Document:

Exhibit
10. 1

 

MEDAREX, INC.

2004 NEW EMPLOYEE STOCK OPTION PLAN

 

Section 1.  Purpose of
the Plan.  The purpose of the Medarex, Inc. New Employee Stock Option
Plan (the “Plan”) is to aid Medarex, Inc. (the “Corporation”) and its
subsidiaries in securing and retaining employees of outstanding ability and to
motivate such persons to exert their best efforts on behalf of the Corporation
and its subsidiaries.  In addition, the
Corporation expects that it will benefit from the added interest which the
respective optionees and participants will have in the welfare of the
Corporation as a result of their ownership or increased ownership of the Common
Stock of the Corporation (the “Stock”).

 

Section 2.  Administration.  (a) the Board of
Directors of the Corporation (the “Board”) shall designate a Committee of not
less than three (3) Directors (the “Committee”) who shall serve at the pleasure
of the Board.  Each member of the
Committee shall be a “non-employee” director within the meaning of Rule
16b-3(b) (3)(i) under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), as such Rule or any other comparable rule may be in effect from time to
time, while serving on the Committee.  In
addition, each member of the Committee shall meet the standards for independence
set forth in the applicable rules and regulations of the Securities and
Exchange Commission and The Nasdaq Stock Market,
Inc.  The Board shall fill any vacancies
on the Committee and may remove any member of the Committee at any time with or
without cause.  The Committee shall
select its chairman and hold its meetings at such times and places as it may
determine.  A majority of the whole
Committee present at a meeting at which a quorum is present, or an act approved
in writing by all members of the Committee, shall be an act of the
Committee.  The Committee shall have full
power and authority, subject to such resolutions not inconsistent with the
provisions of the Plan as may from time to time be issued or adopted by the
Board (provided the entire Board acting on the matter are Disinterested
Persons), to grant to Eligible Persons (as defined herein) pursuant to the
provisions of the Plan (i) stock options to purchase shares, (ii) stock
appreciation rights, (iii) restricted stock, (iv) deferred stock, or (v) other
Stock-based awards permitted hereunder (each of the foregoing being an “AWARD”
and collectively, the “AWARDS”).  The
Committee shall also interpret the provisions of the Plan and any AWARD issued
under the Plan (and any agreements relating thereto) and supervise the
administration of the Plan.

 

(b)  The Committee shall:  (i) select the employees of the Corporation
and its subsidiaries to whom AWARDS may from time to time be granted hereunder;
(ii) determine whether nonqualified stock options, stock appreciation rights,
restricted stock, deferred stock, or other Stock-based awards, or a combination
of the foregoing, are to be granted hereunder; (iii) determine the number of
shares to be covered by each AWARD granted hereunder; (iv) determine the terms
and conditions, not inconsistent with the provisions of the Plan, of any AWARD
granted hereunder (including but not limited to any restriction and forfeiture
condition on such AWARD and/or the shares of Stock relating thereto); (v)
determine whether, to what extent and under what circumstances AWARDS may be
settled in cash; (vi) determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an AWARD under
this Plan shall be deferred either automatically or at the election of the
participant; and (vii)

 

 

determine whether, to what extent, and
under what circumstances option grants and/or other AWARDS under the Plan are
to be made, and operate, on a tandem basis.

 

(c)  All decisions made by the
Committee pursuant to the provisions of the Plan and related orders or
resolutions of the Board (as and to the extent permitted hereunder) shall be
final, conclusive and binding on all persons, including the Corporation, its
shareholders, employees and Plan participants.

 

(d)  No member of the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any AWARD thereunder.

 

(e)  Anything herein to the
contrary notwithstanding, the Committee, by resolution,  may delegate to management of the Corporation
the right to grant AWARDS with respect to up to 50,000 shares to any one
participant without any further action being required by the Committee.

 

Section 3.  Stock
Subject to the Plan.              Except
as otherwise provided by this Section 3, the total number of shares of Stock
available for distribution under the Plan is 500,000.  The total number of shares of stock with
respect to which AWARDS may be granted to any participant in any calendar year
is 200,000 shares.  Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares, except that treasury shares must be used in the case of restricted
stock.  If any shares that have been
optioned cease to be subject to option because the option has expired or has
been deemed to have expired or has been surrendered pursuant to the Plan, or if
any shares of restricted stock are forfeited or such AWARD otherwise terminates
without the actual or deemed delivery of such shares, such shares shall again
be subject to an AWARD under the Plan.

 

In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, extraordinary cash dividend, or other change
in corporate structure affecting the Stock, such adjustment shall be made in
the aggregate number of shares which may be delivered under the Plan, in the
number and/or option price of shares subject to outstanding options granted
under the Plan, and/or in the number of shares subject to restricted stock,
deferred stock, or other Stock-based awards granted under the Plan as may be
determined to be appropriate by the Committee, in its sole discretion; provided
that the number of shares subject to any AWARDS shall always be a whole
number.  Such adjusted option price shall
also be used to determine the amount payable by the Corporation upon the
exercise of any stock appreciation right associated with any option.  In addition, subject to the limitations
provided in Section 11, the Committee is authorized to make adjustments in the
terms and conditions of, and performance criteria relating to, AWARDS in
recognition of unusual or nonrecurring events (including, without limitation,
events described in this paragraph) affecting the Corporation or the financial
statements of the Corporation, or in response to changes in applicable laws,
regulations or accounting principles.

