Document:

EXHIBIT
10.34

 

EMPLOYMENT
AGREEMENT

 

This EMPLOYMENT AGREEMENT (the
“Agreement”) is entered into this 5th day of January, 2004 (the “Effective Date”),
between Christian S. Schade (the “Executive”) and MEDAREX,
INC. (the “Company”) (collectively, the Executive and the Company
shall be referred to as the “Parties”). 
In consideration of the mutual promises and agreements contained herein,
the Parties agree as follows:

 

1.             PURPOSE.  The Company desires to avail itself of the
services of the Executive as its Senior Vice President, Finance and
Administration, and Chief Financial Officer, and the Executive desires to
provide such services in accordance with the terms of this Agreement.  The Parties agree that the duties and obligations
expected of the Executive and of the Company are as set forth in this
Agreement.

 

2.             EFFECTIVE
DATE AND TERM.  This Agreement shall
be effective, and its term (the “Term”) shall commence as of the Effective
Date.  The Term shall continue through
and until January 4, 2007 (the “Initial Term”), unless terminated sooner as
provided by this Agreement or extended by the Parties.  The Term shall be automatically renewed for
successive periods of one year each (each, a “Renewal Term”), unless either
Party gives to the other written notice of intent not to renew at least ninety
(90) days prior to the expiration of the Initial Term or any Renewal Term.  This Agreement supersedes in its entirety
that Employment Agreement between the Company and the Executive dated October
13, 2000.

 

3.             COMPENSATION.

 

A.            Salary.  During the Term the Company shall pay or
cause to be paid to the Executive, in bi-weekly installments, a salary of
$440,000 per annum or such greater amount as may from time to time be
determined by the Board of Directors (the “Board”) of the Company (the “Base
Salary”).  The Base Salary shall be
reviewed annually by the Board and, if appropriate, may be increased.  The Board may also pay the Executive such
bonuses as it deems appropriate. 
Notwithstanding the foregoing, no increase in Base Salary or bonus shall
be paid to the Executive unless and until approved by a committee of the Board,
a majority of which is comprised of Directors who are not employees of the
Company.

 

B.            Expenses.  The Company shall reimburse the Executive,
within thirty days of voucher, the amount of all travel, hotel, entertainment
and other expenses (properly vouched) reasonably incurred by the Executive in
furtherance of his duties under this Agreement.

 

C.            Benefits.

 

(1)           Vacation.  The Executive shall be entitled to twenty
(20) business days of vacation each year. 
The Executive shall be entitled to carry any unused vacation days over
to the next calendar year.  However, in
no event will Executive’s accrued but unused vacation exceed 40 days.

 

(2)           Holidays.  The Executive shall be entitled to all
holidays generally provided to other employees of the Company.

 

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(3)           Life
Insurance.  During the Term, the
Company shall, upon proof of insurability, purchase, or cause to be purchased,
a policy or policies insuring the life of the Executive payable to the
Executive’s designated beneficiary(s) at least equal to that life insurance
generally provided to other executive employees of the Company.

 

(4)           Medical
Insurance.  During the Term, the
Company shall acquire and pay for, or reimburse the Executive for,
hospitalization, dental, major medical, or other health insurance for the
benefit of the Executive and his dependents at least equal to that generally
provided other executive employees under the Company’s group health insurance
plan(s).

 

(5)           Sick
Leave/Disability.  During any period
in which the Executive is absent from work as a result of personal injury,
sickness or other disability, the Board may, by majority vote, appoint an
Acting Senior Vice President, Finance and Administration, and Chief Financial
Officer to serve for the duration of the Executive’s absence.  The Company shall, while such period
continues or for 180 days, whichever is a shorter period, pay the Executive his
full Base Salary.  The Executive will
also be entitled to additional disability benefits at least equal to that which
is generally provided to other executive employees after the Effective Date.

 

(6)           Directors’
and Officers’ Liability Insurance.  During
the Term, the Company shall acquire and pay for, or reimburse the Executive
for, directors’ and officers’ liability insurance for the benefit of the
Executive at least equal to that generally provided to other executive officers
of the Company.

