SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|X| Preliminary Proxy Statement |_| Confidential, For Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
CELGENE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
<PAGE>
CELGENE CORPORATION
7 Powder Horn Drive
Warren, New Jersey 07059
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
----------------
The annual meeting of stockholders of CELGENE CORPORATION (the "Company")
will be held at the offices of Proskauer Rose LLP, 1585 Broadway, 26th floor,
New York, New York 10036 on June 23, 1998, at 1:00 p.m., local time, for the
following purposes:
1. to elect nine directors;
2. to approve an amendment to the Company's Certificate of
Incorporation to increase the number of shares of the Company's
authorized Common Stock, $.01 par value per share, from 20,000,000
shares to 30,000,000 million shares;
3. to approve the Celgene Corporation 1998 Long-Term Incentive Plan;
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 April 27, 1998
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 16, 1998
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 23, 1998, 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 16, 1998.
Only stockholders of record at the close of business on April 27, 1998,
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 16,031,450 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 to the Company's Certificate of Incorporation to
increase the number of shares of the Company's authorized common stock, the
adoption of the Company's 1998 Long-Term Incentive Plan, and the confirmation of
the appointment of the independent certified public accountants of the Company
for the current fiscal year. However, if other matters properly come before the
meeting, the persons named in the accompanying proxy intend to vote thereon in
accordance with their judgment.
The 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 Certificate of Incorporation to increase the number
of shares of the Company's authorized common stock, FOR
<PAGE>
the Celgene Corporation 1998 Long-term Incentive 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.
Abstentions are counted in tabulations of the votes cast on proposals
presented to stockholders, whereas broker non-votes are not counted for purposes
of determining whether a proposal has been approved. Abstentions and broker
non-votes will have no effect on the election of directors, which is by
plurality vote, but abstentions will, in effect, be votes against the adoption
of the Company's 1998 Long-Term Incentive Plan and the ratification of the
selection of independent public accountants, as these items require the
affirmative vote of the shares present and eligible to vote on such matters.
Since approval of the proposed amendment to the Company's Certificate of
Incorporation requires the affirmative vote of a majority of the outstanding
shares, both abstentions and broker non-votes will, in effect, be votes against
such matter.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
At the meeting, nine 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. Pursuant to the Company's By-Laws, the
Board has fixed the number of Directors at nine. 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.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
John W. Jackson 53 Chairman of the Board and
Chief Executive Officer
Sol J. Barer, Ph.D. 50 President, Chief Operating Officer,
and a Director
Frank T. Cary 77 Director
Arthur Hull Hayes, Jr., M.D. 65 Director
Richard C.E. Morgan 53 Director
Walter L. Robb, Ph.D. 70 Director
Lee J. Schroeder 69 Director
Gilla Kaplan, Ph.D. 50 Director
Jack L. Bowman 65 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
3
<PAGE>
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 1987. 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 Issue Sphere, 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 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 has been the
Managing Member of Amphion Partners LLC (formerly Wolfensohn Partners, L.P.),
since 1986. Between January 1996 and January 1998, Mr. Morgan was a partner of
Jackson Hole Management Company, Inc. Mr. Morgan also is Chairman of the Board
of Directors and Chief Executive Officer of AXCESS, Inc.; a director of SEQUUS
Pharmaceuticals, Inc.; Chairman of the Board of Directors of Quidel Corp.; a
director of ChromoVision Medical Systems, Inc.; 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
Electronics, Inc., Cree Research Inc., and Mechanical Technology, 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 Pediatrics, Inc., and Interneuron
Pharmaceuticals, Inc.
Gilla Kaplan, Ph.D, a director of the Company since April 1998, is an
immunologist in the Laboratory of Cellular Physiology and Immunology at The
Rockefeller University in New York where she was appointed Assistant Professor
in 1985 and Associate Professor in 1990. Dr. Kaplan is a member of numerous
professional societies and has been the organizer of several major symposia on
tuberculosis. Dr. Kaplan has served as an advisor to the Global Program for
Vaccines and Immunization of the World Health Organization, has participated in
several NIH peer review panels, is on the Editorial Board of Microbial Drug
Resistances, since 1994, and Tubercle and Lung Disease, since 1997. Dr. Kaplan
is the author of more than 100 scientific publications and has received
international recognition for her work. In 1995, she gave the Special Honorary
Lecture at the American Society for Microbiology and in 1997 was appointed a
Fellow of the American Academy of Microbiology.
4
<PAGE>
Jack L. Bowman, a director of the Company since April 1998, served as
Company Group Chairman of Johnson & Johnson from 1987 to 1994. From 1983 to 1987
Mr. Bowman served as Executive Vice President of American Cyanamid. Mr. Bowman
is also a director of NeoRx Corporation, Cell Therapeutics, Inc., CytRx
Corporation, Cellegy Pharmaceuticals and Targeted Genetics.
Executive Officers Who Are Not Directors
Robert C. Butler, 67, has been Chief Financial Officer of the Company
since July 1996. Mr. Butler plans to retire in July 1998. 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.
Security Ownership of Certain Beneficial Owners and Management
The table below sets forth the beneficial ownership of the Common Stock as
of April 27, 1998 (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.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership Class
- -------------------------------------------- -------------------- ----------
<S> <C> <C>
John W. Jackson ............................ 272,400(1)(2) 1.7%
Sol J. Barer, Ph.D ......................... 209,928(2) 1.3%
Robert C. Butler ........................... 17,500(1) *
Frank T. Cary .............................. 106,000(1) *
Arthur Hull Hayes, Jr., M.D ................ 30,000(1) *
Richard C.E. Morgan ........................ 330,055(1)(3) 2.1%
Walter L. Robb, Ph.D ....................... 92,000(1) *
Lee J. Schroeder ........................... 41,000(1) *
Gilla Kaplan ............................... 0 *
Jack L. Bowman ............................. 0 *
All directors and current
executive officers of
the Company as a group
(eight persons) ........................... 1,098,883(4) 6.9%
Donald P. Moriarty and
William P. Scully(5) ...................... 1,355,000(5) 8.5%
c/o McGrath, Doyle & Phair
150 Broadway
New York, New York 10038
Frontier Capital Management
Company, Inc.(6) .......................... 806,960(6) 5.0%
99 Summer Street
Boston, MA 02110
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership Class
- -------------------------------------------- -------------------- ----------
<S> <C> <C>
Chancellor LGT Asset Management, Inc.,
Chancellor LGT Trust Company and
LGT Asset Management, Inc.
as a group (7) ............................ 1,067,700(8) 6.7%
1166 Avenue of the Americas
New York, New York 10036
</TABLE>
- ------------------------
* Less than one percent (1%).
(1) Includes shares of Common Stock which the directors and executive officers
have the right to acquire through the exercise of options within 60 days
of April 27, 1998, as follows: John W. Jackson -- 250,000; Sol J. Barer --
209,913; Robert C. Butler -- 12,500; Frank T. Cary -- 76,000; Arthur Hull
Hayes, Jr. -- 30,000; Richard C.E. Morgan -- 71,000 shares; Walter L. Robb
-- 49,000, and Lee J. Schroeder -- 41,000. 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
April 27, 1998, as follows: John W. Jackson -- 100,000; Sol J. Barer --
74,167; Robert C. Butler -- 37,500; Frank T. Cary -- 5,000; Arthur Hull
Hayes, Jr. -- 10,000; Richard C.E. Morgan -- 5,000; Walter L. Robb --
5,000, and Lee J. Schroeder -- 5,000.
(2) Includes with respect to Mr. Jackson 400 shares owned by the son of Mr.
Jackson, as to which shares Mr. Jackson disclaims beneficial ownership;
includes with respect to Dr. Barer 15 shares owned by the daughter of Dr.
Barer, as to which shares Dr. Barer disclaims beneficial ownership.
(3) Includes 252,055 shares of Common Stock owned by Amphion Ventures, L.P. of
which Amphion Partners, LLC is the general partner. Mr. Morgan is a
managing member of Amphion Ventures, LLC. 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
Amphion Ventures, L.P.
(4) Includes or excludes, as the case may be, shares of Common Stock as
indicated in the preceding footnotes.
(5) Information regarding Donald P. Moriarty and William P. Scully was
obtained from a Schedule 13D, as amended, filed by them with the
Securities and Exchange Commission. Such Schedule 13D states that Messrs.
Moriarty and Scully are deemed to be the beneficial owners of and to have
shared dispositive power over all such shares of Common Stock, and that
such shares are held by Mr. Moriarty, Mr. Scully, their family members,
and Twin Oaks Partners, a partnership in which Messrs. Moriarty and Scully
are general partners.
(6) Information regarding Frontier Capital Management Company, Inc. was
obtained from a Schedule 13G, filed by it with the Securities and Exchange
Commission. Such Schedule 13G states that Frontier Capital Management
Company, Inc. is the beneficial owner of and has the sole dispositive
power over all such shares of Common Stock.
(7) Information regarding Chancellor LGT Asset Management, Inc., Chancellor
LGT Trust Company and LGT Asset Management, Inc. (the "Group") was
obtained from a Schedule 13G, filed by them with the Securities and
Exchange Commission. Such Schedule 13G states that the Group filed as a
group and as such it is the beneficial owner of and has sole dispositive
power over all such shares of Common Stock.
(8) Includes warrants to purchase 519,231 shares of Common Stock.
6
<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 the Company'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 1997, 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 $7.125 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 1997. 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.
7
<PAGE>
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 1997. 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 1997. The
Compensation Committee has (i) the full power and authority to interpret the
provisions and supervise the administration of the Company's 1986 Stock Option
Plan, 1992 Long-Term Incentive Plan and, if approved at the Annual Meeting, the
1998 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 eight meetings during 1997. During 1997, 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 1997.
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 $100,000, for each of the last
three fiscal years in which such officers were executive officers for all or
part of the year.
8
<PAGE>
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
----------------------------------------- -------------------------
Other Restricted
Annual Stock Securities All Other
Name and Compensation Award(s) Underlying Compen-
Principal Position Year Salary ($) Bonus ($) ($) ($) Options # sation ($)
- ---------------------------- ---- ---------- --------- ------------ ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Jackson............. 1997 270,000 97,200 9,500(3) 0 0 13,390(4)
Chairman and 1996 243,429(1) 105,625(2) 4,750(3) 0 250,000 0
Chief Executive
Officer
- ---------------------------- ---- ---------- --------- ------------ ---------- ---------- ---------
Sol J. Barer, Ph.D.......... 1997 232,500 63,647 9,500(3) 0 0 0
President and Chief 1996 216,667 50,000 4,750(3) 0 72,500 0
Operating Officer 1995 200,000 0 0 0 54,080 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 401(k) plan.
