UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Soliciting Material Pursuant to ss.240.14a-12
PHARMION CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] 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
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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The following was sent to all holders of restricted stock unit awards and
options to purchase shares of common stock of Pharmion Corporation under the
Pharmion Corporation 2000 Stock Incentive Plan on January 4, 2008 in connection
with the proposed acquisition of Pharmion Corporation by Celgene Corporation.
TO HOLDERS OF OPTIONS TO PURCHASE SHARES OF COMMON STOCK AND RESTRICTED STOCK
UNIT AWARDS UNDER THE PHARMION CORPORATION 2000 STOCK INCENTIVE PLAN:
As we announced November 18, 2007, Pharmion Corporation ("Pharmion") entered
into an Agreement and Plan of Merger (the "Merger Agreement") with Celgene
Corporation ("Celgene") providing for the acquisition of Pharmion by Celgene
(the "Merger").
The purpose of this notice is to provide further detail regarding the
consequences the Merger will have with respect to the options to purchase common
stock of Pharmion ("Pharmion Options") and restricted stock unit awards ("RSUs")
granted under the Pharmion Corporation 2000 Stock Incentive Plan (the "Plan").
You are receiving this notice because you hold at least one outstanding award of
Pharmion Options or RSUs under the Plan. This notice does not intend to provide
information regarding any other awards or any other plan or agreement with
Pharmion.
The following questions and answers are provided for your general information
only and are qualified by the exact language of the Merger Agreement. Pursuant
to the Merger Agreement and the Plan, holders of Pharmion Options and RSUs are
entitled to notice regarding the treatment of their stock-based awards under the
Plan in connection with the Merger. This document satisfies such notice
requirements.
YOU SHOULD SEEK THE ADVICE OF YOUR TAX OR FINANCIAL CONSULTANT
IF YOU HAVE SPECIFIC QUESTIONS REGARDING THE TAX CONSEQUENCES
ASSOCIATED WITH YOUR PHARMION OPTIONS.
______________________________________________________________________________
US Federal Income Taxes -- IRS Circular 230 disclosure:
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To ensure compliance with requirements imposed by the Internal Revenue Service,
we inform you that any U.S. tax advice contained in this communication is not
intended or written to be used, and cannot be used, for the purpose of (i)
avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing,
or recommending to another party any transaction or matter addressed herein.
______________________________________________________________________________
TREATMENT OF VESTED PHARMION OPTIONS
------------------------------------
Question 1: What will happen to my vested Pharmion Options in connection with
the Merger?
Answer: Upon the consummation of the Merger (the "Closing"), without
any action on your part, all of your then-outstanding, exercisable and
vested Pharmion Options will be cancelled, and you will receive, in
exchange therefor, the consideration you would have
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received (i) had you, immediately prior to the Closing, effected a
cashless exercise of such vested Pharmion Options, subject to all
applicable income and employment withholding taxes normally due upon
the cashless exercise of stock options, and (ii) had the net shares of
Pharmion common stock that would have been issued to you upon such
cashless exercise been converted by the Merger into the merger
consideration being received by all holders of Pharmion common stock
in connection with the Merger (as described more fully below).
For purposes of determining the number of net shares of Pharmion
common stock that would have been issued to you upon such a "cashless
exercise" of your vested Pharmion Options and therefore subject to
conversion into merger consideration, you would multiply the number of
shares of stock subject to the vested portion of each Pharmion Option
grant awarded to you, by the exercise price per share stated in your
grant agreement, to determine the total "purchase price" of the
Pharmion shares of common stock. You would then subtract from the
total number of Pharmion shares of common stock you would be
purchasing, the number of shares equal in market value on the date of
cashless exercise to the sum of (x) the purchase price and (y) the
aggregate income and employment withholding taxes payable as a result
of the deemed exercise of such vested Pharmion Options. See
illustrative examples of a "cashless exercise" and the resulting
merger consideration below.
