons exercising the Option are the duly appointed legal
representatives of the optionee or of the deceased optionee's estate or the
proper legatees or distributees of such estate.

11. Amendment or Discontinuance

The Plan may be amended at any time and from time to time, but not more
than once in a six month period, by the Board as the Board shall deem advisable
including, but not limited to, amendments necessary to qualify for any exemption
or to comply with applicable law or regulations; provided, however, that except
as provided in Section 9, the Board may not, without further approval by the
stockholders of the Corporation, increase the maximum number of shares of Common
Stock as to which Options may be granted under the Plan, increase the number of
shares subject to an Option, reduce the minimum Option exercise price described
in Section 6, extend the period during which Options may be granted or exercised
under the Plan or change the class of persons eligible to received Options under
the Plan. No amendment of the Plan shall materially and adversely affect any
right of any holder of an Option with respect to any Option theretofore granted
without the written consent of the holder of such Option.

12. Termination

The Plan shall terminate upon the earlier to occur of (a) the adoption of a
resolution of the Board terminating the Plan, (b) April 5, 2005, and (c) April
4, 1996 if the Plan has not been approved by the Corporation's stockholders at
the 1995 Annual Meeting.

13. Effective Date of Plan

The Plan shall become effective as of April 5, 1995, provided that the
Corporation's stockholders shall have approved the Plan at the 1995 Annual
Meeting.

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<PAGE>

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 "Company") 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 Tuesday, June 24, 1997, 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
----------

<PAGE>

[x] Please mark your
votes as in this
example.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR 1, 2, 3 and 4.

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 OF THE CELGENE CORPORATION 1992 LONG-TERM
INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK ISSUABLE
PURSUANT TO STOCK INCENTIVES GRANTED THEREUNDER FROM 1,000,000 TO 1,400,000.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. PROPOSAL TO APPROVE THE AMENDMENT OF THE CELGENE CORPORATION 1995 NON-
EMPLOYEE DIRECTORS' INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON
STOCK ISSUABLE PURSUANT TO STOCK INCENTIVES GRANTED THEREUNDER FROM 250,000
TO 350,000.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

4. PROPOSAL TO APPROVE THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF THE COMPANY.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

5. 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, 3 and 4.

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.