(4) Reflects life insurance premiums for a life insurance policy for Mr.
Jackson.
Employment Agreements and Termination of Employment Arrangements
John W. Jackson and Sol J. Barer (each an "Executive") are employed
pursuant to substantially similar employment agreements (the "Employment
Agreements") providing for their continued employment until September 30, 2000
(the period during which Executive is employed is referred to as the "Employment
Period"). The Employment Period shall be automatically renewed for successive
one-year terms unless the Company or Executive gives written notice to the other
at least one year prior to the expiration of the Employment Period. The
Employment Agreements provide Messrs. Jackson and Barer with a base salary
(which may be increased by the Board of Directors, or a committee thereof) of
$270,000 and $235,000, respectively, per annum. In addition, each of the
Employment Agreements provides for an annual bonus in such amount as may be
determined by the Board of Directors, or a committee thereof. The Employment
Agreements also provide that Messrs. Jackson and Barer are entitled to continue
to participate in all group health and insurance programs and all other fringe
benefit or retirement plans which are generally available to the Company's
employees. Each of the Employment Agreements provides that if the Executive is
terminated by the Company without cause, he shall be entitled to receive a
lump-sum payment in an amount equal to the greater of (A) twelve months salary
at the rate being paid on the date of such termination or (B) salary at such
rate for the unexpired term of the Employment Agreement. Each Employment
Agreement also provides that if Executive is terminated without cause or if
Executive terminates his employment within 30 days of having actual knowledge of
the occurrence of any of the following events: (i) Executive not maintaining his
position with the Company as Chief Executive Officer (in the case of Mr.
Jackson) and Chief Operating Officer (in the case of Mr. Barer), (ii) a
significant change in the duties normally attached to such Executive's position,
(iii) a good faith determination by such Executive that, as a result of a change
in control, such Executive is unable to carry out the duties of such position
and (iv) a breach by the Company of any material term of such Executive's
Employment Agreement, the Executive shall be paid in a lump-sum an amount of
cash equal to 2.99 times Executive's "base amount," as defined in Section
280G(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code").
9
<PAGE>
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
No stock options or stock appreciation rights ("SARs") were granted in
fiscal 1997 to John W. Jackson or Sol J. Barer.
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, 1997 and the value of outstanding and unexercised options held as
of December 31, 1997. There were no SARs exercised during 1997 and none were
outstanding as of December 31, 1997.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired Value at December 31, 1997 at December 31, 1997(1)
on Exercise Realized -------------------- -----------------------
Name ($) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John W. Jackson....... -- -- 166,667 83,333 $0 $0
Sol J. Barer.......... -- -- 190,986 48,334 $160,937 $0
</TABLE>
- ----------------------------------------
(1) Represents the difference between the closing market price of the Common
Stock as reported by Nasdaq on December 31, 1997 of $8.438 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
10
<PAGE>
utilizes incentives such that employees and stockholders share the same risks.
The compensation program is designed to link compensation to performance.
A portion of each employee's compensation relates to the grant of stock
options, and such grants are based on the successful attainment of strategic
corporate, business unit, and individual goals. As the Company has not as yet
attained significant commercial revenues, goals are set which relate to the
successful attainment of strategic events. 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 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 1997 incentive program, it was agreed, subject to the
achievement of certain goals in 1997 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 1998 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 contract
with the Company entered into on September 30, 1997, Mr. Jackson received base
salary of $270,000 for 1997. Mr. Jackson also received a bonus of $97,200 for
1997. Factors considered in determining
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<PAGE>
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.
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, 1992 in the
Company's Common Stock or in one of the indexes, as applicable, including
reinvestment of dividends, at December 31 for each of 1993-1997.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG CELGENE CORPORATION, THE S & P 500 INDEX
AND THE NASDAQ PHARMACEUTICAL INDEX
1992 1993 1994 1995 1996 1997
Celgene Corporation 100 53 43 102 85 64
Standard & Poor's 500 Index 100 110 112 153 189 252
Nasdaq Pharmaceutical Index 100 89 67 123 123 142
* $100 INVESTED ON 12/31/92 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
12
<PAGE>
PROPOSAL TWO
AMENDMENT OF THE COMPANY'S Certificate of Incorporation
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
The Board of Directors has approved, and recommends that the Company's
stockholders approve, an amendment (the "Amendment") to the Company's
Certificate of Incorporation that would increase the number of shares of the
Company's authorized Common Stock, par value $.01 per share ("Common Stock")
from 20,000,000 to 30,000,000. As of April 27, 1998 there were 16,031,450 shares
of Common Stock outstanding and an aggregate 3,524,974 shares of Common Stock
were issuable upon exercise of outstanding options under the Company's 1992
Long-Term Incentive Plan, its 1995 Non-Employee Directors' Plan and other
options and warrants. Accordingly, there are only 443,576 shares of authorized
Common Stock that are not outstanding or issuable as described above.
The Company has no present intention to issue the additional authorized
shares in any presently contemplated transaction, including any stock split,
stock dividend, public or private offering, acquisition or exchange for other
securities. However, the Board of Directors believes that the increased number
of authorized shares of common stock will improve the Company's flexibility. The
Board of Directors will determine whether, when and on what terms the issuance
of shares of Common Stock may be warranted in connection with any future
actions. No further action nor authorization by the Company's stockholders would
be necessary prior to issuance of the Common Stock, except as may be required
for a particular transaction by the Company's Certificate of Incorporation, by
applicable law or regulatory agencies or by the rules of the Nasdaq Stock Market
or of any stock exchange on which the Company's Common Stock may then be listed.
Requiring the stockholders to meet and approve each separate issuance of
additional Common Stock would be time-consuming and costly. Moreover, if
stockholder authorization of additional Common Stock were postponed until a
specific need arose, the delay could, in some instances, deprive the Company and
its stockholders of opportunities otherwise available.
While not intended as an anti-takeover provision, the increase in
authorized shares by the proposed amendment could under some circumstances (i)
enable existing directors and officers of the Company to increase their
beneficial ownership of the Company in response to a takeover attempt by another
person by entering into transactions resulting in the issuance of authorized
shares by the Company to existing directors and officers and/or (ii) dilute the
beneficial ownership of the person making the takeover attempt by issuing shares
to another person who might assist the Board of Directors in opposing the
takeover if the Board of Directors determines that the takeover is not in the
best interests of the Company and its stockholders.
13
<PAGE>
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the annual meeting is required to approve the
foregoing amendment to the Company's Certificate of Incorporation.
14
<PAGE>
PROPOSAL THREE
CELGENE CORPORATION 1998 LONG-TERM INCENTIVE PLAN
The stockholders of the Company are asked to approve the adoption of the
Company's 1998 Long-Term Incentive Plan (the "Plan"). The Board approved the
establishment of the Plan pursuant to unanimous written consent on May 6, 1998,
subject to 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 adoption of the Plan.
The Board recommends that the stockholders vote their shares for the proposal to
approve the adoption of the Plan.
The Company presently may grant (i) stock options, (ii) stock appreciation
rights, (iii) restricted stock; and other performance based awards to employees
and officers of the Company pursuant to the Company's 1992 Long-Term Incentive
Plan (the "1992 Plan"). As of March 31, 1998, fewer than 55,000 shares out of
the aggregate 1,400,000 shares of Common Stock authorized for grant under the
1992 Plan remain available for future grants.
Summary of the Plan.
Background; Purpose; Eligibility. 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 this Plan set forth
as Exhibit A hereto. The purpose of the Plan is to enhance the profitability and
value of the Company and its affiliates for the benefit of their stockholders by
enabling the Company to offer selected management and other employees of the
Company and its affiliates, stock based incentives and other equity interests in
the Company, thereby creating a means to raise the level of stock ownership by
employees in order to attract, retain and reward such employees and strengthen
the mutuality of interests between employees and the Company's stockholders.
Administration. The Plan is administered by a Management Compensation and
Development Committee or such other committee or subcommittee appointed from
time to time by the Board, which is intended to consist of two or more
non-employee directors, each of whom will be, to the extent required by Rule
16b-3 ("Rule 16b-3") under the under the Securities Exchange Act of 1934 (the
"Exchange Act") and Section 162(m) of the Code, a non-employee director as
defined in Rule 16b-3 and an outside director as defined under Section 162(m) of
the Code (the "Committee"). If for any reason the appointed Committee does not
meet the requirements of Rule 16b-3 of the Exchange Act or Section 162(m) of the
Code, the validity of the awards, grants, interpretation or other actions of the
Committee will not be affected. The Committee has the full authority to select
those individuals eligible to receive awards and the amount and type of awards.
Terms and conditions of awards will be set forth in written grant agreements,
the terms of which will be consistent with the terms of the Plan. Awards under
the Plan may not be made on or after the tenth anniversary of the date of its
adoption, but awards granted prior to such date may extend beyond that date.
Types of Awards. The Plan provides for the grant of any or all of the
following types of awards: (i) stock options, including incentive stock options
and non-qualified stock options; (ii) stock appreciation rights, in tandem with
stock options or freestanding; (iii) restricted stock; and (iv)
performance-based awards.
15
<PAGE>
Stock Options. Options may be in the form of incentive stock options or
non-qualified stock options. The Committee will, with regard to each stock
option, determine the number of shares subject to the option, the term of the
option (which shall not exceed ten years, provided, however, that the term of an
incentive stock option granted to a 10% stockholder of the Company shall not
exceed five years), the exercise price per share of stock subject to the option,
the vesting schedule (if any), and the other material terms of the option. No
stock option may have an exercise price less than the fair market value (as
defined in the Plan) of the Common Stock at the time of grant (or, in the case
of an incentive stock option granted to a 10% stockholder of the Company, 110%
of the fair market value of the Common Stock).
The exercise price upon exercise may be paid in cash, shares of Common
Stock owned by the recipient for at least six months and for which the recipient
has good title free and clear of any liens or encumbrances or, if the Common
Stock is traded on a national securities exchange, through the delivery of
irrevocable instructions to a broker to deliver to the Company an amount equal
to the exercise price. The Committee may also provide, at the time of grant,
that the shares to be issued upon the exercise of a stock option be in the form
of restricted stock or may, in the stock option agreement, reserve a right to do
so after the time of grant.
