EXHIBIT 10.40

 

[Form of Employee Stock Option Agreement – ISO]

 

 

ISO No. XX-XX

 

Option for

 

 

X,XXX  Shares

 

MEDAREX, INC.

INCENTIVE STOCK OPTION AGREEMENT

 

FOR          STOCK OPTION PLAN

 

MEDAREX, INC. a New Jersey corporation (the “Company”), in consideration of the
value to it of the continuing services of XXXXXXX (hereinafter called
“Optionee”), which continuing services the grant of this option is designed to
secure, and in consideration of the various undertakings made herein by
Optionee, and pursuant to its XXXX Stock Option Plan (hereinafter called the
“Plan”), hereby grants to Optionee an option (the “Option”), intended to be an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as now or hereafter amended (the “Code”), evidenced by this Option
Agreement, exercisable for the period and upon the terms hereinafter set out, to
purchase XXXXX shares (the “Option Amount”) of $.01 par value common stock of
the Company (“Common Stock”) at a price of $XXXXXX per share (the “Option
Price”), which price represents at least the fair market value (as such term is
defined in the Plan) of the shares as of the Date of Grant (as hereinafter
defined).

 

1.  Term of Option.  This Option is granted and dated on the date set forth next
above the signature shown (sometimes hereinafter called the “Date of Grant”),
and will terminate and expire, to the extent not previously exercised, one day
prior to the end of ten (10) years after the Date of Grant (i.e., on the XXX day
of XXXXX, XXX), except that if Optionee owns stock on the date the Option is
granted (using the attribution of stock ownership rules of Section 424 (d) of
the Code) possessing more than 10% of the total combined power of all classes of
stock of the Company, then the Option shall terminate and expire one day prior
to the end of five years from the Date of Grant (i.e., on the XXX day of XXXXX,
XXXXX), or at such earlier time as may be specified in Section 4 hereof.

 

2.  Vesting.  Except as set forth in the immediately following sentence or as
otherwise provided in the Plan or this Option Agreement, this Option is
exercisable in whole or in part at any time and from time to time prior to the
termination of the Option pursuant to Section 4 herein.  This Option shall
become exercisable as to one fourth (1/4th) of the Option Amount on the first
anniversary of the Date of Grant, and as to one forty-eighth (1/48th) of the
Option Amount on the last day of each full month thereafter; provided, however,
that upon the occurrence of an event constituting a Change of Control, as such
term is defined in the Plan, the Option Amount shall become immediately
exercisable in full.

 

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3.  Non-Transferability.  This Option is not assignable or transferable
otherwise than by will or by the laws of descent and distribution. During the
lifetime of the Optionee, this Option shall be exercisable only by the Optionee.

 

4.  Manner of Exercise.  The Optionee (or other person entitled to exercise the
Option) shall purchase shares of Common Stock subject hereto by the payment to
the Company of the Option Price in full.  This Option is to be exercised by
written notice to the Company stating the full number of shares to be purchased
and the time of delivery thereof, which shall be at least 15 days after the
giving of notice unless an earlier date shall have been agreed upon between
Optionee (or other person entitled to exercise the Option) and the Company.  At
such time, the Company shall, without transfer or issue tax to the Optionee (or
other person entitled to exercise the Option), deliver at the principal office
of the Company, or at such other place as shall be mutually agreed upon, a
certificate or certificates for such shares against payment of the Option Price
therefor in full for the number of shares to be delivered; provided, however,
that the time of delivery may be postponed by the Company for such period as may
be required for it to comply with reasonable diligence with any requirements of
law.  Payment of the Option Price shall be made in cash either by a certified or
official bank check; provided, however, that during the 60-day period from and
after a Change of Control the Optionee (unless the Optionee initiated a Change
of Control in a capacity other than as an officer or director of the Company
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), and the rules and regulations thereunder), shall
have the right, in lieu of the payment of the full Option Price of the shares of
the Common Stock being purchased under the Option, by forwarding written notice
to the Company, to elect (within such 60-day period) to surrender all or part of
the Option to the Company and to receive in cash an amount equal to the amount
by which the fair market value per share of Common Stock on the date of exercise
shall exceed the Option Price per share under the Option multiplied by the
number of shares of Common Stock granted under the Option as to which the right
granted by this proviso shall have been exercised. The written notice provided
by the Optionee shall specify the Optionee’s election to purchase shares subject
to this Option or to receive the cash payment herein provided.