 

Section 4.               Eligibility.  Any person who is an employee of the
Corporation or its subsidiaries and who has not previously been an employee or
director of the Corporation or any of its subsidiaries is eligible to be
granted AWARDS under the Plan as an inducement essential

 

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to that person’s entering into employment
with the Corporation or its subsidiaries (each an “Eligible Person” and
collectively “Eligible Persons”).  The
participants under the Plan shall be selected from time to time by the
Committee, in its sole discretion, from among those eligible, and the Committee
shall determine, in its sole discretion, the number of shares covered by each
stock option, the number of stock appreciation rights (if any) granted to each
optionee, and the number of shares (if any) subject to restricted stock,
deferred stock or other Stock-based awards granted to each participant.

 

For purposes of the Plan, a subsidiary of the Corporation shall be any
corporation which at the time qualifies as a subsidiary thereof under the
definition of “subsidiary corporation” in Section 424(f) of the Internal
Revenue Code of 1986, as amended.

 

Section 5.               Stock Options.  Any stock option granted under the Plan shall
be in such form as the Committee may from time to time approve.  Any such option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Committee
shall deem desirable.

 

(a)           Option
Price.  The purchase price per
share of the Stock purchasable under a stock option shall be determined by the
Committee.

 

(b)           Option
Period.  The term of each stock
option shall be fixed by the Committee, but no stock option shall be
exercisable after the expiration of 10 years from the date the option is
granted.

 

(c)           Exercisability.  (1) Stock options shall be exercisable at
such time or times as determined by the Committee at or subsequent to the date
of grant.  Unless otherwise determined by
the Committee at or subsequent to the date of grant, no stock option shall be
exercisable until the first anniversary date of the granting of the option,
except as provided in paragraphs (f), (g) or (h) of this Section 5; provided,
however, that notwithstanding the foregoing from and after a Change of Control
(as hereinafter defined) all stock options shall become immediately exercisable
to the full extent of the AWARD.

 

(2)            As
used herein, “Change of Control” shall mean any of the following events:

 

(A)          An
acquisition (other than directly from the Corporation) of any voting securities
of the Corporation (the “Voting Securities”) by any “Person” (as the term “person”
is used for purposes of Section 13(d) or 14(d) of the Exchange Act) immediately
after which such Person has “Beneficial Ownership” (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 15% or more of the combined voting
power of the Corporation’s then outstanding Voting Securities; provided,
however, that in determining whether a Change of Control has occurred, voting
securities which are acquired in a “Non-Control Acquisition” (as hereinafter
defined) shall not constitute an acquisition which would cause a Change of
Control.

 

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A “Non-Control Acquisition” shall mean an
acquisition by (i) an employee benefit plan (or a trust forming a part thereof)
maintained by (x) the Corporation or (y) any corporation or other Person of
which a majority of its voting power or its equity securities or equity
interest is owned directly or indirectly by the Corporation (a “Subsidiary”),
(ii) the Corporation or any Subsidiary, or (iii) any Person in connection with
a Non-Control Transaction (as defined below);

 

(B)           The
individuals who, as of January 1, 2002 were members of the Board (the “Incumbent
Board”), cease for any reason to constitute at least 66 2/3% of the Board;
provided, however, that if the election, or nomination for election by the
Corporation’s stockholders, of any new director was approved by a vote of at
least 66 2/3% of the Incumbent Board, such new director shall be considered as
a member of the Incumbent Board; provided, further, however, that no individual
shall be considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or threatened “Election
Contest” (as described in Rule 14a-11 promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board (a “Proxy Contest”) including by reason of any
agreement intended to avoid or settle any Election Contest or Proxy Contest; or

 

(C)           Approval
of the Corporation’s shareholders of: (1) a merger, consolidation or
reorganization involving the Corporation, unless (i) the stockholders of the
Corporation, immediately before such merger, consolidation or reorganization,
own, directly or indirectly immediately following such merger, consolidation or
reorganization, at least 66 2/3% of the combined voting power of the
outstanding Voting Securities of the Corporation resulting from such merger or
consolidation or reorganization (the “Surviving Corporation”) in substantially
the same proportion as their ownership of the Voting Securities immediately
before such merger, consolidation or reorganization, (ii) the individuals who
were members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization constitute
at least 66 2/3% of the members of the board of directors of the Surviving
Corporation, and (iii) no Person, other than the Corporation, any Subsidiary,
any employee benefit plan (or any trust forming a part thereof) maintained by
the Corporation, the Surviving Corporation or any Subsidiary, or any Person
who, immediately prior to such merger, consolidation or reorganization had
Beneficial Ownership of 15% or more of the then outstanding Voting Securities of
the Corporation, has Beneficial Ownership of 15% or more of the combined voting
power of the Surviving Corporation’s then outstanding voting securities (a
transaction described in clause (i) through (iii) shall herein be referred to
as a “Non-Control Transaction”); (2) a complete liquidation or dissolution of
the Corporation; or (3) an agreement for the sale or other disposition of all
or substantially all of the assets of the Corporation to any Person (other than
a transfer to a Subsidiary).