Stock Appreciation Rights ("SARs"). The Committee may grant SARs either
with a stock option ("Tandem SARs") or independent of a stock option
("Non-Tandem SARs"). An SAR is a right to receive a payment either in cash or
Common Stock as the Committee may determine, equal in value to the excess of the
fair market value of a share of Common Stock on the date of exercise over the
reference price per share of Common Stock established in connection with the
grant of the SAR. The reference price per share covered by an SAR will be the
per share exercise price of the related option in the case of a Tandem SAR and
will be the per share fair market value of common stock on the date of the grant
in the case of a Non-Tandem SAR. The Committee may also grant "limited SARs,"
either as Tandem SARs or Non-Tandem SARs, which may become exercisable only upon
the occurrence of a Change in Control (as defined in the Plan) or such other
event as the Committee may, in its sole discretion, designate at the time of
grant or thereafter.
Restricted Stock. The Committee may award shares of restricted stock. Upon
the award of restricted stock, the recipient has all rights of a stockholder
with respect to the shares, including, without limitation, the right to receive
dividends, the right to vote such shares and, subject to and conditioned upon
the full vesting of the shares of restricted stock, the right to tender such
shares. Unless otherwise determined by the Committee at grant, the payment of
dividends, if any, shall be deferred until the date that the relevant share of
restricted stock vests.
Recipients of restricted stock are required to enter into a restricted
stock award agreement with the Company which states that the restrictions to
which the shares are subject and the criteria or date or dates on which such
restrictions will lapse. Within these limits, based on service, attainment of
performance goals, and such other factors as the Committee may determine in its
sole discretion, or a combination thereof, the Committee may provide for the
lapse of such restrictions in installments in whole or in part or may accelerate
or waive such restrictions at any time. If the lapse of the relevant restriction
is based on the attainment of performance goals, the Committee shall establish
the goals, formulae or standards and the applicable vesting percentage for the
restricted stock awards applicable to recipients.
16
<PAGE>
Performance-Based Awards. The Committee may award Common Stock and other
awards that are valued in whole or in part by reference to, or are payable in or
otherwise based on, Common Stock either alone or in addition to or in tandem
with stock options, stock appreciation rights, or restricted stock. Such awards
shall be subject to such terms and conditions as the Committee may prescribe.
Amendment and Termination. The Plan provides that it may be amended, in
whole or in part, suspended or terminated by the Board of Directors, except that
no such amendment, suspension or termination, without stockholder approval to
the extent such approval is required by applicable state law, the applicable
provisions of Rule 16b-3 of the Exchange Act or for the exception for
performance-based compensation under Section 162(m) of the Code or to the extent
applicable to incentive stock options, Section 422 of the Code, may increase the
aggregate number of shares of Common Stock reserved for awards or the maximum
individual limits, change the classification of employees eligible to receive
awards, decrease the minimum exercise price of any stock option, extend the
maximum option period under the Plan or to make any other amendment that would
require stockholder approval under the Code, Rule 16b-3 of the Exchange Act or
the rules of any exchange or system on which the Company's securities are listed
or traded.
Share and Other Limitations. A maximum of 1,500,000 shares of Common Stock
may be issued or used for reference purposes pursuant to the Plan. The maximum
number of shares of Common Stock subject to stock options or SARs that may be
granted to any individual under the Plan shall be 250,000 for any fiscal year of
the Company during the term of the Plan. If an SAR or a limited SAR is granted
in tandem with a stock option, it shall apply against the individual limits for
both stock options and SARs, but only once against the maximum number of shares
available under the Plan. To the extent that shares of Common Stock for which
stock options or SARs are permitted to be granted to a recipient during a
calendar year are not covered by a grant of a stock option or an SAR during the
calendar year, such shares of Common Stock shall not be available for grant or
issuance to the recipient in any subsequent calendar year during the term of
this Plan.
The Committee may make appropriate adjustments to the number of shares
available for awards and the terms of outstanding awards under the Plan to
reflect any change in the Company's capital structure or business, stock
dividend, stock split, recapitalization, reorganization, merger, consolidation
or sale of all or substantially all the assets of the Company.
Change in Control. Unless determined otherwise by the Committee at the
time of grant, upon a Change in Control (as defined in the Plan), all vesting
and forfeiture conditions, restrictions and limitations in effect with respect
to any outstanding award will immediately lapse and any unvested awards will
automatically become 100% vested. The Committee may also, in its sole
discretion, provide for accelerated vesting of an award at any time.
Miscellaneous. Although awards will generally be nontransferable (except
by will or the laws of descent and distribution), the Committee may determine at
the time of grant or thereafter that a non-qualified stock option that is
otherwise nontransferable is transferable in whole or in part and in such
circumstances, and under such conditions, as specified by the Committee.
17
<PAGE>
Certain U.S. Federal Income Tax Consequences.
The rules concerning the federal income tax consequences with respect to
stock options granted pursuant to the Plan are highly technical. In addition,
the applicable statutory provisions are subject to change and their application
may vary in individual circumstances. Therefore, the following is designed to
provide a general understanding of the federal income tax consequences; it does
not set forth any state or local income tax or estate tax consequences that may
be applicable.
Incentive Stock Options. Options granted under the Plan may 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 sale 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 exercise 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 the Common Stock is held for more than eighteen months after the date of
exercise the optionee will be taxed at a lower rate applicable to capital gains
for such optionee. Capital gains rates may be further reduced in the case of a
longer holding period.
If all requirements for incentive stock option treatment other than the
holding period rules are satisfied, the recognition of income by the optionee is
deferred until disposition of the Common Stock, but, in general, any gain (in an
amount equal to the lesser of (i) the fair market value of the Common Stock on
the date of exercise (or, with respect to officers, the date that sale of such
stock would not create liability ("Section 16(b) liability") under Section 16(b)
of the Exchange Act) minus the exercise price or (ii) the amount realized on the
disposition minus the exercise 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 held for at least six months. In general an optionee's
transfer of stock acquired pursuant to the exercise of 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
within the two-year or one-year holding periods discussed above, the optionee
may realize ordinary income under the rules summarized above.
Non-Qualified Stock Options. An optionee will realize no taxable income at
the time he or she 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. Ordinary income will be realized when a
non-qualified stock option is exercised, provided the Common Stock issued is not
restricted stock. The amount of such income will be equal to the excess of the
fair market value on the exercise date
18
<PAGE>
of the shares of Common Stock issued to an optionee over the exercise price. The
optionee's holding period with respect to the shares acquired will begin on the
date of exercise.
The tax basis of the stock acquired upon the exercise of any option will
be equal to the sum of (i) the exercise price of such option and (ii) the amount
included in income with respect to such option. Any gain or loss on a subsequent
sale of the stock will be either a long-term or short-term capital gain or loss,
depending on the optionee's holding period for the stock disposed of. If the
Common Stock issued is restricted stock, different rules may apply. Subject to
the limitation under Sections 162(m) and 280G of the Code (as described below),
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.
Certain Other Tax Issues. In addition, (i) officers of the Company subject
to Section 16(b) liability may be subject to special rules regarding the income
tax consequences concerning their awards; (ii) any entitlement to a tax
deduction on the part of the corporation is subject to the applicable federal
tax rules (including, without limitation, Section 162(m) of the Code regarding
the $1,000,000 limitation on deductible compensation); (iii) in the event that
the exercisability or vesting of any award is accelerated because of a Change in
Control, payments relating to the 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
and may be nondeductible by the Company; and (iv) the exercise of an incentive
stock option may have implications in the computation of alternative minimum
taxable income.
In general, Section 162(m) of the Code denies a publicly held corporation
a deduction for federal income tax purposes for compensation in excess of
$1,000,000 per year per person to its chief executive officer and the four other
officers whose compensation is disclosed in its proxy statement, subject to
certain exceptions. Options and SARs will generally qualify under one of these
exceptions if they are granted under a plan that states the maximum number of
shares with respect to which options and SARs may be granted to any employee
during a specified period and the plan under which the options and SARs are
granted is approved by stockholders and is administered by a compensation
committee comprised of outside directors. The Plan is intended to satisfy these
requirements with respect to options and SARs. Awards of restricted shares and
performance-based awards generally do not satisfy the exception for
performance-based compensation under Section 162(m) of the Code.
The Plan is not subject to any of the requirements of the Employee
Retirement Income Security Act of 1974, as amended. The Plan is not, nor is it
intended to be, qualified under Section 401(a) of the Code.
19
<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.
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 1999
must submit the same in writing so as to be received at the executive office of
the Company on or before January 31, 1999. 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 16, 1998
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.
20
<PAGE>
Exhibit A
CELGENE CORPORATION
1998 LONG-TERM INCENTIVE PLAN
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1. PURPOSE....................................................................................1
ARTICLE 2. DEFINITIONS................................................................................1
ARTICLE 3. ADMINISTRATION.............................................................................5
ARTICLE 4. SHARE AND OTHER LIMITATIONS................................................................8
ARTICLE 5. ELIGIBILITY...............................................................................10
ARTICLE 6. STOCK OPTIONS.............................................................................10
ARTICLE 7. RESTRICTED STOCK AWARDS...................................................................13
ARTICLE 8. STOCK APPRECIATION RIGHTS.................................................................15
ARTICLE 9. PERFORMANCE-BASED AWARDS..................................................................18
ARTICLE 10. NON-TRANSFERABILITY AND TERMINATION PROVISIONS............................................19
ARTICLE 11. CHANGE IN CONTROL PROVISIONS..............................................................21
ARTICLE 12. TERMINATION OR AMENDMENT OF THE PLAN......................................................23
ARTICLE 13. UNFUNDED STATUS OF PLAN...................................................................24
ARTICLE 14. GENERAL PROVISIONS........................................................................24
ARTICLE 15. APPROVAL OF BOARD AND STOCKHOLDERS........................................................27
ARTICLE 16. TERM OF PLAN..............................................................................27
ARTICLE 17. NAME OF PLAN..............................................................................27
</TABLE>
i
<PAGE>
Celgene Corporation
1998 Long-Term Incentive Plan
ARTICLE 1.
PURPOSE
The purpose of this Celgene Corporation 1998 Long-Term Incentive Plan
(the "Plan") is to enhance the profitability and value of the Company and its
Affiliates for the benefit of its stockholders by enabling the Company to offer
selected management (excluding Non-Employee Directors) and other employees of
the Company and its Affiliates, stock based incentives and other equity
interests in the Company, thereby creating a means to raise the level of stock
ownership by employees in order to attract, retain and reward such employees and
strengthen the mutuality of interests between employees and the Company's
stockholders.
ARTICLE 2.