 

Notwithstanding the foregoing, payment in whole or in part of the Option Price
may be made in unrestricted shares of Common Stock which are already owned by
the Optionee free and clear of any liens, claims, encumbrances or security
interests, based upon the fair market value (as defined in the Plan) of the
Common Stock on the date the Option is exercised.  No shares of Common Stock
shall be issued until full payment therefor has been made.  If the Optionee (or
other persons entitled to exercise the Option) fails to accept a delivery of, or
to pay for all or any part of the number of shares specified in such notice upon
tender or delivery thereof, the right to exercise the Option with respect to
such undelivered shares shall be thereupon terminated.

 

5.  Termination of Employment.

 

(a)  Death.  If any Optionee’s relationship with or employment by the Company
and/or any of its subsidiaries terminates by reason of death, this Option may
thereafter be exercised immediately in full by the legal representative of the
estate or by the legatee of the Optionee under the will of the Optionee until
the expiration of the stated term of the Option.

 

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(b)  Permanent Disability.  If the Optionee’s relationship with or employment by
the Company and/or any of its subsidiaries terminates by reason of “Permanent
and Total Disability” (as defined in Section 22(e)(3) of the Code), this Option
may, to the extent such Option has vested, thereafter be exercised by the
Optionee for a period of three years from the date of such termination or
expiration of the stated term of the Option, whichever period is the shorter. 
Notwithstanding the foregoing, if the Option is not exercised within 12 months
of the date Optionee’s employment by the Company and/or any of its subsidiaries
is terminated by reason of Permanent and Total Disability within the meaning of
Section 22(e)(3) of the Code, the Option shall be treated as a nonqualified
option and not an incentive stock option under the Code.  If the Optionee dies
during the 12-month period commencing on the date his/her employment by the
Company terminates by reason of such Permanent and Total Disability, however,
then the Option will continue to be an incentive stock option under the Code
until such time as the Option shall no longer be exercisable under the terms
hereof.

 

(c)    Termination for Cause.  If the Optionee’s relationship with or employment
by the Company is terminated by the Company for reason of willful violation of
the Company’s policies, the Option shall thereupon terminate.  Notwithstanding
the foregoing, nothing herein shall be deemed to alter the at-will employment
status of an employee of the Company in any way.

 

(d)   Other Termination.  If the Optionee’s relationship with or employment by
the Company terminates for any reason other than death or permanent disability
or for reason of willful violation of the Company’s policies, this Option may,
to the extent such Option has vested, thereafter be exercised by the Optionee
for a period of three months from the date of such termination or expiration of
the stated term of the Option, whichever period is the shorter; provided,
however, that if such termination is by action of the Company within 18 months
following a Change of Control (other than discharge for reason of willful
violation of the Company’s policies), any unexercised portion of this Option may
be exercised by the Optionee until the earlier of six months and one day after
such termination or the expiration of such Option in accordance with the terms
hereof.  Notwithstanding the foregoing, if the Option is not exercised within
three months of the date Optionee’s relationship with or employment by the
Company and/or any of its subsidiaries is terminated, the Option shall be
treated as a nonqualified option and not an incentive stock option under the
Code.

 

6.  Adjustments on Recapitalization.  The number of shares of Common Stock
subject hereto and the Option Price per share shall be proportionately adjusted
for any increase or decrease in the number of issued shares of the Common Stock
resulting from the subdivision or consolidation of the shares, or the payment of
a stock dividend after the Date of Grant, or other decrease or increase in the
shares of Common Stock outstanding effected without receipt of consideration by
the Company; provided, however, that any Options to purchase fractional shares
resulting from such adjustments shall be eliminated.

 

If the Company shall at any time merge or consolidate with or into another
corporation, the holder of this Option will thereafter receive, upon the
exercise thereof, the securities or property to which a holder of the number of
shares of Common Stock then deliverable upon the exercise of such Option would
have been entitled upon such merger or consolidation, and the

 

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Company shall take such steps in connection with such merger or consolidation as
may be necessary to assure that the provisions of the Plan shall thereafter be
applicable, as nearly as reasonably may be, in relation to any securities or
property thereafter deliverable upon the exercise of such Option.  A sale of
consideration (apart from the assumption of obligations) consisting primarily of
securities shall be deemed a merger or consolidation for the foregoing
purposes.  In the event of the proposed dissolution, liquidation or
reorganization of the Company, other than pursuant to a merger or consolidation
as referred to above, the Option granted hereunder shall terminate as of a date
to be fixed by the Committee (as that term is defined in the Plan); provided
that not less than 30 day’s prior written notice of the date so fixed shall be
given to the Optionee, and the Optionee shall have the right, during the period
of thirty (30) days preceding such termination, to exercise his or her Option as
to all or any part of the shares covered thereby, including shares as to which
such Option would not otherwise be exercisable.