Pursuant to the Merger Agreement, the "merger consideration" per share
of Pharmion common stock consists of (x) $25.00 in cash and (y) a
fraction of a share of Celgene common stock equal to (A) $47.00
divided by (B) the volume weighted average price per share of Celgene
common stock on The Nasdaq Stock Market for the 15 consecutive trading
days ending on (and including) the third trading day immediately prior
to the date of Closing (the "Celgene Stock Measurement Price");
provided that you will not receive in the Merger more than 0.8370, or
less than 0.6445 (such range, the "Collar"), of a share of Celgene
common stock per share of Pharmion common stock deemed held by you as
the result of such automatic cashless exercise of your vested Pharmion
Options. Thus, for example, in the event the Celgene Stock Measurement
Price falls to any price below $56.15, the stock portion of the merger
consideration will never be higher than 0.8370 of a share of Celgene
common stock per share of Pharmion common stock, and in the event the
Celgene Stock Measurement Price rises above $72.93, the stock portion
of the merger consideration will never be lower than 0.6445 of a share
of Celgene common stock per share of Pharmion common stock. In lieu of
any fractional share resulting from the operation of this formula, you
will receive an amount in cash (rounded down to the nearest whole
cent) equal to such fractional share multiplied by the Celgene Stock
Measurement Price.
Examples: The following examples illustrate how the treatment of
vested Pharmion Options described in this answer will work, based on
several assumptions. Please note that these illustrations are only
examples and may not be construed as a guarantee of any particular
financial result.
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General Assumptions for Examples:
---------------------------------
1. You hold vested Pharmion Options on the date of Closing to purchase 100
shares of Pharmion common stock at an exercise price of $40.00 per share.
2. The assumed total tax withholding rate is 35% (each Holder's applicable tax
withholding rate will be determined and applied)
--------------------------------------------- ------------------ ------------------ ------------------
Example #1 Example #2 Example #3
Celgene Stock Celgene Stock Celgene Stock
Measurement Measurement Measurement
Price Within the Price Below the Price Above the
Collar Collar Collar
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
Assumptions Variable by Example:
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--------------------------------------------- ------------------ ------------------ ------------------
Celgene Stock Measurement Price $65.00 $50.00 $80.00
--------------------------------------------- ------------------ ------------------ ------------------
Closing Price of Pharmion common stock $72.00 $66.85 $76.56
immediately prior to the Closing
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--------------------------------------------- ------------------ ------------------ ------------------
Deemed Cashless Exercise:
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--------------------------------------------- ------------------ ------------------ ------------------
Purchase price of Pharmion Option shares
$4,000 $4,000 $4,000
(100 shares x (100 shares x (100 shares x
$40.00/share $40.00/share $40.00/share
exercise price) exercise price) exercise price)
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
Net market value of Pharmion Option shares, (100 shares x (100 shares x (100 shares x
after subtracting the Purchase Price, but $72.00/share) - $66.85/share) - $76.56/share) -
before taxes $4,000 = $3,200 $4,000 = $2,685 $4,000 = $3,656
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
Assumed tax withholding obligation $3,200 x 35% = $2,685 x 35% = $3,656 x 35% =
$1,120.00 $939.75 $1,279.60
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--------------------------------------------- ------------------ ------------------ ------------------
Net market value of Pharmion Option shares $3,200.00 - $2,685.00 - $3,656.00 -
after taxes $1,120.00 = $939.75 = $1,279.60 =
$2,080.00 $1,745.25 $2,376.40
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
$2,080/$72.00 $1745.25/$66.85 $2,376.40/$76.56
Net number of shares of Pharmion common per share = per share = per share =
stock deemed distributed to you upon 28.8889 Pharmion 26.1070 Pharmion 31.0397 Pharmion
cashless exercise of vested Pharmion Options shares shares shares
--------------------------------------------- ------------------ ------------------ ------------------
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Merger Consideration Components:
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$25.00 x 28.8889 $25.00 x 26.1070 $25.00 x 31.0397
Cash component of merger consideration Pharmion shares Pharmion shares Pharmion shares
= $722.22 cash = $652.68 cash = $775.99 cash
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
28.8889 Pharmi
shares x 26.1070 Pharmion 31.0397 Pharmion
($47.00/$65.00) shares x .8370 = shares x .6445 =
Celgene common stock component of = 21 shares of 20 shares of
consideration (whole shares) 20 shares of Celgene common Celgene common
Celgene common stock stock
stock
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
0.8896 of a 0.8516 of a 0.0051 of a
Celgene share Celgene share Celgene share
Cash in lieu of remaining fractional remaining x remaining x remaining x
Celgene share $65.00 = $57.82 $50.00 = $42.58 $80.00 = $0.40
cash cash cash
--------------------------------------------- ------------------ ------------------ ------------------
--------------------------------------------- ------------------ ------------------ ------------------
Cash of $780.04 Cash of $695.26 Cash of $776.39
($722.22 + ($652.68 + ($775.99 +
$57.82) and 20 $42.58) and 21 $0.40) and 20
Net Merger Consideration Received: shares of shares of shares of
--------------------------------- Celgene common Celgene common Celgene common
stock stock stock
--------------------------------------------- ------------------ ------------------ ------------------
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Question 2: Will I need to take any action to receive this consideration in
connection with the Merger?