DEFINITIONS
For purposes of this Plan, the following terms shall have the
following meanings:
2.1. "Affiliate" shall mean other than the Company, (i) any
Subsidiary, (ii) any corporation in an unbroken chain of corporations
ending with the Company which owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the
other corporations in such chain, (iii) any corporation, trade or
business (including, without limitation, a partnership or limited
liability company) which is controlled 50% or more (whether by
ownership of stock, assets or an equivalent ownership interest or
voting interest) by the Company or one of its Affiliates, or (iv) any
other entity, approved by the Committee as an Affiliate under the
Plan, in which the Company or any of its Affiliates has a material
equity interest.
2.2. "Award" shall mean any award under this Plan of any Stock
Option, Restricted Stock, Stock Appreciation Right, or
Performance-Based Award. All Awards, shall be granted by, confirmed
by, and subject to the terms of, a written agreement executed by the
Company and the Participant.
2.3. "Board" or "Board of Directors" shall mean the Board of
Directors of the Company.
2.4. "Cause" shall mean, with respect to a Participant's
Termination of Employment: (i) in the case where there is no
employment agreement, consulting
<PAGE>
agreement, change in control agreement or similar agreement in effect
between the Company or an Affiliate and the Participant at the time of
the relevant grant or Award, or where there is an employment
agreement, consulting agreement, change in control agreement or
similar agreement in effect at the time of the relevant grant or Award
but such agreement does not define "cause" (or words of like import),
termination due to a Participant's dishonesty, fraud, insubordination,
willful misconduct, refusal to perform services (for any reason other
than illness or incapacity) or materially unsatisfactory performance
of his or her duties for the Company or an Affiliate or (ii) in the
case where there is an employment agreement, consulting agreement,
change in control agreement or similar agreement in effect between the
Company or an Affiliate and the Participant at the time of the
relevant grant or Award that defines "cause" (or words of like import)
and a "cause" termination would be permitted under such agreement at
that time, termination that is or would be deemed to be for "cause"
(or words of like import) as defined under such agreement; provided,
that with regard to any agreement that conditions "cause" on
occurrence of a change in control, such definition of "cause" shall
not apply until a change in control actually takes place and then only
with regard to a termination thereafter.
2.5. "Change in Control" shall have the meaning set forth in
Article 11.
2.6. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
2.7. "Committee" shall mean a Management Compensation and
Development Committee or such other committee or subcommittee
appointed from time to time by the Board, which shall be intended to
consist of two (2) or more non-employee directors, each of whom shall
be, to the extent required by Rule 16b-3 (as defined herein), a
"non-employee director" as defined in Rule 16b-3 and, to the extent
required by Section 162(m) of the Code and any regulations thereunder,
an "outside director" as defined under Section 162(m) of the Code.
Notwithstanding the foregoing, if and to the extent that no Committee
exists which has the authority to administer the Plan, the functions
of the Committee shall be exercised by the Board. If for any reason
the appointed Committee does not meet the requirements of Rule 16b-3
or Section 162(m) of the Code, such noncompliance with the
requirements of Rule 16b-3 or Section 162(m) of the Code shall not
affect the validity of the Awards, grants, interpretations or other
actions of the Committee.
2.8. "Common Stock" means the common stock, $.01 par value per
share, of the Company.
2.9. "Company" means Celgene Corporation, a Delaware
corporation, and its successors by merger, consolidation or otherwise.
2.10. "Disability" shall mean, with respect to an Eligible
Employee, a permanent and total disability as defined in Section
22(e)(3) of the Code. A Disability
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shall only be deemed to occur at the time of the determination by the
Committee or the Board, as the case may be, of the Disability.
2.11. "Effective Date" shall mean May 4, 1998,
subject to Article 15.
2.12. "Eligible Employees" shall mean the employees of the
Company and its Affiliates who are eligible pursuant to Article 5 to
be granted Awards under this Plan.
2.13. "Exchange Act" shall mean the Securities Exchange Act of
1934.
2.14. "Fair Market Value" for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any
regulations issued thereunder, shall mean, as of any date the last
sales price reported for the Common Stock on the applicable date (i)
as reported by the principal national securities exchange in the
United States on which it is then traded, or (ii) if not traded on any
such national securities exchange, as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers.
For purposes of the exercise of any Stock Appreciation Right the
applicable date shall be the date a notice of exercise is received by
the Committee or, if not a day on which the applicable market is open,
the next day that it is open.
2.15. "Incentive Stock Option" shall mean any Stock Option
awarded under this Plan intended to be and designated as an "Incentive
Stock Option" within the meaning of Section 422 of the Code.
2.16. "Limited Stock Appreciation Right" shall mean an Award
made pursuant to Section 8.5 of the Plan which may be a Tandem Stock
Appreciation Right or a Non-Tandem Stock Appreciation Right.
2.17. "Non-Employee Director" shall mean a director of the
Company who is not an active employee of the Company or an Affiliate.
2.18. "Non-Qualified Stock Option" shall mean any Stock Option
awarded under this Plan that is not an Incentive Stock Option.
2.19. "Participant" shall mean an Eligible Employee to whom an
Award has been made pursuant to this Plan.
2.20. "Performance-Based Award" shall mean an Award made
pursuant to Article 9 of this Plan of the right to receive awards of
Common Stock and other Awards that are valued in whole or in part by
reference to, or are payable in or otherwise based on, Common Stock.
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2.21. "Performance Period" shall have the meaning set forth in
Section 9.1.
2.22. "Restricted Stock" shall mean an award of shares of
Common Stock under this Plan that is subject to restrictions under
Article 7.
2.23. "Restriction Period" shall have the meaning set forth in
Subsection 7.3(a) with respect to Restricted Stock for Eligible
Employees.
2.24. "Retirement" shall mean a Participant's Termination of
Employment without Cause at or after age fifty-five (55).
2.25. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b)
of the Exchange Act as then in effect or any successor provisions.
2.26. "Section 162(m) of the Code" shall mean the exception
for performance-based compensation under Section 162(m) of the Code
and any Treasury regulations thereunder.
2.27. "Stock Appreciation Right" shall mean the right
(pursuant to an Award granted under Article 8). A Tandem Stock
Appreciation Right shall mean the right to surrender to the Company
all (or a portion) of a Stock Option in exchange for an amount in cash
or stock equal to the excess of (i) the Fair Market Value, on the date
such Stock Option (or such portion thereof) is surrendered, of the
Common Stock covered by such Stock Option (or such portion thereof),
over (ii) the aggregate exercise price of such Stock Option (or such
portion thereof). A Non-Tandem Stock Appreciation Right shall mean the
right to receive an amount in cash or stock equal to the excess of (x)
the Fair Market Value of a share of Common Stock on the date such
right is exercised, over (y) the aggregate exercise price of such
right, otherwise than on surrender of a Stock Option.
2.28. "Stock Option" or "Option" shall mean any option to
purchase shares of Common Stock granted to Eligible Employees pursuant
to Article 6.
2.29. "Subsidiary" shall mean any subsidiary corporation of
the Company within the meaning of Section 424(f) of the Code.
2.30. "Ten Percent Stockholder" shall mean a person owning
stock of the Company possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or
its Subsidiaries or its parent corporations, as defined in Section
424(e) of the Code.
2.31. "Termination of Employment" shall mean (i) a termination
of service (for reasons other than a military or personal leave of
absence granted by the Company) of a Participant from the Company and
its Affiliates or (ii) when an entity which is
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employing a Participant ceases to be an Affiliate, unless the
Participant thereupon becomes employed by the Company or another
Affiliate.
2.32. "Transfer" or "Transferred" or "Transferable" shall mean
anticipate, alienate, attach, sell, assign, pledge, encumber, charge,
hypothecate or otherwise transfer.
ARTICLE 3.
ADMINISTRATION
3.1. The Committee. The Plan shall be administered and
interpreted by the Committee.
3.2. Awards. The Committee shall have full authority to
grant to Eligible Employees, pursuant to the terms of this Plan: (i) Stock
Options, (ii) Restricted Stock, (iii) Stock Appreciation Rights, and (iv)
Performance-Based Awards. In particular, the Committee shall have the authority:
(a) to select the Eligible Employees to whom Stock
Options, Restricted Stock, Stock Appreciation Rights, and
Performance-Based Awards may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock
Options, Restricted Stock, Stock Appreciation Rights, and
Performance-Based Awards or any combination thereof, are to be granted
hereunder to one or more Eligible Employees;
(c) to determine, in accordance with the terms of
this Plan, the number of shares of Common Stock to be covered by each
Award to an Eligible Employee granted hereunder;
(d) to determine the terms and conditions, not
inconsistent with the terms of this Plan, of any Award granted
hereunder to an Eligible Employee (including, but not limited to, the
exercise or purchase price, any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or
waiver thereof, regarding any Stock Option or other Award, and the
shares of Common Stock relating thereto, based on such factors, if
any, as the Committee shall determine, in its sole discretion);
(e) to determine whether and under what circumstances
a Stock Option may be settled in cash and/or Common Stock under
Section 6.3(d);
(f) to determine whether, to what extent and under
what circumstances to provide loans (which may be on a recourse basis
and shall bear
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interest at the rate the Committee shall provide) to Eligible
Employees in order to exercise Options under this Plan;
(g) to determine whether to require an Eligible
Employee, as a condition of the granting of any Award, to not sell or
otherwise dispose of shares acquired pursuant to the exercise of an
Option or as an Award for a period of time as determined by the
Committee, in its sole discretion, following the date of the
acquisition of such Option or Award; and
(h) to determine whether a Stock Appreciation Right
is a Tandem Stock Appreciation Right or Non-Tandem Stock Appreciation
Right.
3.3. Guidelines. Subject to Article 12 hereof, the Committee
shall have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including the
delegation of its administrative responsibilities, as it shall, from time to
time, deem advisable; to construe and interpret the terms and provisions of this
Plan and any Award issued under this Plan (and any agreements relating thereto);
and to otherwise supervise the administration of this Plan. The Committee may
correct any defect, supply any omission or reconcile any inconsistency in this
Plan or in any agreement relating thereto in the manner and to the extent it
shall deem necessary to carry this Plan into effect but only to the extent any
such action would be permitted under the applicable provisions of Rule 16b-3 and
Section 162(m) of the Code. The Committee may adopt special guidelines and
provisions for persons who are residing in, or subject to, the taxes of,
countries other than the United States to comply with applicable tax and
securities laws and may impose any limitations and restrictions that they deem
necessary to comply with the applicable tax and securities laws of such
countries other than the United States. To the extent applicable, the Plan is
intended to comply with the applicable requirements of Rule 16b-3 and the
exception for performance-based compensation under Section 162(m) of the Code
with regard to Options and Stock Appreciation Rights and shall be limited,
construed and interpreted in a manner so as to comply therewith.
