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
[X] Filed by the Registrant [ ] Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ]Confidential, For Use of the Com-
mission Only (as permitted by
Rule 14a-6(e)(2))
[X] 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
May 8, 2000
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend the
2000 Annual Meeting of Stockholders of Celgene Corporation. The Annual Meeting
will be held on Tuesday, June 20, 2000, beginning at 1:00 p.m., local time, at
the offices of Proskauer Rose LLP, 1585 Broadway, 26th floor, New York, New York
10036. The formal Notice of Annual Meeting is set forth in the enclosed
material.
The matters expected to be acted upon at the meeting are described in the
attached Proxy Statement. During the meeting, stockholders will have the
opportunity to ask questions and comment on the Company's operation.
It is important that your views be represented whether or not you are able
to be present at the Annual Meeting. Please sign and return the enclosed proxy
card promptly.
We appreciate your investment in Celgene Corporation and urge you to return
your proxy card as soon as possible.
Sincerely,
John W. Jackson
Chairman of the Board and
Chief Executive Officer
<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 20, 2000, at 1:00 p.m., local time, for the
following purposes:
1. to elect nine directors;
2. to amend the 1998 Long-Term Incentive Plan (the "1998 Incentive Plan")
to increase the number of shares that may be subject to awards
thereunder from 4,500,000 to 6,500,000;
3. to ratify the appointment of KPMG LLP as the independent certified
public accountants of the Company for the fiscal year ending December
31, 2000; and
4. to transact any such other business as may properly come before the
Meeting and at any adjournment thereof.
The Board of Directors has fixed the close of business on May 1, 2000 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 8, 2000
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 (the "Meeting" or "Annual Meeting") of the Company to be held on
June 20, 2000, 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 8, 2000.
Only stockholders of record at the close of business on May 1, 2000, the
record date for the Annual Meeting, will be entitled to notice of and to vote at
the Meeting. On the record date the Company had outstanding 64,415,089 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 Annual 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 1998 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.
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 1998 Incentive Plan and FOR the ratification of the appointment
of KPMG LLP as the Company's independent certified public accountants for the
fiscal year ending December 31, 2000.
A majority of the outstanding shares of Common Stock entitled to vote on
the record date, whether present in person or represented by proxy, will
constitute a quorum for the transaction of business at the Annual Meeting and
any adjournment or postponement thereof. Abstentions and broker non-votes will
be counted as present or represented for purposes of establishing a quorum for
the transaction of business.
<PAGE>
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
ratification of the selection of independent public accountants, and approval of
the proposed amendment to the 1998 Incentive Plan, as these items require the
affirmative vote of the shares of Common Stock present and eligible to vote on
such matters.
All shares of Common Stock as set forth in this proxy statement have been
adjusted to reflect the three for one split declared by the Company and paid on
April 14, 2000 (the "Split").
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL ONE: ELECTION OF DIRECTORS
At the Annual 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 or her successor has been elected and qualified. Pursuant to the
Company's By-Laws, the Board of Directors 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 the Board of Directors does not
anticipate, the proxy will be voted for any substitute nominee or nominees who
may be selected by the Board of Directors prior to or at the Meeting, or, if no
substitute is selected by the Board of Directors prior to or at the Meeting, for
a motion to reduce the membership of the Board of Directors to the number of
nominees available. Directors will be elected by an affirmative vote of a
plurality of the votes cast at the Annual Meeting. 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 ....................... 55 Chairman of the Board and Chief Executive
Officer
Sol J. Barer, Ph.D. ................... 52 President, Chief Operating Officer and
Director
Jack L. Bowman ........................ 67 Director
Frank T. Cary ......................... 79 Director
Arthur Hull Hayes, Jr., M.D. .......... 66 Director
Gilla Kaplan, Ph.D. ................... 52 Director
Richard C.E. Morgan ................... 55 Director
Walter L. Robb, Ph.D. ................. 72 Director
Lee J. Schroeder ...................... 71 Director
</TABLE>
John W. Jackson has been our Chairman of the Board and Chief Executive
Officer since January 1996. From February 1991 to January 1996, Mr. Jackson was
President of Gemini Medical, a consulting firm that he founded and which
specialized in services and investment advice to start-up medical device and
biotechnology companies. 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. Mr. Jackson
received a B.A. degree from Yale University and an M.B.A. from INSEAD, France.