 

7.  Subject to Plan.  This Option is subject to all the terms and conditions of
the Plan, and specifically to the power of the Committee to make interpretations
of the Plan and of the options granted thereunder, and of the Board of Directors
of the Company (“Board of Directors”) to alter, amend, suspend or discontinue
the Plan subject to the limitations expressed in the Plan.  By acceptance
hereof, Optionee acknowledges receipt of a copy of a Summary Plan Description
which describes the basic terms and conditions of the Plan and is attached
hereto as Exhibit A, and recognizes and agrees that determinations,
interpretations or other actions respecting the Plan may be made by a majority
of the Board of Directors or of the Committee, and that such determinations,
interpretations or other actions are final, conclusive and binding upon all
parties, including Optionee.

 

8.  Rights as Shareholder.  This Option shall not entitle Optionee or any
permitted transferee hereof to any rights of a shareholder of the Company or to
any notice of proceedings of the Company or to any notice of proceedings of the
Company in respect of any shares issuable upon exercise of this Option unless
and until the Optionee has given to the Company a written notice of exercise,
has paid in full the Option Price for such shares and, if applicable, has given
a representation to the Company that he or she is purchasing such shares for
investment only and not with a view towards any distribution.  The Company shall
not be required to issue or deliver any certificate for shares of its Common
Stock purchased hereunder prior to compliance with applicable federal and state
laws and regulations with respect to the issuance, registration or listing of
such shares.

 

9. Securities Laws.    Optionee acknowledges that he or she has been informed
of, or is otherwise familiar with, the nature and the limitations imposed by the
Securities Act of 1933, as amended (the “Act”), the Exchange Act, and the rules
and regulations thereunder (in particular, Rule 144, promulgated under the Act
and Section 16 of the Exchange Act, and Rule 16b-3 promulgated thereunder),
concerning the shares issuable upon exercise of this Option and agrees to be
bound by the restrictions embodied in such Act, the Exchange Act, and all the
rules and regulations promulgated thereunder.

 

10. Reporting of Premature Disposition.    If Shares acquired through the
exercise of an Option are disposed of either within two years of the Date of
Grant or within one year of the date

 

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the Option was exercised, the Optionee shall promptly provide written notice to
the Company of the date of disposition and the amount realized from the
disposition.

 

11.  Miscellaneous; Governing Law.

 

(a) In the event the Option shall be exercised in whole, this Option Agreement
shall be surrendered to the Company for cancellation.  In the event the Option
shall be exercised in part, or a change in the number or designation of the
Common Stock shall be made, this Option Agreement shall be delivered by Optionee
to the Company for the purpose of making appropriate notation thereon, or of
otherwise reflecting, in such manner as the Company shall determine, the partial
exercise or the change in the number of designation of the Common Stock.

 

(b)  The Option shall be exercised in accordance with such administrative
regulations as the Committee shall from time to time adopt to the extent not
inconsistent with Section 422 of the Code and regulations issued thereunder.

 

(c)  The Option and this Option Agreement shall be construed, administered and
governed in all respects under and by the laws of the State of New Jersey to the
extent not inconsistent with Section 422 of the Code and regulations issued
thereunder.

 

(d)  Optionee hereby agrees that he or she will make such arrangements as the
Company deems necessary to discharge any federal, state, or local income or
payroll tax withholding obligations imposed upon the Company with respect to
this Option.  Upon Optionee’s request and subject to the Company’s approval, in
its sole discretion, and in compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of Common
Stock otherwise issuable to Optionee upon exercise of the Option a number of
whole shares of Common Stock having a fair market value, determined as of the
date of exercise, not in excess of the minimum amount of tax required to be
withheld by law.

 

(e)  Nothing contained in this Agreement shall confer upon Optionee the right to
employment by the Company or any of its subsidiaries.

 

IN WITNESS WHEREOF, this Option Agreement is executed as of the XXX day of
XXXXXX, XXXXX.

 

 

 

MEDAREX, INC.

 

 

 

 

 

By:

 

 

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