3.4. Decisions Final. Any decision, interpretation or other
action made or taken in good faith by or at the direction of the Company, the
Board, or the Committee (or any of its members) arising out of or in connection
with the Plan shall be within the absolute discretion of all and each of them,
as the case may be, and shall be final, binding and conclusive on the Company
and all employees and Participants and their respective heirs, executors,
administrators, successors and assigns.
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3.5. Reliance on Counsel. The Company, the Board or the
Committee may consult with legal counsel, who may be counsel for the Company or
other counsel, with respect to its obligations or duties hereunder, or with
respect to any action or proceeding or any question of law, and shall not be
liable with respect to any action taken or omitted by it in good faith pursuant
to the advice of such counsel.
3.6. Procedures. If the Committee is appointed, the Board
shall designate one of the members of the Committee as chairman and the
Committee shall hold meetings, subject to the By-Laws of the Company, at such
times and places as it shall deem advisable. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of the members present. Any decision or determination reduced to
writing and signed by all the Committee members in accordance with the By-Laws
of the Company, shall be fully as effective as if it had been made by a vote at
a meeting duly called and held. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
3.7. Designation of Consultants/Liability.
(a) The Committee may designate employees of the
Company and professional advisors to assist the Committee in the
administration of the Plan and may grant authority to employees to
execute agreements or other documents on behalf of the Committee.
(b) The Committee may employ such legal counsel,
consultants, appraisers and agents as it may deem desirable for the
administration of the Plan and may rely upon any opinion received from
any such counsel, appraiser or consultant and any computation received
from any such consultant, appraiser or agent. Expenses incurred by the
Committee in the engagement of any such counsel, consultant or agent
shall be paid by the Company. The Board, the Committee, its members and
any employee of the Company designated pursuant to paragraph (a) above
shall not be liable for any action or determination made in good faith
with respect to the Plan. To the maximum extent permitted by applicable
law, no officer or employee of the Company or member or former member
of the Committee or of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any Award
granted under it. To the maximum extent permitted by applicable law and
the Certificate of Incorporation and By-Laws of the Company and to the
extent not covered by insurance, each officer, employee of the Company
and member or former member of the Committee or of the Board shall be
indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to
the Company) or liability (including any sum paid in settlement of a
claim with the approval of the Company), and advanced amounts necessary
to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with
the Plan, except to the extent arising out of such officer's,
employee's, member's or former member's own fraud or bad faith. Such
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indemnification shall be in addition to any rights of indemnification
the officers, employees, directors or members or former officers,
directors or members may have under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or Affiliates.
Notwithstanding anything else herein, this indemnification will not
apply to the actions or determinations made by an individual with
regard to Awards granted to him or her under this Plan.
ARTICLE 4.
SHARE AND OTHER LIMITATIONS
4.1. Shares.
(a) General Limitation. The aggregate number of
shares of Common Stock which may be issued or used for reference
purposes under this Plan or with respect to which all Awards may be
granted shall not exceed 1,500,000 shares (subject to any increase or
decrease pursuant to Section 4.2). If any Option or Stock Appreciation
Right granted under this Plan expires, terminates or is canceled for
any reason without having been exercised in full, the number of shares
of Common Stock underlying any unexercised Stock Appreciation Right or
Option shall again be available for the purposes of Awards under the
Plan. If any shares of Restricted Stock awarded under this Plan to a
Participant are forfeited for any reason, the number of forfeited
shares of Restricted Stock shall again be available for the purposes of
Awards under the Plan. If a Tandem Stock Appreciation Right or a
Limited Stock Appreciation Right is granted in tandem with an Option,
such grant shall only apply once against the maximum number of shares
of Common Stock which may be issued under this Plan.
(b) Individual Participant Limitations. (i) The
maximum number of shares of Common Stock subject to any Option
which may be granted under this Plan during any fiscal year of
the Company to each Eligible Employee shall be 250,000 shares
(subject to any increase or decrease pursuant to Section 4.2).
(ii) The maximum number of shares of Common
Stock subject to any Stock Appreciation Right which may be
granted under this Plan during any fiscal year of the Company
to each Eligible Employee shall be 250,000 shares (subject to
any increase or decrease pursuant to Section 4.2). If a Tandem
Stock Appreciation Right or Limited Stock Appreciation Right
is granted in tandem with an Option it shall apply against the
Eligible Employee's individual share limitations for both
Stock Appreciation Rights and Options.
(iii) To the extent that shares of Common
Stock for which Options or Stock Appreciation Rights are
permitted to be granted to a Participant pursuant to Section
4.1(b) during a calendar year of the Company
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are not covered by a grant of an Option or a Stock
Appreciation Right in the Company's calendar year, such shares
of Common Stock shall not be available for grant or issuance
to the Participant in any subsequent calendar year during the
term of this Plan.
4.2. Changes.
(a) The existence of the Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board
or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's
capital structure or its business, any merger or consolidation of the
Company or its Affiliates, any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting Common Stock, the
dissolution or liquidation of the Company or its Affiliates, any sale
or transfer of all or part of its assets or business or any other
corporate act or proceeding.
(b) In the event of any such change in the capital
structure or business of the Company by reason of any stock dividend or
distribution, stock split or reverse stock split, recapitalization,
reorganization, merger, consolidation, split-up, combination or
exchange of shares, distribution with respect to its outstanding Common
Stock or capital stock other than Common Stock, reclassification of its
capital stock, conversion of the Company's preferred stock, issuance of
warrants or options to purchase any Common Stock or securities
convertible into Common Stock, any sale or Transfer of all or part of
the Company's assets or business, or any similar change affecting the
Company's capital structure or business, then the aggregate number and
kind of shares which thereafter may be issued under this Plan, the
number and kind of shares or other property (including cash) to be
issued upon exercise of an outstanding Option or other Awards granted
under this Plan and the purchase price thereof shall be appropriately
adjusted consistent with such change in such manner as the Committee
may deem equitable to prevent substantial dilution or enlargement of
the rights granted to, or available for, Participants under this Plan,
and any such adjustment determined by the Committee in good faith shall
be binding and conclusive on the Company and all Participants and
employees and their respective heirs, executors, administrators,
successors and assigns.
(c) Fractional shares of Common Stock resulting from
any adjustment in Options or Awards pursuant to Section 4.2(a) or (b)
shall be aggregated until, and eliminated at, the time of exercise by
rounding-down for fractions less than one-half (1/2) and rounding-up
for fractions equal to or greater than one-half (1/2). No cash
settlements shall be made with respect to fractional shares eliminated
by rounding. Notice of any adjustment shall be given by the Committee
to each Participant whose Option or Award has been adjusted and such
adjustment (whether or not such notice is given) shall be effective and
binding for all purposes of the Plan.
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(d) In the event of a merger or consolidation in
which the Company is not the surviving entity or in the event of any
transaction that results in the acquisition of substantially all of the
Company's outstanding Common Stock by a single person or entity or by a
group of persons and/or entities acting in concert, or in the event of
the sale or transfer of all or substantially all of the Company's
assets (all of the foregoing being referred to as "Acquisition
Events"), then the Committee may, in its sole discretion, terminate all
outstanding Options and Stock Appreciation Rights of Eligible
Employees, effective as of the date of the Acquisition Event, by
delivering notice of termination to each such Participant at least
twenty (20) days prior to the date of consummation of the Acquisition
Event; provided, that during the period from the date on which such
notice of termination is delivered to the consummation of the
Acquisition Event, each such Participant shall have the right to
exercise in full all of his or her Options and Stock Appreciation
Rights that are then outstanding (without regard to any limitations on
exercisability otherwise contained in the Option or Award Agreements)
but contingent on occurrence of the Acquisition Event, and, provided
that, if the Acquisition Event does not take place within a specified
period after giving such notice for any reason whatsoever, the notice
and exercise shall be null and void.
If an Acquisition Event occurs, to the extent the Committee does not
terminate the outstanding Options and Stock Appreciation Rights pursuant to this
Section 4.2(d), then the provisions of Section 4.2(b) shall apply.
4.3. Purchase Price. Notwithstanding any provision of this
Plan to the contrary, if authorized but previously unissued shares of Common
Stock are issued under this Plan, such shares shall not be issued for a
consideration which is less than as permitted under applicable law.
ARTICLE 5.
ELIGIBILITY
All management (excluding Non-Employee Directors) and other
employees of the Company and its Affiliates are eligible to be granted Options,
Restricted Stock, Stock Appreciation Rights, and Performance-Based Awards under
this Plan. Eligibility under this Plan shall be determined by the Committee in
its sole and absolute discretion.
ARTICLE 6.
STOCK OPTIONS
6.1. Options. Each Stock Option granted hereunder shall be one
of two types: (i) an Incentive Stock Option intended to satisfy the requirements
of Section 422 of the Code or (ii) a Non-Qualified Stock Option.
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6.2. Grants. The Committee shall have the authority to grant
to any Eligible Employee one or more Incentive Stock Options, Non-Qualified
Stock Options, or both types of Stock Options (in each case with or without
Stock Appreciation Rights). To the extent that any Stock Option does not qualify
as an Incentive Stock Option (whether because of its provisions or the time or
manner of its exercise or otherwise), such Stock Option or the portion thereof
which does not qualify, shall constitute a separate Non-Qualified Stock Option.
Notwithstanding any other provision of this Plan to the contrary or any
provision in an agreement evidencing the grant of an Option to the contrary, any
Option granted to an Eligible Employee of an Affiliate (other than one described
in Section 2.1 (i) or (ii)) shall be a Non-Qualified Stock Option.
6.3. Terms of Options. Options granted under Article 6 of this
Plan shall be subject to Article 10 and the following terms and conditions, and
shall be in such form and contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem desirable:
(a) Option Price. The option price per share of
Common Stock purchasable under an Incentive Stock Option or a
Non-Qualified Stock Option shall be determined by the Committee at the
time of grant but shall not be less than 100% of the Fair Market Value
of the share of Common Stock at the time of grant; provided, however,
if an Incentive Stock Option is granted to a Ten Percent Stockholder,
the purchase price shall not be less than 110% of the Fair Market
Value of the share of Common Stock at the time of grant.