Answer: No, you do not need to take any further action with respect to
your vested Pharmion Options in order to receive the consideration
described above. If you do nothing now, then if and when the Merger is
completed (i.e., the Closing occurs), you will automatically be
entitled to payment of the merger consideration received by Pharmion
stockholders in the Merger in respect of the number of shares of
Pharmion common stock that you would have received upon a cashless
exercise of your outstanding vested Pharmion Options upon the Closing,
as described above. As the Closing draws nearer, further instructions
will be provided regarding the process by which you will actually
receive the merger consideration. HOWEVER, SEE QUESTION 6 BELOW
REGARDING PHARMION OPTIONS THAT ARE SCHEDULED TO EXPIRE PRIOR TO THE
CLOSING OF THE MERGER.
TREATMENT OF UNVESTED PHARMION OPTIONS
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Question 3: What will happen to my unvested Pharmion Options in connection with
the Merger?
Answer: Upon the Closing, each of your unvested Pharmion Options will
be converted into an option to acquire Celgene common stock with a
substantially equivalent "spread value" (a "Celgene Option") and will
otherwise continue to be governed by the same terms and conditions in
the Plan and any agreements related to the grant of such Pharmion
Options as were applicable immediately prior to the Closing. The
remaining vesting schedule of your unvested Pharmion Options will be
unaffected by the conversion into Celgene Options. Celgene will assume
and continue to administer the Plan, and any new grants that are
issued by Celgene under the Plan following the Closing, if any, will
be for Celgene common stock only.
The number of shares of Celgene common stock subject to each of your
converted Celgene Options will be equal to (i) the number of shares of
Pharmion common stock subject to each unvested Pharmion Option held by
you, if any, immediately prior to the Closing, multiplied by (ii) an
"option exchange ratio." The exercise price per share for each of your
Celgene Options will equal (x) the exercise price per share of each
such Pharmion Option immediately prior to the Closing, divided by (y)
the "option exchange ratio." For purposes of the above, the "option
exchange ratio" means (A) the value of the per-share merger
consideration received in the Merger by holders of Pharmion common
stock, divided by (B) the Celgene Stock Measurement Price (defined in
the answer to Question 1 above).
The following example illustrates how the arrangement described in
this answer will work, based on several assumptions. Please note that
this illustration is only an example and may not be construed as a
guarantee of any particular financial result.
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General Assumptions for Example #4 - Conversion of Unvested Pharmion Options:
----------------------------------------------------------------------------
1. Celgene Stock Measurement Price: $65.00
2. You hold unvested Pharmion Options on the date of Closing to purchase 100
shares of Pharmion common stock at an exercise price of $40.00 per share.