2
<PAGE>
Sol J. Barer, Ph.D. has been our President of the Company since October
1993 and our Chief Operating Officer and one of our directors since March 1994.
Dr. Barer was Senior Vice President -- Science and Technology and Vice
President/General Manager -- Chiral Products from October 1990 to October 1993
and our Vice President -- Technology from September 1987 to October 1990. Dr.
Barer received a Ph.D. in organic and physical chemistry from Rutgers
University.
Jack L. Bowman, one of our directors 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., Cellegy
Pharmaceuticals, Targeted Genetics and Osiris Phamaceuticals.
Frank T. Cary has been Chairman of the Executive Committee of our Board of
Directors since July 1990 and has been one of our directors 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., Lexmark
International Inc., Vion Pharmaceuticals Inc. and Teltrend, Inc.
Arthur Hull Hayes, Jr., M.D., one of our directors 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 United States Food and Drug Administration. Dr.
Hayes also is a director of Myriad Genetics, Inc., NaPro BioTherapeutics, Inc.
and Premier Research Worldwide.
Gilla Kaplan, Ph.D., one of our directors 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, and is on the Editorial Board of Microbial Drug
Resistances and Tubercle and Lung Disease. 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.
Richard C.E. Morgan, one of our directors since 1987, is the Chairman and
Chief Executive Officer of incuVest LLC and a Managing Partner of Amphion
Partners LLC, formerly Wolfensohn Partners, L.P. Mr. Morgan is Chairman of the
Board of Directors of Quidel Corp. He also serves on the Board of Directors of
Indigo, N.V., ChromaVision Medical Systems, Inc., and Orbis International, Inc.
Walter L. Robb, Ph.D., one of our directors 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 is Chairman
of the Board of Directors of Capital District Sports. He is also a director of
Cree, Inc., Mechanical Technology, Inc., Plug Power, Inc., Molecular
OptoElectronics, Nextec, R2 Technology, and X-Ray Optical Systems.
3
<PAGE>
Lee J. Schroeder, one of our directors 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 MGI Pharmaceutical, Inc., Ascent Pediatrics,
Inc. and Interneuron Pharmaceuticals, Inc.
--------------------------
The Company's By-Laws provide that nominations for the election of
directors may be made at any annual meeting of the stockholders: (a) by or at
the direction of the Board of Directors (or any duly authorized committee
thereof) or (b) by any stockholder of the Company (i) who is a stockholder of
record on the date of the giving of the notice and on the record date for the
determination of stockholders entitled to vote at such annual meeting and (ii)
who complies with the notice procedures set forth below.
In addition to any other applicable requirements, for a nomination to be
made by a stockholder, such stockholder must have given timely notice thereof in
proper written form to the Secretary of the Company.
To be timely, a stockholder's notice to the Secretary must be delivered to
or mailed and received at the principal executive offices of the Company not
less than sixty (60) days nor more than ninety (90) days prior to the date of
the annual meeting; provided, however, that in the event that less than seventy
(70) days' notice or prior public disclosure of the date of the annual meeting
is given or made to stockholders, notice by the stockholder (in order to be
timely) must be so received not later than the close of business on the tenth
(10th) day following the day on which such notice of the date of the annual
meeting was mailed or such public disclosure of the date of the annual meeting
was made, whichever first occurs.
To be in proper written form, a stockholder's notice to the Secretary must
set forth (a) as to each person whom the stockholder proposes to nominate for
election as a director (i) the name, age, business address and residence address
of theperson, (ii) the principal occupation or employment of the person, (iii)
the class or series and number of shares of capital stock of the Company which
are owned beneficially or of record by the person and (iv) any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filing required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii) the class or
series and number of shares of capital stock of the Company which are owned
beneficially or of record by such stockholder, (iii) a description of all
arrangements or understandings between such stockholder and each proposed
nominee and any other person or persons (including their names) pursuant to
which the nomination(s) are to be made by such stockholder, (iv) a
representation that such stockholder intends to appear in person or by proxy at
the annual meeting to nominate the persons named in his notice and (v) any other
information relating to such stockholder that would be required to be disclosed
in a proxy statement or other filing required to be made in connection with
solicitations of proxies for election of directors pursuant to Section 14 of the
Exchange Act and the rules and regulations promulgated thereunder. Such notice
must be accompanied by a written consent of each proposed nominee to being named
as a nominee and to serve as a director if elected.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth the beneficial ownership of the Common Stock as
of March 31, 2000 (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. All
shares of Common Stock have been adjusted to reflect the Split.