 

Notwithstanding the foregoing, a Change of Control shall not be deemed
to occur solely because any Person (the “Subject Person”) acquired Beneficial
Ownership of more than

 

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the permitted amount of the outstanding Voting Securities as a result
of the acquisition of Voting Securities by the Corporation which, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Person, provided that if a Change
of Control would occur (but for the operation of this sentence) as a result of
the acquisition of Voting Securities by the Corporation, and after such share
acquisition, the Subject Person becomes the Beneficial Owner of any additional
Voting Securities which increases the percentage of the then outstanding Voting
Securities Beneficially Owned by the Subject Person, then a Change of Control
shall occur.

 

(d)           Method of
Exercise.  Stock options may
be exercised, in whole or in part, by giving written notice of exercise to the
Corporation specifying the number of shares to be purchased.  Such notice shall be accompanied by payment
in full of the purchase price in cash, either by certified or bank check;
provided, however, that after a Change of Control an optionee, during the
60-day period from and after a Change of Control, shall have the right, in lieu
of the payment of the full purchase price of the shares of the Stock being
purchased under the stock option and by giving written notice to the Corporation,
to elect (within such respective periods) to surrender all or part of the stock
option to the Corporation and to receive in cash an amount equal to the amount
by which the fair market value per share of the Stock on the date of exercise
shall exceed the purchase price per share under the stock option multiplied by
the number of shares of the Stock granted under the stock 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 the stock option or to receive the cash
payment herein provided.

 

Notwithstanding the foregoing, the Committee may, in its sole
discretion, authorize payment in whole or in part of the purchase price to be
made in unrestricted stock already owned by the optionee, or in restricted
stock, or deferred stock subject to an AWARD hereunder (based upon the fair
market value of the Stock on the date the option is exercised as determined by
the Committee).  The Committee may
authorize such payment at or after grant. 
No shares of Stock shall be issued until full payment therefor has been
made.  Subject to paragraph (i) of this
Section 5, an optionee shall have the rights to dividends or other rights of a
stockholder with respect to shares subject to the option when the optionee has
given written notice of exercise, has paid in full for such shares, and, if
requested, has given the representation described in paragraph (a) of Section
14.

 

As used in this paragraph (d) of Section 5, the fair market value of
the Stock on the date of exercise shall mean, with respect to an election by an
optionee to receive cash in respect of a stock option, the “Change of Control
Fair Market Value,” as defined below.

 

(e)           Restrictions
on Transferability.  The
Committee, in its sole discretion, may impose such restrictions on the
transferability of stock options granted hereunder as it deems
appropriate.  Any such restrictions shall
be set forth in the stock option agreement with respect to such stock options.

 

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(f)            Termination
by Death.  Except to the
extent otherwise provided by the Committee at or after the time of grant, if an
optionee’s relationship with or employment by the Corporation and/or any of its
subsidiaries terminates by reason of death, the stock option may thereafter be
immediately exercised 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 period of the option.

 

(g)           Permanent
Disability.  Except to the
extent otherwise provided by the Committee at or after the time of grant, if an
optionee’s relationship with or employment by the Corporation and/or any of its
subsidiaries terminates by reason of  “Permanent
and Total Disability” (as defined in Section 22(e)(3) of the Code), any stock
option held by such optionee may, to the extent such option has vested,
thereafter be exercised for a period of three years from the date of such
termination or expiration of the stated term of the stock option, whichever
period is the shorter.

 

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

 

(i)            Other
Termination.  Unless otherwise
determined by the Committee at or after grant, if an optionee’s relationship
with or employment by the Corporation terminates for any reason other than
death, permanent disability or for reason of willful violation of the
Corporation’s policies, the stock option may, to the extent such stock 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 stock option, whichever period is the shorter; provided, however, that if
such termination is by the action of the Corporation within 18 months following
a Change of Control (other than discharge for reason of willful violation of
the Corporation’s policies), any unexercised portion of this stock option may
be exercised by the optionee until the earlier of six months and one day after
such termination or the expiration of such stock option in accordance with the
terms hereof.

 

(j)            Option
Buyout.  The Committee may at
any time offer to repurchase an option based on such terms and conditions as
the Committee shall establish and communicate to the optionee at the time that
such offer is made.

 

(k)           Form of
Settlement.  In its sole
discretion, the Committee may provide, at the time of grant, that the shares to
be issued upon an option’s exercise shall be in the form of restricted stock or
deferred stock, or may reserve the right to so provide after the time of grant.