(b) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Stock Option shall be exercisable
more than ten (10) years after the date the Option is granted;
provided, however, that the term of an Incentive Stock Option granted
to a Ten Percent Stockholder may not exceed five (5) years.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at grant. If the
Committee provides, in its discretion, that any Stock Option is
exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitations on the
exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Committee may waive the
installment exercise provisions or accelerate the time at which
Options may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever
installment exercise and waiting period provisions apply under
subsection (c) above, Stock Options may be exercised in whole or in
part at any time during the Option term, by giving written
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notice of exercise to the Company specifying the number of shares to
be purchased. Such notice shall be accompanied by payment in full of
the purchase price as follows: (i) in cash or by check, bank draft or
money order payable to the order of Company, (ii) if the Common Stock
is traded on a national securities exchange, the Nasdaq Stock Market,
Inc. or quoted on a national quotation system sponsored by the
National Association of Securities Dealers, through the delivery of
irrevocable instructions to a broker to deliver promptly to the
Company an amount equal to the purchase price, (iii) by payment in
full or part in the form of Common Stock owned by the Participant for
a period of at least 6 months (and for which the Participant has good
title free and clear of any liens and encumbrances) based on the Fair
Market Value of the Common Stock on the payment date as determined by
the Committee or the Board or (iv) on such other terms and conditions
as may be acceptable to the Committee or the Board, as applicable. No
shares of Common Stock shall be issued until payment therefor, as
provided herein, has been made or provided for.
(e) Incentive Stock Option Limitations. To the extent
that the aggregate Fair Market Value (determined as of the time of
grant) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an Eligible Employee
during any calendar year under the Plan and/or any other stock option
plan of the Company or any Subsidiary or parent corporation (within the
meaning of Section 424(e) of the Code) exceeds $100,000, such Options
shall be treated as Options which are not Incentive Stock Options. In
addition, if an Eligible Employee does not remain employed by the
Company, any Subsidiary or parent corporation (within the meaning of
Section 424(e) of the Code) at all times from the time the Option is
granted until three (3) months prior to the date of exercise (or such
other period as required by applicable law), such Option shall be
treated as an Option which is not an Incentive Stock Option.
Should the foregoing provision not be necessary in order for
the Stock Options to qualify as Incentive Stock Options, or should any
additional provisions be required, the Committee may amend the Plan
accordingly, without the necessity of obtaining the approval of the
stockholders of the Company.
Without the written consent of the Company, no Common Stock
acquired by a Participant upon the exercise of an Incentive Stock
Option granted hereunder may be disposed of by the Participant within
two (2) years from the date such Incentive Stock Option was granted,
nor within one (1) year after the transfer of such Common Stock to the
Participant; 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.
(f) Form of Options. Subject to the terms and
conditions and within the limitations of the Plan, an Option shall be
evidenced by such form of agreement or grant as is approved by the
Committee.
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(g) Form of Settlement. In its sole discretion, the
Committee may provide, at the time of grant, that the shares to be
issued upon the exercise of a Stock Option shall be in the form of
Restricted Stock, or may, in the Option agreement, reserve a right to
so provide after the time of grant.
(h) Other Terms and Conditions. Options may contain
such other provisions, which shall not be inconsistent with any of the
foregoing terms of the Plan, as the Committee shall deem appropriate
including, without limitation, permitting "reloads." With regard to
such "reloads", 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 (6) months prior to such date of
surrender in accordance with the Plan and the terms and conditions of
the Option agreement. Any 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.
ARTICLE 7.
RESTRICTED STOCK AWARDS
7.1. Awards of Restricted Stock. Shares of Restricted Stock
may be issued to Eligible Employees either alone or in addition to other Awards
granted under the Plan. The Committee shall determine the eligible persons to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the price (if any) to be paid by the
recipient (subject to Section 7.2), the time or times within which such Awards
may be subject to forfeiture, the vesting schedule and rights to acceleration
thereof, and all other terms and conditions of the Awards. The Committee may
condition the grant of Restricted Stock upon the attainment of specified
performance goals or such other factors as the Committee may determine, in its
sole discretion.
7.2. Awards and Certificates. An Eligible Employee selected to
receive Restricted Stock shall not have any rights with respect to such Award,
unless and until such Participant has delivered a fully executed copy of the
Restricted Stock Award agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
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(a) Purchase Price. The purchase price of Restricted
Stock shall be fixed by the Committee. Subject to Section 4.3, the
purchase price for shares of Restricted Stock may be the minimum
permitted by applicable law.
(b) Acceptance. Awards of Restricted Stock must be
accepted within a period of ninety (90) days (or such shorter period as
the Committee may specify at grant) after the Award date, by executing
a Restricted Stock Award agreement and by paying whatever price (if
any) the Committee has designated thereunder.
(c) Legend. Each Participant receiving a Restricted
Stock Award shall be issued a stock certificate in respect of such
shares of Restricted Stock, unless the Committee elects to use another
system, such as book entries by the transfer agent, as evidencing
ownership of a Restricted Stock Award. Such certificate shall be
registered in the name of such Participant, and shall bear an
appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The anticipation, alienation, attachment, sale,
transfer, assignment, pledge, encumbrance or charge of the shares of
stock represented hereby are subject to the terms and conditions
(including forfeiture) of the Celgene Corporation (the "Company") 1998
Long-Term Incentive Plan and an Agreement entered into between the
registered owner and the Company dated . Copies of such Plan and
Agreement are on file at the principal office of the Company."
(d) Custody. The Committee may require that any stock
certificates evidencing such shares be held in custody by the Company
until the restrictions thereon shall have lapsed, and that, as a
condition of any Restricted Stock Award, the Participant shall have
delivered a duly signed stock power, endorsed in blank, relating to the
Common Stock covered by such Award.
7.3. Restrictions and Conditions on Restricted Stock Awards.
The shares of Restricted Stock awarded pursuant to this Plan shall be subject to
Article 10 and the following restrictions and conditions:
(a) Restriction Period; Vesting and Acceleration of
Vesting. (i) The Participant shall not be permitted to Transfer shares
of Restricted Stock awarded under this Plan during a period set by the
Committee (the "Restriction Period") commencing with the date of such
Award, as set forth in the Restricted Stock Award agreement and such
agreement shall set forth a vesting schedule and any events which would
accelerate vesting of the shares of Restricted Stock. Within these
limits, based on service, attainment of performance goals established
pursuant to Section 7.3(a)(ii) below and/or such other factors or
criteria as the Committee may determine in its sole discretion, the
Committee may provide for the lapse of such restrictions in
installments in whole or in
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part, or may accelerate the vesting of all or any part of any
Restricted Stock Award and/or waive the deferral limitations for all
or any part of any Restricted Stock Award.
(ii) Performance Goals, Formulae or Standards (the
"Performance Goals"). If the lapse of restrictions is based on the
attainment of Performance Goals, the Committee shall establish the
Performance Goals and the applicable vesting percentage of the
Restricted Stock Award applicable to each Participant or class of
Participants in writing prior to the beginning of the applicable
fiscal year or at such later date as otherwise determined by the
Committee and while the outcome of the Performance Goals is
substantially uncertain. Such Performance Goals may incorporate
provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation,
dispositions and acquisitions) and other similar type events or
circumstances.
(b) Rights as Stockholder. Except as provided in this
subsection (b) and subsection (a) above and as otherwise determined by
the Committee, the Participant shall have, with respect to the shares
of Restricted Stock, all of the rights of a holder of shares of Common
Stock of the Company including, without limitation, the right to
receive any dividends, the right to vote such shares and, subject to
and conditioned upon the full vesting of shares of Restricted Stock,
the right to tender such shares. Notwithstanding the foregoing, the
payment of dividends shall be deferred until, and conditioned upon,
the expiration of the applicable Restriction Period, unless the
Committee, in its sole discretion, specifies otherwise at the time of
the Award.
(c) Lapse of Restrictions. If and when the
Restriction Period expires without a prior forfeiture of the
Restricted Stock subject to such Restriction Period, the certificates
for such shares shall be delivered to the Participant. All legends
shall be removed from said certificates at the time of delivery to the
Participant except as otherwise required by applicable law.
ARTICLE 8.
STOCK APPRECIATION RIGHTS
8.1. Tandem Stock Appreciation Rights. Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option (a
"Reference Stock Option") granted under this Plan ("Tandem Stock Appreciation
Rights"). In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant of such Reference Stock Option.
In the case of an Incentive Stock Option, such rights may be granted only at the
time of the grant of such Reference Stock Option.
8.2. Terms and Conditions of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not
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inconsistent with the provisions of this Plan, as shall be determined from time
to time by the Committee, including Article 10 and the following:
(a) Term. A Tandem Stock Appreciation Right or
applicable portion thereof granted with respect to a Reference Stock
Option shall terminate and no longer be exercisable upon the
termination or exercise of the Reference Stock Option, except that,
unless otherwise determined by the Committee, in its sole discretion,
at the time of grant, a Tandem Stock Appreciation Right granted with
respect to less than the full number of shares covered by the Reference
Stock Option shall not be reduced until and then only to the extent the
exercise or termination of the Reference Stock Option causes the number
of shares covered by the Tandem Stock Appreciation Right to exceed the
number of shares remaining available and unexercised under the
Reference Stock Option.
(b) Exercisability. Tandem Stock Appreciation Rights
shall be exercisable only at such time or times and to the extent that
the Reference Stock Options to which they relate shall be exercisable
in accordance with the provisions of Article 6 and Article 8.
(c) Method of Exercise. A Tandem Stock Appreciation
Right may be exercised by an optionee by surrendering the applicable
portion of the Reference Stock Option. Upon such exercise and
surrender, the Participant shall be entitled to receive an amount
determined in the manner prescribed in this Section 8.2. Stock Options
which have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Tandem Stock Appreciation Rights
have been exercised.
(d) Payment. Upon the exercise of a Tandem Stock
Appreciation Right a Participant shall be entitled to receive up to,
but no more than, an amount in cash and/or Common Stock (as chosen by
the Committee in its sole discretion) equal in value to the excess of
the Fair Market Value of one share of Common Stock over the Option
price per share specified in the Reference Stock Option multiplied by
the number of shares in respect of which the Tandem Stock Appreciation
Right shall have been exercised, with the Committee having the right to
determine the form of payment.
(e) Deemed Exercise of Reference Stock Option. Upon
the exercise of a Tandem Stock Appreciation Right, the Reference Stock
Option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Article 4 of the Plan on the number of shares
of Common Stock to be issued under the Plan.
8.3. Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under this Plan.