4
<PAGE>
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP CLASS
- --------------------------------------------------- ---------------------- -----------
<S> <C> <C>
John W. Jackson ................................... 1,164,399(1) 1.8%
Sol J. Barer, Ph.D. ............................... 697,284(1)(2) 1.1%
Robert J. Hugin ................................... 35,000(1) *
Frank T. Carey .................................... 293,340 *
Arthur Hull Hayes, Jr., M.D. ...................... 120,000(1) *
Richard C.E. Morgan ............................... 237,270(1)(3) *
Walter L. Robb, Ph.D. ............................. 300,000(1) *
Lee J. Schroeder .................................. 168,000(1) *
Gilla Kaplan ...................................... 50,100(1) *
Jack L. Bowman .................................... 38,100(1) *
All directors and current executive officers of the
Company as a group (ten persons) .................. 3,103,493(4) 4.8%
Pilgram Baxter & Associates, Ltd. .................
825 Duportail Road
Wayne, PA 19087 3,361,200(5) 5.2%
</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
March 31, 2000, as follows: John W. Jackson -- 981,369; Sol J. Barer --
697,239; Robert J. Hugin -- 35,000; Frank T. Cary -- 0; Arthur Hull Hayes,
Jr. -- 120,000; Richard C.E. Morgan -- 75,000 shares; Walter L. Robb --
192,000; Lee J. Schroeder -- 60,000; Gilla Kaplan -- 50,100; Jack Bowman --
35,100. Does not include shares of Common Stock which the directors and
executive officers had the right to acquire through the exercise of options
not exercisable within 60 days of March 31, 2000, as follows: John W.
Jackson -- 740,001; Sol J. Barer -- 290,001; Robert J. Hugin -- 520,000;
Frank T. Cary -- 30,000; Arthur Hull Hayes, Jr. -- 30,000; Richard C.E.
Morgan -- 30,000; Walter L. Robb -- 30,000; Lee J. Schroeder -- 30,000;
Gilla Kaplan -- 60,000; and Jack L. Bowman -- 60,000.
(2) Includes with respect to Dr. Barer, 45 shares owned by the daughter of Dr.
Barer, as to which shares Dr. Barer disclaims beneficial ownership.
(3) Includes with respect to Mr. Morgan, 270 shares owned by the son of Mr.
Morgan, as to which shares Mr. Morgan disclaims beneficial ownership.
(4) Includes or excludes, as the case may be, shares of Common Stock as
indicated in the preceding footnotes.
(5) Information regarding Pilgrim Baxter & Associates was obtained from a
questionnaire and from a Schedule 13G, filed by it with the Securities and
Exchange Commission. Such Schedule 13G states that Pilgrim Baxter &
Associates Ltd. is the beneficial owner of and has the sole dispositive
power over all such shares of Common Stock and has sole voting power over
2,557,500 of those shares.
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
5
<PAGE>
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' Option Plan (the "Directors' Option
Plan").
The Directors' Option 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. At the Annual Meeting of the Company held in 1997, the
Director's Option Plan was amended to increase the number of shares of the
Company's Common Stock that may be issued upon exercise of options granted
thereunder from 750,000 shares to 1,050,000, as adjusted for the Split. At the
Annual Meeting of the Company held in 1999, the Directors' Option Plan was
amended to increase the number of shares of the Company's Common Stock that may
be issued upon exercise of options granted thereunder from 1,050,000 shares to
1,800,000 shares, as adjusted for the Split. The Directors' Option Plan
currently provides for the granting to Non-Employee Directors of non-qualified
options to purchase an aggregate of not more than 1,800,000 shares (subject to
adjustment in certain circumstances) of Common Stock.
Under the Directors' Option Plan, each Non-Employee Director as of April 5,
1995 was granted a non-qualified option to purchase 60,000 shares of Common
Stock, as adjusted for the Split, and each new Non-Employee Director upon the
date of his or her 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 60,000 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 Directors' Option 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 1999, pursuant to the Directors' Option Plan, each of Messrs. Bowman,
Cary, Hayes, Morgan, Robb, Schroeder and Dr. Kaplan received an option to
purchase 30,000 shares of Common Stock at an exercise price of $5.2083 per
share, the fair market value of the stock on the date of the grant, as adjusted
for the Split.