 

Section 6.              Stock Appreciation Rights.  (a)  Grant and Exercise. 
Stock appreciation rights may be granted in conjunction with (or in
accordance with Section 9, separated from) all or part of any stock option
granted under the Plan, either at the time of the grant of such option or at
any subsequent time during the term of the option.  A “stock

 

6

 

appreciation right” is a right to receive
cash or Stock, as provided in this Section 6, in lieu of the purchase of a
share under a related option.  A stock
appreciation right, or applicable portion thereof, shall terminate and no
longer be exercisable upon the termination or exercise of the related stock
option, except that a stock appreciation right granted with respect to less
than the full number of shares covered by a related stock option shall not be
reduced until the exercise or termination of the related stock option exceeds
the number of shares not covered by the stock appreciation right.  A stock appreciation right may be exercised
by an optionee, in accordance with paragraph (b) of this Section 6, by
surrendering the applicable portion of the related stock option.  Upon such exercise and surrender, the
optionee shall be entitled to receive an amount determined in the manner
prescribed in paragraph (b) of this Section 6. 
Options which have been so surrendered, in whole or in part, shall no
longer be exercisable to the extent the related stock appreciation rights have
been exercised.

 

(b)           Terms and
Conditions.  Stock
appreciation rights shall be subject to such terms and conditions, not inconsistent
with the provisions of the Plan, as shall be determined from time to time by
the Committee, including the following:

 

(i)             Stock
appreciation rights shall be exercisable only at such time or times and to the
extent that the stock options to which they relate shall be exercisable.  Except as otherwise provided in Section 5, a
person who is required to file reports under Section 16(a) of the Exchange Act
(an “Insider”) may only settle a stock appreciation right by satisfying either
of the following conditions:

 

(A)         the stock appreciation right is settled at least six (6)
months after its date of grant; or

 

(B)          the settlement of the stock appreciation right is made
pursuant to an irrevocable election to settle the right no earlier than six (6)
months after the date of such election.

 

None of the conditions of this Section 6(i)
shall be applicable in the event of death or permanent disability of the
optionee.

 

(ii)            Upon
the exercise of a stock appreciation right, an optionee shall be entitled to
receive up to, but no more than, an amount in cash or whole shares of the Stock
as determined by the Committee in its sole discretion equal to the excess of
the fair market value of one share of Stock over the option price per share
specified in the related stock option multiplied by the number of shares in
respect of which the stock appreciation right shall have been exercised;
provided, however, that the payment in settlement of stock appreciation rights
during the period from and after a Change of Control shall be entirely in
cash.  Each stock appreciation right may
be exercised only at the time and so long as a related option, if any, would be
exercisable or as otherwise permitted by applicable law; provided however, that
no stock appreciation right granted under the Plan to an Insider then subject
to Section 16 of the Exchange Act shall be exercised during

 

7

 

the first six
months of its term.  The fair market
value of the Stock on the date of exercise of a stock appreciation right shall
be determined in the same manner as the fair market value of the Stock on the
date of grant of a stock option is determined pursuant to paragraph (a) of
Section 5 of the Plan; provided, however, that during the 60-day period from and
after a Change of Control, the fair market value of the Stock on the date of
exercise shall mean, with respect to the exercise of a stock appreciation right
accompanying an option, the “Change of Control Fair Market Value.”

 

For purposes of this Plan, the “Change of
Control Fair Market Value” shall mean the higher of (x) the highest reported
sale price, regular way, of a share of the Stock on the Composite Tape for New
York Stock Exchange Listed Stock during the 60-day period prior to the date of
the Change of Control or, if such security is not listed or admitted to trading
on the New York Stock Exchange, on the principal national securities exchange
on which such security is listed or admitted to trading or, if not listed or
admitted to trading on any national securities exchange, on the Nasdaq National
Market or, if such security is not quoted on such Nasdaq National Market, the
average of the closing bid and asked prices during such 60-day period in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotation system (“NASDAQ”) or, if bid and asked prices for
such security during such period shall not have been reported through NASDAQ,
the average of the bid and asked prices for such period as furnished by any New
York Stock Exchange member firm regularly making a market in such security
selected for such purpose by the Board of Directors of the Corporation or a
committee thereof or, if such security is not publicly traded, the fair market
value thereof as determined by an independent investment banking or appraisal
firm experienced in the valuation of such securities selected in good faith by
the Board of Directors of the Corporation or a committee thereof or, if no such
investment banking or appraisal firm is in the good faith judgment of the Board
of Directors or such committee available to make such determination, as
determined in good faith by the Board of Directors of the Corporation or such
committee and (y) if the Change of Control is the result of a transaction or
series of transactions described in paragraph (i) or (iii) of the definition of
Change of Control set forth in Section 5(c), the highest price per share of the
Stock paid in such transaction or series of transactions (in the case of a
Change of Control described in such paragraph (i) of Section 5(c), as reflected
in any Schedule 13D filed by the person having made the acquisition).