3. The assumed value of the per-share merger consideration is $72.00
4. The spread value of unvested Pharmion Options at Closing: 100 shares x
($72.00 - $40.00) = $3,200
----------------------------------------------- --------------------------------
Example #4
Conversion of unvested Pharmion
Options to Celgene Options
----------------------------------------------- --------------------------------
Number of shares of Celgene common stock 100 Pharmion Option shares x
underlying your Celgene Options ($72.00/$65.00 per share) =
110 Celgene Option shares
----------------------------------------------- --------------------------------
----------------------------------------------- --------------------------------
Exercise price of converted Celgene Options: $40.00 per
share/($72.00/$65.00 per
share) = $36.11 per share
----------------------------------------------- --------------------------------
----------------------------------------------- --------------------------------
Spread value of Celgene Options: 110 shares x ($65.00 - $36.11)
= $3,177.90
----------------------------------------------- --------------------------------
Thus, the "spread value" of your unvested Pharmion Options before the
Closing ($3,200) is substantially equal (and not exactly equal due to
the rounding provisions in the Merger Agreement) to the "spread value"
of your Celgene Options after the Closing ($3,177.90).
Question 4: Will I need to take any action for my unvested Pharmion Options to
be converted in connection with the Merger into Celgene Options?
Answer: No, you do not need to take any further action with respect to
your unvested Pharmion Options in order for them to be converted into
Celgene Options. The conversion of your unvested Pharmion Options into
Celgene Options will occur automatically upon the Closing.
Question 5: What will happen to my unvested Pharmion Options in the event my
employment terminates with Pharmion (or its successor), either prior to or after
the Closing?
Answer: The treatment of your unvested Pharmion Options upon a
termination of employment depends upon the timing of and circumstances
surrounding such
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termination, as follows:
(1) In the event your employment with Pharmion terminates for any
reason prior to the Closing, the same terms and conditions as set
forth in the Plan and any agreements thereunder relating to the grant
of your Pharmion Options will continue to govern such Pharmion
Options. To the extent vested Pharmion Options remain outstanding and
exercisable after your termination and through the Closing, they will
be treated as any other vested Pharmion Option as described herein. To
the extent vested Pharmion Options remain outstanding and exercisable
after your termination but expire prior to the Closing, they will be
treated as described in the answer to Question 6 below.
(2) In the event your employment is terminated as of the Closing or
within 12 months following the Closing, in either case because
Pharmion (or its successor) either (i) does not provide you with
"comparable employment" or (ii) terminates you other than for "Cause"
(as defined in the Plan), each of your Celgene Options (converted from
Pharmion Options as described in the answer to Question 3 above) will
accelerate and vest in full as of the date of your termination, and
you will have three months from the date of your termination to
exercise each such Celgene Option, or if earlier, until the time each
such Celgene Option would have expired pursuant to its terms. For
purposes of the above, "comparable employment" means a position with
Pharmion (or its successor) on and following the Closing which (x)
does not result in a material reduction in scope, or material change
in content, of your duties and responsibilities, (y) provides you with
compensation and employee benefits (other than equity compensation)
that are comparable in the aggregate to the greater of (A) those
provided by Celgene to similarly situated employees of Celgene and (B)
those provided by Pharmion immediately prior to the Closing, and (z)
does not require you to relocate your principal business location
beyond fifty miles from your principal business location immediately
prior to the Closing.
(3) In the event your employment terminates for any reason on or
following the Closing other than as set forth in (2) above, the same
terms and conditions as set forth in the Plan and any agreements
thereunder related to the grant of such Celgene Options (which will
have been converted from Pharmion Options as described in the answer
to Question 3 above) will continue to govern such options.
TREATMENT OF PHARMION OPTIONS THAT EXPIRE PRIOR TO THE CLOSING
--------------------------------------------------------------
Question 6: What will happen to my Pharmion Options that would otherwise expire
prior to the Closing pursuant to their terms?