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8.4. Terms and Conditions of Non-Tandem Stock Appreciation
Rights. Non-Tandem Stock Appreciation Rights granted hereunder shall be subject
to such terms and conditions, not inconsistent with the provisions of this Plan,
as shall be determined from time to time by the Committee, including Article 10
and the following:
(a) Term. The term of each Non-Tandem Stock
Appreciation Right shall be fixed by the Committee, but shall not be
greater than ten (10) years after the date the right is granted.
(b) Exercisability. Non-Tandem Stock Appreciation
Rights shall be exercisable at such time or times and subject to such
terms and conditions as shall be determined by the Committee at grant.
If the Committee provides, in its discretion, that any such right is
exercisable subject to certain limitations (including, without
limitation, that it is exercisable only in installments or within
certain time periods), the Committee may waive such limitation on the
exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Committee may waive the
installment exercise provisions or accelerate the time at which rights
may be exercised), based on such factors, if any, as the Committee
shall determine, in its sole discretion.
(c) Method of Exercise. Subject to whatever
installment exercise and waiting period provisions apply under
subsection (b) above, Non-Tandem Stock Appreciation Rights may be
exercised in whole or in part at any time during the option term, by
giving written notice of exercise to the Company specifying the number
of Non-Tandem Stock Appreciation Rights to be exercised.
(d) Payment. Upon the exercise of a Non-Tandem Stock
Appreciation Right a Participant shall be entitled to receive, for each
right exercised, up to, but no more than, an amount in cash and/or
Common Stock (as chosen by the Committee in its sole discretion) equal
in value to the excess of the Fair Market Value of one share of Common
Stock on the date the right is exercised over the Fair Market Value of
one (1) share of Common Stock on the date the right was awarded to the
Participant.
8.5. Limited Stock Appreciation Rights. The Committee may, in
its sole discretion, grant Tandem and Non-Tandem Stock Appreciation Rights
either as a general Stock Appreciation Right or as a Limited Stock Appreciation
Right. Limited Stock Appreciation Rights may be exercised only upon the
occurrence of a Change in Control or such other event as the Committee may, in
its sole discretion, designate at the time of grant or thereafter. Upon the
exercise of Limited Stock Appreciation Rights, except as otherwise provided in
an Award agreement, the Participant shall receive in cash or Common Stock, as
determined by the Committee, an amount equal to the amount (i) set forth in
Section 8.2(d) with respect to Tandem Stock Appreciation Rights or (ii) set
forth in Section 8.4(d) with respect to Non-Tandem Stock Appreciation Rights.
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ARTICLE 9.
PERFORMANCE-BASED AWARDS
9.1. Performance-Based Awards. Awards of Common Stock and
other Awards that are valued in whole or in part by reference to, or are payable
in or otherwise based on, Common Stock ("Performance-Based Awards") may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights, or Restricted Stock.
Subject to the provisions of this Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
Awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such Awards, and all other conditions of the Awards. The Committee
may also provide for the grant of Common Stock under such Awards upon the
completion of a specified Performance Period.
9.2. Terms and Conditions. Performance-Based Awards made
pursuant to this Article 9 shall be subject to the following terms and
conditions:
(a) Dividends. Unless otherwise determined by the
Committee at the time of Award, subject to the provisions of the Award
agreement and this Plan, the recipient of an Award under this Article 9
shall be entitled to receive, currently or on a deferred basis,
dividends or dividend equivalents with respect to the number of shares
of Common Stock covered by the Award, as determined at the time of the
Award by the Committee, in its sole discretion.
(b) Vesting. Any Award under this Article 9 and any
Common Stock covered by any such Award shall vest or be forfeited to
the extent so provided in the Award agreement, as determined by the
Committee, in its sole discretion.
(c) Waiver of Limitation. In the event of the
Participant's Retirement, Disability or death, or in cases of special
circumstances, the Committee may, in its sole discretion, waive in
whole or in part any or all of the limitations imposed hereunder (if
any) with respect to any or all of an Award under this Article.
(d) Purchase Price. Subject to Section 4.3, Common
Stock issued on a bonus basis under this Article 9 may be issued for no
cash consideration; Common Stock purchased pursuant to a purchase right
awarded under this Article 9 shall be priced as determined by the
Committee.
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ARTICLE 10.
NON-TRANSFERABILITY AND TERMINATION PROVISIONS
The terms and conditions of this Article 10 shall apply to Awards under
this Plan as follows:
10.1. Nontransferability. No Stock Option, Stock Appreciation
Right, or Performance-Based Award shall be Transferable by the Participant
otherwise than by will or by the laws of descent and distribution. All Stock
Options and all Stock Appreciation Rights shall be exercisable, during the
Participant's lifetime, only by the Participant or his or her legal guardian or
representative. Tandem Stock Appreciation Rights shall be Transferable, solely
to the extent permitted above, only with the underlying Stock Option. In
addition, except as provided above, no Stock Option shall be Transferred
(whether by operation of law or otherwise), and no Stock Option shall be subject
to execution, attachment or similar process. Upon any attempt to Transfer any
Stock Option, or in the event of any levy upon any Stock Option by reason of any
execution, attachment or similar process contrary to the provisions hereof, such
Stock Option shall immediately terminate and become null and void.
Notwithstanding the foregoing, the Committee may determine at the time of grant
or thereafter that a Non-Qualified Stock Option that is otherwise not
Transferable pursuant to this Article 10 is Transferable in whole or in part and
in such circumstances, and under such conditions, as specified by the Committee.
Shares of Restricted Stock under Article 7 may not be Transferred prior to the
date on which shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses. No Award shall, except as
otherwise specifically provided by law or herein, be Transferable in any manner,
and any attempt to Transfer any such Award shall be void, and no such Award
shall in any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
Award, nor shall it be subject to attachment or legal process for or against
such person.
10.2. Termination of Employment. The following rules apply
with regard to the Termination of Employment of a Participant:
(a) Termination by Reason of Death. If a
Participant's Termination of Employment is by reason of death, any
Stock Option or Stock Appreciation Right held by such Participant,
unless otherwise determined by the Committee at grant or, if no rights
of the Participant's estate are reduced, thereafter, may be exercised,
to the extent exercisable at the Participant's death, by the legal
representative of the estate, at any time within a period of one (1)
year from the date of such death, but in no event beyond the expiration
of the stated term of such Stock Option or Stock Appreciation Right.
(b) Termination by Reason of Retirement or
Disability. If a Participant's Termination of Employment is by reason
of Retirement or Disability, any
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Stock Option or Stock Appreciation Right held by such Participant,
unless otherwise determined by the Committee at grant or, if no rights
of the Participant are reduced, thereafter, may be exercised, to the
extent exercisable at the Participant's termination, by the
Participant (or the Participant's legal representative to the extent
permitted under Section 14.11 or the legal representative of the
Participant's estate if the Participant dies after termination) at any
time within a period (the "Retirement or Disability Period") which is
the longer of (i) up to ten (10) years after the date of grant of such
Stock Option or Stock Appreciation Right, such period to be set on a
case by case basis by the Committee, or (ii) three (3) years from the
date of such termination; provided, however, that, if the Participant
dies within such Retirement or Disability Period, any unexercised
Stock Option or Stock Appreciation Right held by such Participant
shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one (1) year (or
such other period as the Committee may specify at grant or, if no
rights of the Participant's estate are reduced, thereafter) from the
date of such death, but in no event beyond the expiration of the
stated term of such Stock Option or Stock Appreciation Right.
(c) Voluntary Resignation or Involuntary Termination
Without Cause. If a Participant's Termination of Employment is due to a
voluntary resignation or by involuntary termination without Cause and
such termination occurs prior to, or more than ninety (90) days after,
the occurrence of an event which would be grounds for Termination of
Employment by the Company for Cause (without regard to any notice or
cure period requirements), any Stock Option or Stock Appreciation Right
held by such Participant, unless otherwise determined by the Committee
at grant or, if no rights of the Participant are reduced, thereafter,
may be exercised, to the extent exercisable at termination, by the
Participant at any time within a period of thirty (30) days from the
date of such termination, but in no event beyond the expiration of the
stated term of such Stock Option or Stock Appreciation Right.
(d) Termination for Cause. Unless otherwise
determined by the Committee at grant or, if no rights of the
Participant are reduced, thereafter, if a Participant's Termination of
Employment is for Cause for any reason, any Stock Option or Stock
Appreciation Right held by such Participant shall thereupon terminate
and expire as of the date of termination. In the event the termination
is an involuntary termination without Cause or is a voluntary
resignation within ninety (90) days after occurrence of an event which
would be grounds for Termination of Employment by the Company for Cause
(without regard to any notice or cure period requirement), any Stock
Option or Stock Appreciation Right held by the Participant at the time
of occurrence of the event which would be grounds for Termination of
Employment by the Company for Cause shall be deemed to have terminated
and expired upon occurrence of the event which would be grounds for
Termination of Employment by the Company for Cause.
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(e) Termination of Employment for Restricted Stock.
Subject to the applicable provisions of the Restricted Stock Award
agreement and this Plan, upon a Participant's Termination of Employment
for any reason during the relevant Restriction Period, all Restricted
Stock still subject to restriction will vest or be forfeited in
accordance with the terms and conditions established by the Committee
at grant or thereafter.
(f) Termination of Employment for Performance-Based
Awards. Subject to the applicable provisions of the Award agreement and
this Plan, upon a Participant's Termination of Employment for any
reason, the Performance-Based Award in question will vest or be
forfeited in accordance with the terms and conditions established by
the Committee at grant or thereafter.
ARTICLE 11.
CHANGE IN CONTROL PROVISIONS
11.1. Benefits. In the event of a Change in Control of the
Company (as defined below), except as otherwise provided by the Committee upon
the grant of an Award, the Participant shall be entitled to the following
benefits:
(a) All outstanding Stock Options and the related
Tandem Stock Appreciation Rights and Non-Tandem Stock Appreciation
Rights of such Participant, if any, granted prior to the Change in
Control shall be fully vested and immediately exercisable in their
entirety.
(b) All unvested Restricted Stock and
Performance-Based Awards shall become fully vested upon a Change in
Control, including without limitation, the following: (i) the
restrictions to which any shares of Restricted Stock of a Participant
granted prior to the Change in Control are subject shall lapse as if
the applicable Restriction Period had ended upon such Change in Control
and (ii) the conditions required for vesting of any unvested
Performance-Based Awards shall be deemed to be satisfied upon such
Change in Control.