 

(iii)           The
Committee, in its sole discretion, may impose such restrictions on the
transferability of stock appreciation rights as it deems appropriate.  Any such restrictions shall be set forth in
the written agreement between the Corporation and the optionee with respect to
such rights.

 

(iv)          Upon
the exercise of a stock appreciation right, the stock option or part thereof to
which such stock appreciation right is related shall be deemed to

 

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have been
exercised for the purpose of the limitation of the number of shares of the
Stock to be issued under the Plan, as set forth in Section 3 of the Plan.

 

Section 7.               Restricted Stock.  (a)  Stock and Administration. 
Shares of restricted stock may be issued either alone
or in addition to stock options, stock appreciation rights, deferred stock or
other Stock-based awards granted under the Plan.  The Committee shall determine the employees
of the Corporation and its subsidiaries to whom, and the time or times at
which, grants of restricted stock will be made, the number of shares to be awarded,
the time or times within which such AWARDS may be subject to forfeiture, and
all other conditions of the AWARDS.  The
provisions of restricted stock AWARDS need not be the same with respect to each
recipient.

 

(b)           Awards and
Certificates.  The prospective
recipient of an AWARD of shares of restricted stock shall not, with respect to
such AWARD, be deemed to have become a participant, or to have any rights with
respect to such AWARD, until and unless such recipient shall have executed an
agreement or other instrument evidencing the AWARD and delivered a fully
executed copy thereof to the Corporation and otherwise complied with the then
applicable terms and conditions.

 

(i)             Each
participant shall be issued a stock certificate in respect of shares of
restricted stock awarded under the Plan. 
Such certificate shall be registered in the name of the participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such AWARD, substantially in the following form:

 

“The transferability of this certificate and
the shares of stock represented hereby are subject to the terms and conditions
(including forfeiture) of the Medarex, Inc. 2002  New Employee Stock Option Plan and an
Agreement entered into between the registered owner and Medarex, Inc.  Copies of such Plan and Agreement are on file
in the offices of Medarex, Inc., 707 State Road, Princeton, New Jersey 08540.”

 

(ii)            The
Committee shall require that the stock certificates evidencing such shares be
held in custody by the Corporation until the restrictions thereon shall have
lapsed, and shall require, as a condition of any restricted stock AWARD, that
the participant shall have delivered a stock power, endorsed in blank, relating
to the Stock covered by such AWARD.

 

(c)           Restrictions
and Conditions.  The shares of
restricted stock awarded pursuant to the Plan shall be subject to the following
restrictions and conditions:

 

(i)             subject to the provisions of this Plan during a period set
by the Committee commencing with the date of such AWARD (the “restriction
period”), the participant shall not be permitted to sell, transfer, pledge, or
assign shares of restricted stock awarded under the Plan.  Within these limits the Committee may

 

9

 

provide for the
lapse of such restrictions in installments where deemed appropriate.

 

(ii)            Except
as provided in paragraph (c) of this Section 7, the participants shall have,
with respect to the shares of restricted stock, all of the rights of a
stockholder of the Corporation, including the right to vote the restricted
stock and the right to receive any cash dividends.  The Committee, in its sole discretion, may
permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested in additional restricted stock or otherwise
reinvested.  Certificates for shares of
unrestricted stock shall be delivered to the participant promptly after, and
only after, the period of forfeiture shall expire without forfeiture in respect
of such shares of restricted stock.

 

(iii)           Subject
to the provisions of paragraph (c)(iv) of this Section
7, upon termination of employment of any reason during the restriction period,
all shares still subject to restriction shall be forfeited by the participant
and reacquired by the Corporation.

 

(iv)          In
the event of a participant’s retirement, permanent disability, or death, or in
cases of special circumstances, the Committee may, in its sole discretion, when
it finds that a waiver would be in the best interests of the Corporation, waive
in whole or in part any or all remaining restrictions with respect to such
participant’s shares of restricted stock.

 

(v)           Notwithstanding
anything in the foregoing to the contrary, upon a Change of Control any and all
restrictions on restricted stock shall lapse regardless of the restriction
period established by the Committee and all such restricted stock shall become
fully vested and nonforfeitable.

 

Section 8.               Deferred Stock Awards. 
(a)  Stock and
Administration.  AWARDS of the
right to receive Stock that is not to be distributed to the participant until
after a specified deferral period (such AWARD and the deferred stock delivered
thereunder hereinafter as the context shall require, referred to as the “deferred
stock”) may be made either alone or in addition to stock options, stock
appreciation rights, or restricted stock, or other Stock-based awards granted
under the Plan.  The Committee shall
determine the employees of the Corporation and its subsidiaries to whom and the
time or times at which deferred stock shall be awarded, the number of shares of
deferred stock to be awarded to any participant, the duration of the period
(the “Deferral Period”) during which, and the conditions under which, receipt
of the Stock will be deferred, and the terms and conditions of the AWARD in
addition to those contained in paragraph (b) of this Section 8.  In its sole discretion, in lieu of delivering
shares, the Committee may provide for a minimum payment to the participant at
the end of the applicable Deferral Period based on a stated percentage of the
fair market value on the date of grant of the number of shares covered by a
deferred stock AWARD.  The Committee may
also provide for the grant of deferred stock upon the completion of a specified
performance period.  The provisions of
deferred stock AWARDS need not be the same with respect to each recipient.