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 1999. The
Executive Committee has and may exercise all of the powers and authority of the
full Board of Directors of the Company, subject to certain exceptions.
The Company has an Audit Committee of the Board of Directors, consisting
entirely of outside directors, the current members of which are Walter L. Robb,
Chairman, Arthur Hull Hayes, Jr., M.D., and Gilla Kaplan. The Audit Committee
held one meeting in 1999. The Board of Directors
6
<PAGE>
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, Jack L. Bowman and Lee J.
Schroeder. The Compensation Committee held three meetings in 1999. 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 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 five meetings during 1999. During 1999, 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.
Due to an administrative oversight, Messrs. Cary, Hayes, Morgan, Robb,
Schroeder, Bowman and Dr. Kaplan were not able to timely file forms required
with respect to the automatic grant of options in 1999 under the Non-Employee
Directors' Incentive Plan and Messrs. Jackson, Barer and Hugin were not able to
timely file forms with respect to options granted in 1999 to each of them under
the Company's 1998 Long-Term Incentive Plan.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE ELECTION OF EACH OF THE NOMINEES
7
<PAGE>
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 $100,000, for each of the fiscal
years ended December 31, 1999, December 31, 1998 and December 31, 1997 in which
such officers were executive officers for all or part of the year.
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
-------------------------------------------
NAME AND OTHER ANNUAL
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($)
- ------------------------------ ------ ------------ ----------- ------------------
<S> <C> <C> <C> <C>
John W. Jackson .............. 1999 300,000 390,000 19,200(1)
Chairman and Chief 1998 285,000 79,800 19,200(1)
Executive Officer 1997 270,000 97,200 9,500(1)
Sol J. Barer, Ph.D. .......... 1999 255,833 230,250 19,200(1)
President and Chief 1998 243,333 51,100 19,200(1)
Operating Officer 1997 232,500 63,647 9,500(1)
Robert J. Hugin(3) ........... 1999 127,385 168,000 7,200(1)
Senior Vice President and
Chief Financial Officer
<CAPTION>
LONG TERM
COMPENSATION
-------------------------------------------------
SECURITIES
NAME AND RESTRICTED STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION AWARD(S) ($) OPTIONS # COMPENSATION ($)
- ------------------------------ ------------------ ------------ -----------------
<S> <C> <C> <C>
John W. Jackson .............. 0 660,000 13,390(2)
Chairman and Chief 0 300,000 13,390(2)
Executive Officer 0 0 13,390(2)
Sol J. Barer, Ph.D. .......... 0 210,000 0
President and Chief 0 150,000 0
Operating Officer 0 0 0
Robert J. Hugin(3) ........... 0 450,000 0
Senior Vice President and
Chief Financial Officer
</TABLE>
- -------------
(1) Reflects matching contributions under the Company's 401k plan.
(2) Reflects life insurance premiums for a life insurance policy for Mr.
Jackson.
(3) Mr. Hugin has been employed by the Company since June 1999.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
John W. Jackson, Sol J. Barer and Robert J. Hugin (each an "Executive") are
employed pursuant to substantially similar employment agreements (collectively,
the "Employment Agreements") providing for their continued employment until
January 1, 2003 (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 six months prior to the expiration of the
Employment Period. The Employment Agreements provide Messrs. Jackson, Barer and
Hugin with a base salary (which may be increased by the Board of Directors, or a
committee thereof) of $300,000, $258,000 and $240,000, respectively, per annum.