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11.2. Change in Control. A "Change in Control" shall mean
the occurrence of any of the following:
(a) any person (as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof),
excluding the Company, any subsidiary of the Company and any employee
benefit plan sponsored or maintained by the Company or any subsidiary
of the Company (including any trustee of any such plan acting in his
capacity as trustee), becoming the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act) of securities of the Company
representing thirty percent (30%) of the total combined voting power of
the Company's then outstanding securities;
(b) the merger, consolidation or other business
combination of the Company (a "Transaction"), other than (A) a
Transaction involving only the Company and one or more of its
subsidiaries, or (B) a Transaction immediately following which the
stockholders of the Company immediately prior to the Transaction
continue to have a majority of the voting power in the resulting entity
and no person (other than those covered by the exceptions in (a) above)
becomes the beneficial owner of securities of the resulting entity
representing more than twenty-five percent (25%) of the voting power in
the resulting entity;
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(c) during any period of two (2) consecutive years
beginning on or after the Effective Date, the persons who were members
of the Board immediately before the beginning of such period (the
"Incumbent Directors") ceasing (for any reason other than death) to
constitute at least a majority of the Board or the board of directors
of any successor to the Company, provided that, any director who was
not a director as of the Effective Date shall be deemed to be an
Incumbent Director if such director was elected to the board of
directors by, or on the recommendation of or with the approval of, at
least two-thirds of the directors who then qualified as Incumbent
Directors either actually or by prior operation of the foregoing unless
such election, recommendation or approval occurs as a result of an
actual or threatened election contest (as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act or any
successor provision) or other actual or threatened solicitation of
proxies or contests by or on behalf of a person other than a member of
the Board; or
(d) the approval by the stockholders of the Company
of any plan of complete liquidation of the Company or an agreement for
the sale of all or substantially all of the Company's assets other than
the sale of all or substantially all of the assets of the Company to a
person or persons who beneficially own, directly or indirectly, at
least fifty percent (50%) or more of the combined voting power of the
outstanding voting securities of the Company at the time of such sale.
ARTICLE 12.
TERMINATION OR AMENDMENT OF THE PLAN
Notwithstanding any other provision of this Plan, the Board may at any
time, and from time to time, amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the stockholders of the Company in accordance with the laws of the
State of Delaware, to the extent required by the applicable provisions of Rule
16b-3 or Section 162(m) of the Code, or, with regard to Incentive Stock Options,
Section 422 of the Code, no amendment may be made which would (i) increase the
aggregate number of shares of Common Stock that may be issued under this Plan or
the maximum individual Participant limitations under Section 4.1(b), (ii) change
the classification of employees eligible to receive Awards under this Plan,
(iii) decrease the minimum option price of any Stock Option, (iv) extend the
maximum option period under Section 6.3, or (v) require stockholder approval in
order for the Plan to continue to comply with the applicable provisions of Rule
16b-3 or Section 162(m) of the Code, or, with regard to Incentive Stock Options,
Section 422 of the Code. In no event may the Plan be amended without the
approval of the stockholders of the Company in accordance with the applicable
laws or other requirements to increase the aggregate number of shares of Common
Stock that may be issued under the Plan, decrease the minimum option price of
any Stock
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Option, or to make any other amendment that would require stockholder
approval under the rules of any exchange or system on which the Company's
securities are listed or traded at the request of the Company.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but, subject to Article 4 above or as otherwise
specifically provided herein, no such amendment or other action by the Committee
shall impair the rights of any holder without the holder's consent.
ARTICLE 13.
UNFUNDED STATUS OF PLAN
This Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments as to which a Participant has a fixed
and vested interest but which are not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any rights that are
greater than those of a general creditor of the Company.
ARTICLE 14.
GENERAL PROVISIONS
14.1. Legend. The Committee may require each person receiving
shares of Common Stock pursuant to an Award under the Plan to represent to and
agree with the Company in writing that the Participant is acquiring the shares
without a view to distribution thereof, and that any subsequent offer for sale
or sale of any such shares of Common Stock shall be made either pursuant to (i)
a registration statement on an appropriate form under the Securities Act of
1933, which registration statement shall have become effective and shall be
current with respect to the shares of Common Stock being offered and sold, or
(ii) a specific exemption from the registration requirements of the Securities
Act of 1933, and that in claiming such exemption the Participant will, prior to
any offer for sale or sale of shares of Common Stock, obtain a favorable written
opinion, satisfactory in form and substance to the Company, from counsel
acceptable to the Company as to the availability of such exception. In addition
to any legend required by this Plan, the certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on Transfer.
All certificates for shares of Common Stock delivered under
the Plan shall be subject to such stock transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed or any national securities association
system upon whose system the Common Stock is then quoted, any applicable Federal
or state securities law, and any applicable corporate law, and the Committee
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may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions.
14.2. Other Plans. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and, such
arrangements may be either generally applicable or applicable only in specific
cases.
14.3. No Right to Employment. Neither this Plan nor the grant
of any Award hereunder shall give any Participant or other employee any right
with respect to continuance of employment by the Company or any Affiliate, nor
shall there be a limitation in any way on the right of the Company or any
Affiliate by which an employee is employed to terminate his employment at any
time.
14.4. Withholding of Taxes. The Company shall have the right
to deduct from any payment to be made to a Participant, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Participant of, any Federal, state or
local taxes required by law to be withheld. Upon the vesting of Restricted
Stock, or upon making an election under Section 83(b) of the Code, a Participant
shall pay all required withholding to the Company.
At the discretion of the Committee, any such withholding
obligation with regard to any Participant may be satisfied by reducing the
number of shares of Common Stock otherwise deliverable or by delivering shares
of Common Stock already owned. Any fraction of a share of Common Stock required
to satisfy such tax obligations shall be disregarded and the amount due shall be
paid instead in cash by the Participant.
14.5. Listing and Other Conditions.
(a) As long as the Common Stock is listed on a
national securities exchange or system sponsored by a national
securities association, the issue of any shares of Common Stock
pursuant to an Award shall be conditioned upon such shares being listed
on such exchange or system. The Company shall have no obligation to
issue such shares unless and until such shares are so listed, and the
right to exercise any Option with respect to such shares shall be
suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of
the opinion that any sale or delivery of shares of Common Stock
pursuant to an Award is or may in the circumstances be unlawful or
result in the imposition of excise taxes on the Company under the
statutes, rules or regulations of any applicable jurisdiction, the
Company shall have no obligation to make such sale or delivery, or to
make any application or to effect or to maintain any qualification or
registration under the Securities Act of 1933, as amended, or otherwise
with respect to shares of Common Stock or Awards, and the
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right to exercise any Option shall be suspended until, in the opinion
of said counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on the Company.
(c) Upon termination of any period of suspension
under this Section 14.5, any Award affected by such suspension which
shall not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which would
otherwise have become available during the period of such suspension,
but no such suspension shall extend the term of any Option.
14.6. Governing Law. This Plan shall be governed and construed
in accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).
14.7. Construction. Wherever any words are used in this Plan
in the masculine gender they shall be construed as though they were also used in
the feminine gender in all cases where they would so apply, and wherever any
words are used herein in the singular form they shall be construed as though
they were also used in the plural form in all cases where they would so apply.
14.8. Other Benefits. No Award payment under this Plan shall
be deemed compensation for purposes of computing benefits under any retirement
plan of the Company or its Affiliates nor affect any benefits under any other
benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation.
14.9. Costs. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Awards hereunder.
14.10. No Right to Same Benefits. The provisions of Awards
need not be the same with respect to each Participant, and such Awards to
individual Participants need not be the same in subsequent years.
14.11. Death/Disability. The Committee may in its discretion
require the transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require the agreement of the transferee to be bound by all of
the terms and conditions of the Plan. If the Committee shall find, without any
obligation or responsibility of any kind to do so, that any person to whom
payment is payable under this Plan is unable to care for his or her affairs
because of disability, illness or accident, any payment due may be paid to such
person's duly appointed legal representative in such manner and proportions as
the Committee may determine, in it sole discretion. Any such payment shall be a
complete discharge of the liabilities of the Committee and the Board under this
Plan.
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14.12. Section 16(b) of the Exchange Act. All elections and
transactions under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3. The Committee may establish and adopt
written administrative guidelines, designed to facilitate compliance with
Section 16(b) of the Exchange Act, as it may deem necessary or proper for the
administration and operation of the Plan and the transaction of business
thereunder.
14.13. Severability of Provisions. If any provision of the
Plan shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof, and the Plan shall be construed
and enforced as if such provisions had not been included.
14.14. Headings and Captions. The headings and captions herein
are provided for reference and convenience only, shall not be considered part of
the Plan, and shall not be employed in the construction of the Plan.
ARTICLE 15.
APPROVAL OF BOARD AND STOCKHOLDERS
The Plan shall not be effective unless and until approved by the Board
and, solely to the extent required by any applicable law (including without
limitation, approval required under Rule 16b-3, Section 162(m) of the Code or
Section 422 of the Code) or registration or stock exchange rule, approved by the
stockholders of the Company in the manner set forth in such law, regulation or
rule.
ARTICLE 16.
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Plan is adopted or the date of
stockholder approval (if applicable), but Awards granted prior to such tenth
anniversary may extend beyond that date.
ARTICLE 17.
NAME OF PLAN
This Plan shall be known as the Celgene Corporation 1998 Long-Term
Incentive Plan.
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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 LLP, 26th floor, 1585 Broadway, New York, New
York 10036 on Tuesday, June 23, 1998, 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).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR (1), (2), (3) AND (4)
1. ELECTION OF DIRECTORS
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY
(except as marked to the contrary) to vote for all
nominees listed
John W. Jackson, Sol J. Barer, Frank T. Cary, Richard C.E. Morgan,
Walter L. Robb, Lee J. Schroeder, Arthur Hull Hayes, Jr.,
Gilla Kaplan and James Bowman
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL, WRITE THAT
NOMINEE'S NAME ON THE SPACE PROVIDED BELOW:
- ---------------------------------
2. PROPOSAL TO APPROVE THE AMENDMENT OF THE CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON
STOCK FROM 20,000,000 TO 30,000,000
|_| FOR |_| AGAINST |_| ABSTAIN
3. PROPOSAL TO APPROVE THE CELGENE CORPORATION 1998 LONG-TERM INCENTIVE
PLAN
|_| 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
<PAGE>
5. In their discretion, upon such other matters as may properly come
before 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 ELECTION OF ALL NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND FOR
PROPOSALS 2, 3, AND 4.
|_| I will attend the meeting |_| I will not attend the meeting
Note: Please sign exactly as name appears on this proxy. Where shares are held
by joint tenants, both should sign. If 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 person. If a partnership, please sign in partnership name by an
authorized person.
Dated:
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(Signature)
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