 

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(b)           Terms and
Conditions.  Deferred stock
AWARDS made pursuant to this Section 8 shall be subject to the following terms
and conditions:

 

(i)             Subject
to the provisions of the Plan, the shares to be issued pursuant to a deferred
stock AWARD may not be sold, assigned, transferred, pledged or otherwise
encumbered during the Deferral Period or Elective Deferral Period (defined
below), where applicable, and may be subject to a risk of forfeiture during all
or such portion of the Deferral Period as shall be specified by the
Committee.  At the expiration of the
Deferral Period and Elective Deferral Period, share certificates shall be
delivered to the participant, or the participant’s legal representative, in a
number equal to the number of shares covered by the deferred stock AWARD.

 

(ii)            Amounts
equal to any dividends declared during the Deferral Period with respect to the
number of shares covered by a deferred stock AWARD will be paid to the
participant currently, or deferred and deemed to be reinvested in additional
deferred stock or otherwise reinvested, as determined at the time of the AWARD
by the Committee, in its sole discretion.

 

(iii)           Subject
to the provisions of paragraph (b)(iv) of this Section 8, upon termination of
the relationship with or employment by the Corporation for any reason during
the Deferral Period for a given deferred stock AWARD, the deferred stock in
question shall be forfeited by the participant.

 

(iv)          In
the event of the participant’s retirement, permanent disability or death during
the Deferral Period (or Elective Deferral Period, where applicable), or in
cases of special circumstances, the Committee may, in its sole discretion, when
it finds that a waiver would be in the best interests of the Corporation, waive
in whole or in part any or all of the remaining deferral limitations imposed
hereunder with respect to any or all of the participant’s deferred stock.  Anything in the Plan to the contrary
notwithstanding, upon the occurrence of a Change of Control, the Deferral
Period and the Elective Deferral Period with respect to each deferred stock
AWARD shall expire immediately and all share certificates relating to such
deferred stock AWARDS shall be delivered to each participant or the participant’s
legal representative.

 

(v)           Prior
to completion of the Deferral Period, a participant may elect to defer further
the receipt of the deferred stock AWARD for a specified period or until a
specified event (the “Elective Deferred Period”), provided that the Committee
may, in its sole discretion, disallow any such action.

 

(vi)          Each
deferred stock AWARD shall be confirmed by a deferred stock agreement or other
instrument executed by the Committee and by the participant.

 

11

 

Section 9.               Other Stock-Based Awards.  (a)  Stock and Administration. 
Other AWARDS of the Stock and other AWARDS that are valued in whole or
in part by reference to, or are otherwise based on the Stock (“Other
Stock-based AWARDS”), including (without limitation) performance shares and
convertible debentures, may be granted either alone or in addition to other
AWARDS granted under the Plan.  Subject
to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the employees of the Corporation and/or any of its
subsidiaries to whom and the time or times at which such Other Stock-based
AWARDS shall be made, the number of shares of the Stock to be awarded pursuant
to such Other Stock-based AWARDS and all other conditions of the Other
Stock-based AWARDS.  The Committee may
also provide for the grant of the Stock upon the completion of a specified
performance period.  The provisions of
Other Stock-based AWARDS need not be the same with respect to each recipient.

 

(b)           Terms and
Conditions.  Other Stock-based
AWARDS made pursuant to this Section 9 shall be subject to the following terms
and conditions:

 

(i)             Subject
to the provisions of this Plan, shares or interests in shares subject to Other
Stock-based AWARDS made under this Section 9 may not be sold, assigned,
transferred, pledged or otherwise encumbered prior to the date on which the
shares are issued, or, if later, the date on which any applicable restriction,
performance or deferral period lapses.

 

(ii)            Subject
to the provisions of this Plan and the Other Stock-based AWARD agreement, the
recipients of Other Stock-based AWARDS under this Section 9 shall be entitled
to receive, currently or on a deferred basis, interest or dividends or interest
or dividend equivalents with respect to the number of shares or interests
therein covered by the Other Stock-based AWARDS, as determined at the time of
the Other Stock-based AWARDS by the Committee, in its sole discretion, and the
Committee may provide that such amounts (if any) shall be deemed to have been
reinvested in additional Stock or otherwise reinvested.

 

(iii)           Any
Other Stock-based AWARDS under this Section 9 and any Stock covered by any such
Other Stock-based AWARD may be forfeited to the extent so provided in the Other
Stock-based AWARD agreement, as determined by the Committee, in its sole
discretion.