In addition, each of the Employment Agreements provides for an annual target
bonus in such amount equal to 65%, 45% and 35%, respectively, of Executive's
base salary measured against objective criteria to be determined by the Board of
Directors, or a committee thereof. The Employment Agreements also provide that
Messrs. Jackson, Barer and Hugin 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 or due to disability, he shall be entitled to receive a
lump-sum payment in an amount equal to Executive's annual base salary and a pro
rata share of Executive's annual target bonus. Upon the occurrence of a change
in control (as defined in the Employment Agreements) and thereafter, each
Employment Agreement also provides that if (a) at any time within one year of a
change in control Executive's employment is terminated by the Company without
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cause or for disability or by Executive for good reason (as defined in the
Employment Agreement) or (b) at any time within 90 days prior to a change in
control, Executive's employment is terminated by the Company without cause or by
Executive for good reason, Executive shall be entitled to receive: (i) a lump
sum payment in an amount equal to three times Executive's base salary and three
times Executive's highest annual bonus within the three years prior to the
change in control; (ii) any accrued benefits; (iii) payment of health and
welfare premiums for Executive and his dependants; and (iv) full and immediate
vesting of all stock options and equity awards; provided, however, that such
payment shall be reduced by any payments made to Executive prior to the change
in control pursuant to Sections 10(a)(iv) and (v) of the Employment Agreements.
Each Employment Agreement also provides that Executive shall be entitled to
receive a gross-up payment on any payments made to Executive that are subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code, except that
a gross-up will not be made if the payments made to Executive do not exceed 105%
of the greatest amount that could be paid to Executive such that the receipt of
payments would not give rise to the excise tax. Each Executive is subject to a
non-compete which applies during the period the Executive is employed and until
the first anniversary of the date Executive's employment terminates (the
non-compete applies to the second anniversary of the date Executive's employment
terminates if the Executive receives change in control payments and benefits).
STOCK OPTIONS
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, 1999, and the value of outstanding and unexercised options held as
of December 31, 1999. There were no stock appreciation rights exercised during
1999 and none were outstanding as of December 31, 1999.
OPTION GRANTS FOR FISCAL 1999
The following table provides information concerning grants of stock options
by the Company to the named executive officers in fiscal 1999 as adjusted for
the Split.
OPTION GRANTS DURING FISCAL 1999
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT
ASSUMED ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED EXERCISE OPTION TERM
OPTIONS TO EMPLOYEES PRICE PER EXPIRATION --------------------------
NAME DATE OF GRANT GRANTED (1) IN 1999 (2) SHARE DATE 5% 10%
- ---------------------- --------------- ------------- -------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
John W. Jackson ...... 1/22/99 210,000 8% $ 5.5000 1/22/09 577,500 1,155,000
4/20/99 450,000 18% $ 6.0000 4/20/09 1,350,000 2,700,000
Sol J. Barer ......... 1/22/99 105,000 4% $ 5.5000 1/22/09 288,750 577,500
4/20/99 105,000 4% $ 6.0000 4/20/09 315,000 630,000
Robert J. Hugin ...... 6/22/99 450,000 18% $ 5.2083 6/22/09 1,171,875 2,343,750
</TABLE>
- -------------
(1) All options granted in 1999 were granted pursuant to the Company's 1998
Long-Term Incentive Plan. The grants to Mr. Jackson, Dr. Barer and Mr.
Hugin are exercisable in annual increments of 33 1/3% of each total grant,
beginning on the first anniversary of the date of grant. All options were
granted at the fair market value of Common Stock on the effective date of
grant, as adjusted for the Split.
(2) The total number of options granted to employees in 1999 was 2,445,591.
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<PAGE>
OPTION EXERCISES AND VALUES FOR FISCAL 1999
The following table provides information concerning options exercised in fiscal
1999 by the named executive officers, as adjusted for the Split, and the value
of such officers' unexercised options at December 31, 1999.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
SHARES AT FISCAL YEAR-END AT FISCAL YEAR-END (2)
ACQUIRED VALUE ----------------------------- -----------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------- ----------------- ----------------- ------------- --------------- ----------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
John W. Jackson ......... 230,730 $3,475,762 619,270 860,000 $11,850,996 $15,640,819
Sol J. Barer ............ 225,000 $2,887,380 527,238 310,002 $10,205,963 $ 5,740,440
Robert J. Hugin ......... -- -- -- 450,000 -- $ 8,156,250
</TABLE>
- -------------
(1) Represents the difference between the average high and low trading price of
the Common Stock on the Nasdaq National Market on the date the shares were
acquired and the average high and low exercise price of the options
exercised multiplied by the number of shares acquired upon exercise.
(2) Represents the difference between the closing market price of the Common
Stock as reported by the Nasdaq National Market on December 31, 1999 of
$23.33 per share, as adjusted for the Split, 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 ON EXECUTIVE COMPENSATION
The Compensation Committee determines the Company's executive compensation
policies. The Compensation Committee determines the compensation of the
Company's executive officers and approves and oversees the administration of
incentive compensation programs for all employees including executive officers.