Answer: Prior to the Closing, the Merger Agreement will have no effect
on your outstanding Pharmion Options, which will remain subject to the
terms and conditions of the applicable Plan and award agreements
currently in effect. Thus, whether or not you are currently or remain
a Pharmion employee or to the extent any Pharmion Options you hold
would expire pursuant to their terms prior to the Closing, you will
need to exercise
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vested Pharmion Options if you wish to participate in the Merger as a
holder of Pharmion common stock. If you fail to exercise your Pharmion
Options prior to their expiration date, those Pharmion Options will
expire on their expiration date, and you will not be entitled to any
consideration in connection with the Merger in respect of such
Pharmion Options or the Pharmion common stock underlying such Pharmion
Options.
TREATMENT OF RESTRICTED STOCK UNIT AWARDS
-----------------------------------------
Question 7: What will happen to my RSUs in connection with the Merger?
Answer: Subject to your continued employment with Pharmion through the
date of the Closing, immediately prior to Closing, and without any
action on your part, your unvested RSUs will fully vest, and if
applicable, settle in net shares of Pharmion common stock (subject to
applicable income and employment tax withholding). The shares of
Pharmion common stock held by you as a result of such vesting or
vesting and settlement will be converted into the merger consideration
being received by all holders of Pharmion common stock in connection
with the Merger, as described in the answer to Question 1 above.
In the event your employment with Pharmion terminates prior to the
Closing, the treatment of your RSUs will be based, without regard to
the Merger Agreement, on the terms and conditions of the applicable
Plan and award agreements currently in effect with respect thereto,
including the current vesting schedules.
NO MERGER
---------
Notwithstanding the signing of the Merger Agreement, if the Merger is not
completed for any reason (no Closing takes place), your RSUs and/or Pharmion
Options will remain unaffected by the Merger Agreement and will remain subject
to all of the terms and conditions of the Plan and award agreements currently in
effect, including the current vesting schedules.
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
------------------------------------------------------------
This document shall not constitute an offer of any securities for sale. The
Merger will be submitted to Pharmion's stockholders for their consideration and
vote. In connection with the Merger, Celgene and Pharmion intend to file
relevant materials with the SEC, including a registration statement, the proxy
statement/prospectus, and other relevant documents concerning the Merger.
Investors and stockholders of Celgene and Pharmion are urged to read the
registration statement, the proxy statement/prospectus, and other relevant
documents filed with the SEC when they become available, as well as any
amendments or supplements to such documents because they will contain important
information about Celgene, Pharmion, and the Merger. Stockholders of Celgene and
Pharmion can obtain more information about the proposed transaction by reviewing
the Forms 8-K filed by Celgene and Pharmion in connection with the announcement
of the entry into the Merger Agreement and any other relevant documents filed
with the SEC when they become available. The proxy statement/prospectus, the
registration statement, and any other relevant materials (when they become
available), and any other documents filed with the SEC by Celgene or Pharmion,
may be obtained free of charge at the
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SEC's web site at www.sec.gov. In addition, investors and stockholders may
obtain free copies of the documents filed with the SEC by directing a written
request to: Celgene Corporation, 86 Morris Ave., Summit, New Jersey 07901,
Attention: Investor Relations, or Pharmion Corporation, 2525 28th Street, Suite
200, Boulder, Colorado 80301, Attention: Investor Relations. Investors and
stockholders are urged to read the proxy statement/prospectus, the registration
statement, and other relevant materials when they become available before making
any voting or investment decision with respect to the Merger.
PARTICIPANTS IN SOLICITATIONS
-----------------------------
Pharmion and its directors, executive officers, and other members of its
management and employees may be deemed to be participants in the solicitation of
proxies from stockholders of Pharmion in connection with the Merger. Information
regarding Pharmion's directors and executive officers is available in Pharmion's
proxy statement on Schedule 14A for its 2007 annual meeting of stockholders,
which was filed with the SEC on April 30, 2007. Additional information regarding
the interests of such potential participants will be included in the proxy
statement and the other relevant documents filed with the SEC when they become
available.
If you have additional questions concerning the information contained in this
notice, please contact Steve Dupont (telephone: 720-564-9153; email:
sdupont@pharmion.com) or Diane Anderson (telephone: 720-564-9125, email:
danderson@pharmion.com).
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