 

(iv)          In
the event of the participant’s retirement, permanent disability or death, or in
cases of special circumstances, the Committee may, in its sole discretion, when
it finds that a waiver would be in the best interests of the Corporation, waive
in whole or in part any or all of the remaining limitations imposed hereunder
(if any) with respect to any or all Other Stock-based AWARDS under this Section
9.  Anything in the Plan to the contrary
notwithstanding, any limitations imposed with respect to any Other Stock-based
AWARD under this Section 9, including any provision providing for the
forfeiture

 

12

 

of any Other Stock-based AWARD under any circumstance, shall terminate
immediately upon a Change of Control and the number of shares of or interests
in the Stock subject to such Other Stock-based AWARD shall be delivered to the
participant (or, in the case of an Other Stock-based AWARD with respect to
which such number is not determinable, such number of shares of or interests in
the Stock as is determined by the Committee and set forth in the terms of such
Other Stock-based AWARD).

 

(v)           Each
Other Stock-based AWARD under this Section 9 shall be confirmed by an agreement
or other instrument executed by the Corporation and by the participant.

 

(vi)          The
Stock or interests therein (including securities convertible into the Stock)
paid or awarded on a bonus basis under this Section 9 shall be issued for no
cash consideration; the Stock or interests therein (including securities
convertible into the Stock) purchased pursuant to a purchase right awarded
under this Section 9 shall be priced at least 50% of the fair market value of
the Stock on the date of grant.

 

(vii)         The
Committee, in its sole discretion, may impose such restrictions on the
transferability of Other Stock-based Awards as it deems appropriate.  Any such restrictions shall be set forth in
the written agreement between the Corporation and the optionee with respect to
such Award.

 

(viii)        Each
Other Stock-based AWARD to an Insider under this Section 9 shall be subject to
all of the limitations and qualifications that may be required by Section 16 of
the Exchange Act and all of the rules and regulations promulgated thereunder.

 

Section 10.            Transfer, Leave of Absence, etc.  For purposes of the Plan:  (a) a transfer of an employee from the
Corporation to a subsidiary, or vice versa, or from one subsidiary to another;
(b) a leave of absence, duly authorized in writing by the Corporation, for
military service or sickness, or for any other purposes approved by the
Corporation if the period of such leave does not exceed 90 days; and (c) a
leave of absence in excess of 90 days, duly authorized in writing by the
Corporation, shall not be deemed a termination of employment.

 

Section 11.            Amendments and Termination.  The Board may amend, alter, or discontinue
the Plan, but no amendment, alteration, or discontinuation shall be made which
would impair the rights of an optionee or participant under any AWARD
theretofore granted, without the optionee’s or participant’s consent, or which
without the approval of the shareholders would:

 

(a)           subsequent to the date of grant decrease the option price of
any stock option to less than 100% of the fair market value on the date of the
granting of the option;

 

13

 

(b)           extend the maximum option period under Section 5(b) of the
Plan; or

 

(c)           otherwise materially increase the benefits accruing to
participants under, or materially modify the requirements as to eligibility for
participation in, the Plan.

 

The Committee may amend the terms of any AWARD theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights
of any holder without such holder’s consent. 
Notwithstanding the foregoing, the Board or the Committee may, in its
discretion, amend the Plan or terms of any outstanding AWARD held by a person
then subject to Section 16 of the Exchange Act without the consent of any
holder in order to preserve exemptions under said Section 16 which are or
become available from time to time under rules of the Securities and Exchange
Commission.  The Committee may also
substitute new stock options for previously granted options, including
previously granted options having higher option prices.

 

Section 12.            Unfunded Status of the Plan.  The Plan is intended to constitute an “unfunded”
plan for incentive and deferred compensation. 
With respect to any payments not yet made to a participant or optionee
by the Corporation, nothing contained herein shall give any such participant or
optionee any rights that are greater than those of a general creditor of the
Corporation.  In its sole discretion, the
Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver the Stock; provided, however,
that the existence of such trusts or other arrangements is consistent with the
unfunded status of the Plan.

 

Section 13.            Employment at Will.  Nothing contained in the Plan, or in any
option granted pursuant to the Plan, nor in any agreement made pursuant to the
Plan, shall confer upon any optionee any right with respect to continuance of
employment by the Company or its subsidiaries, nor interfere in any way with
the right of the Company or its subsidiaries to terminate the optionee’s
employment at will or change the optionee’s compensation at any time.

 

Section 14.            General Provisions.  (a) 
The Committee may require each participant purchasing shares pursuant to
an AWARD under the Plan to represent to and agree with the Corporation in
writing that such participant is acquiring the shares without a view to
distribution thereof.  The certificates
for such shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.

 

(b)           All certificates for
shares of the Stock delivered under the Plan pursuant to any AWARD 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 Stock is
then listed, and any applicable Federal or state securities 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

 

(c)           Recipients of shares of
restricted stock, deferred stock and other Stock-based awards under the Plan
(other than options) shall not be required to make any payment or provide
consideration other than the rendering of services.