The Compensation Committee is composed solely of outside directors.
EXECUTIVE COMPENSATION POLICIES AND PROGRAMS
The Company's executive compensation program is part of a company-wide
program covering all employees. The program's goals are to attract, retain, and
motivate employees, and it utilizes incentives such that employees and
stockholders share the same risks. The compensation program is designed to link
compensation to performance.
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.
The Company does not have a pension plan or other capital accumulation
program. Grants of stock options are therefore of great importance to executives
as well as all employees. Any long-term value to be derived from such grants
will be consistent with stockholder gains.
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<PAGE>
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 1999 incentive program, it was agreed, subject to the
achievement of certain goals in 1999 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 2000 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 a base
salary of $300,000 for 1999. Mr. Jackson also received a bonus of $390,000 for
1999. Factors considered in determining Mr. Jackson's bonus included the
successful attainment of several important milestones in the development of the
Company's products, as well comparisons to total compensation packages of chief
executive officers at corporations within the Company's industry that are of
comparable size.
Members of the Compensation Committee
Richard C.E. Morgan, Chairman
Frank T. Cary
Jack L. Bowman
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, Jack L. Bowman and Lee J. Schroeder. Each is
an outside director of the Company.
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<PAGE>
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; 3) the NASDAQ Pharmaceutical Index; and 4) the NASDAQ Biotechnology
Index.
The graph shows the value of $100 invested on December 31, 1994 in the
Company's Common Stock or in one of the indexes, as applicable, including
reinvestment of dividends, at December 31 for each of 1994-1999.
[GRAPHIC OMITTED]
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<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG CELGENE CORPORATION, THE S & P 500 INDEX,
THE NASDAQ PHARMACEUTICAL INDEX AND THE
NASDAQ BIOTECHNOLOGY INDEX
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
12/94 12/95 12/96 12/97 12/98 12/99
Celgene Corporation ........... 100 238 198 150 273 1,244
S & P 500 ..................... 100 138 169 226 290 351
Nasdaq Pharmaceutical ......... 100 183 184 190 242 450
Nasdaq Biotechnology .......... 100 189 188 188 271 546
</TABLE>
* $100 INVESTED ON 12/31/94 IN STOCK OR INDEX -
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Securities and Exchange
Commission or subject to Regulations 14A and 14C under the Exchange Act or to
the liabilities of Section 18 under the Exchange Act.
PROPOSAL TWO: APPROVAL OF AN AMENDMENT TO
THE 1998 LONG-TERM INCENTIVE PLAN
The stockholders of the Company are asked to approve an amendment to the
1998 Incentive Plan to increase the aggregate number of shares of the Company's
Common Stock that may be subject to awards granted thereunder from 4,500,000 to
6,500,000, as adjusted for the Split. The 1998 Incentive Plan was adopted by the
Board of Directors on May 6, 1998 and approved by the Company's stockholders at
the 1998 Annual Meeting of Stockholders. The Board of Directors amended the 1998
Incentive Plan on June 22, 1999 to permit the Committee (as defined below) to
clarify the persons to whom non-qualified stock options may be transferred. The
affirmative vote of the holders of at least a majority of the outstanding shares
of Common Stock present and entitled to vote at the Annual Meeting is required
to approve the amendment to the 1998 Incentive Plan to increase the aggregate
number of shares of the Company's Common Stock that may be subject to awards.
BACKGROUND OF THE PROPOSAL TO AMEND THE 1998 INCENTIVE PLAN
As of March 31, 2000, options to purchase 3,523,440 shares of Common Stock
have been granted under the 1998 Incentive Plan at exercise prices based on the
fair market value of the shares of the Company's Common Stock ranging from
$5.2083 to $56.8333, as adjusted for the Split. Of the options granted, none has
been canceled, leaving a total of 976,560 available for future grants out of the
aggregate of 4,500,000 shares of Common Stock authorized for grant under the
1998 Incentive Plan. As of May 1, 2000, the closing price of a share of Common
Stock was $47.375. The Board of Directors believes that stock ownership by
employees provides performance incentives and fosters pride in the Company to
the benefit of both the Company and its stockholders. Accordingly, the Board of
Directors recommends that stockholders approve the amendment to the 1998
Incentive Plan to increase the aggregate number of shares of Company's Common
Stock that may be subject to awards as described below. The Board of Directors
approved the amendment of the 1998 Incentive Plan on May 5, 2000, subject to the
approval of stockholders.
13
<PAGE>
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, a copy
of which may be obtained upon written request to the Company at the Company's
principal business address.
Administration. The 1998 Incentive 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 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 1998 Incentive Plan. Awards under the 1998 Incentive 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 1998 Incentive 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.
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 1998 Incentive 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
14
<PAGE>
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 1998 Incentive 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 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.
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 1998 Incentive 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 1998 Incentive 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 6,500,000 shares of Common Stock
as adjusted for the Split may be issued or used for reference purposes pursuant
to the 1998 Incentive Plan as amended. The maximum number of shares of Common
Stock subject to stock options or SARs that may be granted to any individual
under the 1998 Incentive Plan shall be 750,000 for any fiscal year of the
Company during the term of the 1998 Incentive Plan, as adjusted for the Split.
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 1998 Incentive
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 1998 Incentive
Plan.
The Committee may make appropriate adjustments to the number of shares
available for awards and the terms of outstanding awards under the 1998
Incentive Plan to reflect any change in the Company's
15
<PAGE>
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 1998 Incentive 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. However, unless otherwise determined by
the Committee at the time of grant or thereafter, no acceleration of
exercisability shall occur with regard to certain stock options that the
Committee reasonably determines in good faith prior to a Change in Control will
be honored or assumed or new rights substituted therefor by a recipient's
employer immediately following the Change in Control. 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. If a
non-qualified stock option is transferable, it is anticipated that the options
may be transferred solely to immediate family members or trusts, partnerships or
other family entities and, to the extent permitted by the Committee, to
charitable organizations.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The rules concerning the federal income tax consequences with respect to
stock options granted pursuant to the 1998 Incentive 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 1998 Incentive 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 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.
16
<PAGE>
The 1998 Incentive Plan provides that an optionee may pay for Common Stock
received upon the exercise of an option (including an incentive stock option)
with other shares of Common Stock 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 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 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 may be granted to any employee during a specified
period and the plan under which the options are granted is approved by
stockholders and is administered by a compensation committee comprised of
outside directors. The 1998 Incentive Plan is intended to satisfy these
requirements with respect to options. 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 1998 Incentive Plan is not subject to any of the requirements of the
Employee Retirement Income Security Act of 1974, as amended. The 1998 Inventive
Plan is not, nor is it intended to be, qualified under Section 401(a) of the
Code.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ADOPTION OF THIS PROPOSAL
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PROPOSAL THREE: INDEPENDENT AUDITORS
The Board of Directors has appointed KPMG LLP, independent certified public
accountants, to audit the books and records of the Company for the current year.
The affirmative vote of a majority of the shares voted at the Annual Meeting is
required for the ratification of the Board of Directors' selection of KPMG LLP
as the Company's independent auditors for the fiscal year ending December 31,
2000.
Representatives of KPMG 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.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ADOPTION OF THIS PROPOSAL
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STOCKHOLDER 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 2001
must submit the same in writing so as to be received at the executive office of
the Company on or before January 15, 2001. If notice of a stockholder proposal
is not received by the Company on or before April 1, 2001, the persons named in
the enclosed form of proxy will have discretionary authority to vote all proxies
with respect thereto in accordance with their best judgment. Such proposals must
also meet the other requirements of the rules of the Securities and Exchange
Commission relating to stockholders' proposals.
OTHER MATTERS
Upon written request addressed to the Company's Secretary at 7 Powder Horn
Drive, Warren, New Jersey 07059 from any person solicited herein, the Company
will provide, at no cost, a copy of the Form 10-K Annual Report filed with the
Commission for the fiscal year ended December 31, 1999.
The Board of Directors of the Company does not know of any matters to be
brought before the Annual Meeting other than the matters set forth in the Notice
of Annual Meeting of Stockholders and matters incident to the conduct of the
Meeting. However, if any other matters should properly come before the Annual
Meeting, the persons named in the enclosed proxy card will have discretionary
authority to vote all proxies with respect thereto in accordance with their best
judgment.