 

(d)           AWARDS granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for, any other AWARDS granted
under the Plan.  If AWARDS are granted in
substitution for other AWARDS, the Committee shall require the surrender of
such other AWARDS in consideration for the grant of the new AWARDS.  AWARDS granted in addition to or in tandem
with other AWARDS may be granted either at the same time as or at a different
time from the grant of such other AWARDS. 
The exercise price of any option or the purchase price of any Other
Stock-based AWARD in the nature of a purchase right shall be determined by the
Committee:

 

(e)           Nothing contained in
this Plan shall prevent the Board of Directors from adopting other or
additional compensation arrangements, subject to shareholder approval if such
approval is required; and such arrangements may be either generally applicable
or applicable only in specific cases.

 

Section 15.            Taxes.  Participants shall make arrangements
satisfactory to the Committee regarding payment of any Federal, state, or local
taxes of any kind required by law to be withheld with respect to any income
which the participant is required, or elects, to include in his gross income
and the Corporation and its subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the participant.  Anything
contained herein to the contrary notwithstanding, the Committee may, in its
sole discretion, authorize acceptance of Stock received in connection with the
grant or exercise of an AWARD or otherwise previously acquired in satisfaction
of withholding requirements.

 

Section 16.            Effective Date of the Plan.  The Effective Date of the Plan is as of July
29, 2004, the date the Plan was approved by the vote of a majority of the Board
of Directors.

 

Section 17.            Term of the Plan.  No AWARD shall be granted pursuant to the
Plan after July 29, 2014, but AWARDS theretofore granted may extend beyond that
date.

 

15Exhibit 4.5

 

SHARE BONUS AWARD CERTIFICATE

 

PURSUANT TO THE

 

UNITY BANCORP, INC.

 

2004 STOCK BONUS PLAN

 

This
Award Certificate evidences a share bonus award of               
shares of common stock, no par value, (“Common Stock”) per share (the “Award”),
of Unity Bancorp, Inc. (the “Corporation”), which has been granted by the Board
of Directors of the Corporation to                                                   
(the “Participant”) pursuant to, and in all respects subject to the terms,
definitions and provisions of, the Unity Bancorp, Inc. 2004 Stock Bonus Plan
(the “Plan”) and the additional terms and conditions set forth in this Award
certificate.  The Plan is incorporated by
reference herein and a copy of the Plan is available to the Participant at no
charge, upon request of the Participant.

 

1.             Vesting of Plan Awards.  The Award shall vest in installments, as set
forth in the schedule below.  The
Participant must be an officer, director or employee of the Corporation on the
specified vesting date (and must have held such a position continuously from
the date of grant of the Award through such specified vesting date) in order
for the applicable portion of the Award to vest on such date.  Once a portion of the Award has vested, the
Participant shall have all rights of a shareholder of the Corporation with
respect to the shares constituting such vested portion.  Notwithstanding any terms contained herein to
the contrary, 100% of the Award will vest upon the occurrence of a Change in
Control of the Corporation (as defined in the Plan) in accordance with the
terms of the Plan.

 

Schedule of Vesting

 

	
  Date

  	
   

  	
  Number of Shares

  	
   

  	
  Percentage of Total Shares

  Awarded Which are Non-

  forfeitable

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Upon Grant 

  	
   

  	
  0

  	
   

  	
  0 

  	
  %

  
	
  As of 

  	
   

  	
   

  	
   

  	
  25 

  	
  %

  
	
  As of 

  	
   

  	
   

  	
   

  	
  50 

  	
  %

  
	
  As of 

  	
   

  	
   

  	
   

  	
  75 

  	
  %

  
	
  As of

  	
   

  	
   

  	
   

  	
  100

  	
  %

  

 

 

2.             Adjustments. The number of
shares subject to the Award will be adjusted to reflect future stock splits,
stock dividends and certain other corporate transactions.

 

3.             Restrictions on Awards. The shares
constituting this Award may not be delivered to the recipient if the issuance
of such shares would constitute a violation of any applicable federal or state
securities or other applicable law or regulation. As a condition to the
Participant’s receipt of this Award, the Corporation may require the
Participant to make such representations and warranties to the Corporation as
may be required by any such applicable law or regulation.

 

4.             Non-transferability of Award; Termination of Employment.
The shares constituting this Award may not be transferred in any manner, in
whole or in part, prior to their vesting. 
If the Participant’s employment with, or service as a director of, the
Corporation terminates for any reason, including the death, disability or
retirement (other than retirement after the Participant has reached age 63) of
the Participant, any portion of the Award not vested at the date of such
termination will be forfeited by the Participant.  If the Participant’s employment or service
terminates by reason of retirement at or after age 63, the Award will continue
to vest in accordance with the vesting schedule set forth in Section 1
of this Award certificate.

 

5.             Other Restrictions on Award.
This Award is subject to such other restrictions and limitations as are
contained in the Plan or as may be determined by the Board of Directors of the
Corporation.

 

	
   

  	
  UNITY BANCORP, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Date of Grant:

  	
   

  	
   

  	
  By:

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