By Order of the Board of Directors,
JOHN W. JACKSON
Chairman of the Board and
Chief Executive Officer
May 8, 2000
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.
19
<PAGE>
CELGENE CORPORATION
PROXY
The undersigned hereby appoints John W. Jackson, Sol J. Barer and
Robert J. Hugin, 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 20, 2000, 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) AND (3)
<TABLE>
<CAPTION>
<S> <C>
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 Jack Bowman
</TABLE>
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 1998 LONG-TERM INCENTIVE PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK THAT MAY BE SUBJECT TO
AWARDS THEREUNDER FROM 4,500,000 SHARES TO 6,500,000 SHARES
|_| FOR |_| AGAINST |_| ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR
ENDING DECEMBER 31, 2000
|_| FOR |_| AGAINST |_| ABSTAIN
4. 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 AND 3.
|_| I will attend the meeting |_| I will not attend the meeting
Note: Please sign exactly as names appear 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:
-------------------------------
-------------------------------
-------------------------------
(Signature)
PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE.
20
<PAGE>
EXHIBIT A
CELGENE CORPORATION
1998 LONG-TERM INCENTIVE PLAN
<PAGE>
(This document reflects all amendments to the 1998 Incentive Plan,
including the amendment to be approved by stockholders at the 2000
Annual Meeting, and reflects the three-for-one stock split declared
by the Company and paid on April 14, 2000)
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.............................................................................11
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......................................................22
ARTICLE 13. UNFUNDED STATUS OF PLAN...................................................................23
ARTICLE 14. GENERAL PROVISIONS........................................................................23
ARTICLE 15. APPROVAL OF BOARD AND STOCKHOLDERS........................................................26
ARTICLE 16. TERM OF PLAN..............................................................................26
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 agreement, change in control agreement or similar
agreement in effect between the
<PAGE>
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 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
<PAGE>
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. "Family Member", shall mean, with respect to any
Participant, any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any
person sharing the Participant's household (other than a tenant or
employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, and any other entity in
which these persons (or the Participant) own more than 50% of the
voting interests.
2.16. "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.
2.17. "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.
2.18. "Non-Employee Director" shall mean a director of the
Company who is not an active employee of the Company or an Affiliate.
2.19. "Non-Qualified Stock Option" shall mean any Stock Option
awarded under this Plan that is not an Incentive Stock Option.
2.20. "Participant" shall mean an Eligible Employee to whom an
Award has been made pursuant to this Plan.
3
<PAGE>
2.21. "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.
2.22. "Performance Period" shall have the meaning set forth in
Section 9.1.
2.23. "Restricted Stock" shall mean an award of shares of
Common Stock under this Plan that is subject to restrictions under
Article 7.
2.24. "Restriction Period" shall have the meaning set forth in
Subsection 7.3(a) with respect to Restricted Stock for Eligible
Employees.
2.25. "Retirement" shall mean a Participant's Termination of
Employment without Cause at or after age fifty-five (55).
2.26. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b)
of the Exchange Act as then in effect or any successor provisions.
2.27. "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.
2.28. "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.
2.29. "Stock Option" or "Option" shall mean any option to
purchase shares of Common Stock granted to Eligible Employees pursuant
to Article 6.
2.30. "Subsidiary" shall mean any subsidiary corporation of
the Company within the meaning of Section 424(f) of the Code.
2.31. "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.
4
<PAGE>
2.32. "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 employing a Participant
ceases to be an Affiliate, unless the Participant thereupon becomes
employed by the Company or another Affiliate.
2.33. "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);
5
<PAGE>
(f) to determine whether, to what extent and under
what circumstances to provide loans (which may be on a recourse basis
and shall bear 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.
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.
6
<PAGE>
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
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.
7
<PAGE>
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 6,500,000 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 750,000 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 750,000 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 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.
8
<PAGE>
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.
(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,
9
<PAGE>
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.
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
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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 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
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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.
(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
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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:
(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
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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 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
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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 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
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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.
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.
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(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.
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.
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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.
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.
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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
to a Family Member in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee. A Non-Qualified Stock Option which is
Transferred to a Family Member pursuant to the preceding sentence may not be
subsequently Transferred by such Family Member. 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 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)
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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.
(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.
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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.
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;
(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
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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 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.
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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 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
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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 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
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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.
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
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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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