 

(7)           Other
Benefits.  The Executive shall be
entitled to participate in any equity incentive, pension, retirement or other
qualified plans adopted by the Company for the benefit of its employees,
including, but not limited to, the Company’s stock option plans and the Company’s
tax-qualified 401(k) cash or deferred compensation plan.

 

4.             DUTIES
OF THE EXECUTIVE.

 

A.            Duties.  During the Term, the Executive shall be
Senior Vice President, Finance and Administration, and Chief Financial Officer
of the Company, shall perform such duties as the Company may reasonably require
and shall use his best efforts to carry into effect the directions of the Chief
Executive Officer of the Company.

 

B.            Representation.  During the Term, the Executive shall well and
faithfully serve the Company and use his best efforts to promote the interests
of the Company.  The Executive shall at
all times give the Company the full benefit of his knowledge, expertise,
technical skill and ingenuity in the performance of his duties and exercise of
his powers and authority as Senior Vice President, Finance and Administration,
and Chief Financial Officer.  In
particular (but without limiting the generality thereof), the Executive shall
give to the Chief Executive Officer such information regarding the affairs of
the Company as he shall require and at all times conform to the reasonable
instructions or directions of the Chief Executive Officer.

 

C.            Time
Devoted by Executive.  The Executive
agrees to devote substantially all his time and attention during business hours
and such additional time and attention as may reasonably be required to perform
his duties hereunder.  It shall not be a 

 

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violation of this
Agreement for the Executive to (a) serve on corporate, civic or charitable
boards or committees, (b) deliver lectures, fulfill speaking engagements or
teach at educational institutions, (c) manage personal investments, or (d)
engage in activities permitted by the policies of the Company or as specifically
permitted by the Company, so long as such activities do not significantly
interfere with the full time performance of the Executive’s responsibilities in
accordance with this Agreement.  It is
expressly understood and agreed that to the extent any such activities have
been conducted by the Executive prior to the Term, the continued conduct of
such activities (or the conduct of activities similar in nature and scope)
during the Term shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.

 

5.             RESTRICTIONS
ON THE EXECUTIVE.

 

A.            Non-Disclosure
of Confidential Information.  All
information learned or developed by the Executive during the course of his
employment by the Company will be deemed “Confidential Information” under the
terms of this Agreement.  Examples of
Confidential Information include, but are not limited to, business, scientific
and technical information owned or controlled by the Company, including the
Company’s business plans and strategies; business operations and systems;
information concerning employees, customers, partners and/or licensees; patent
applications; trade secrets; inventions; ideas; procedures; formulations;
processes; formulae; data and all other information of any nature whatsoever
which relate to the Company’s business, science, technology and/or
products.  In addition, Confidential
Information shall include, but not be limited to, all information which the
Company may receive from third parties. 
The Executive will not disclose to any person at any time or use in any
way, except as directed by the Company, either during or after the employment
of the Executive by the Company, any Confidential Information.  The foregoing restrictions shall not apply to
information which is or becomes part of the public domain though no act or
failure to act by the Executive.

 

In addition to the foregoing, in the process of the
Executive’s employment with the Company, or thereafter, under no condition is
the Executive to use or disclose to the Company, or incorporate or use in any
of his work for the Company, any confidential information imparted to the
Executive or with which he may have come into contact while in the employ of
his former employer(s).

 

B.            Inventions.  The term “Invention” means any invention,
discovery, improvement, apparatus, implement, process, compound, composition or
formula, whether or not patentable, conceived or reduced to practice, in whole
or in part, by the Executive (alone, or jointly with others) during any term of
his employment by the Company and twelve (12) months thereafter which directly
or indirectly relates to the business, science, technology or products of the
Company and /or any Confidential Information. 
The Executive will keep, on behalf of the Company, complete, accurate,
and authentic accounts, notes, data, and records (“Records”) of each and every
Invention, which Records will, at all times, be the property of the
Company.  The Executive will comply with
the directions of the Company with respect to the manner and form of keeping or
surrendering Records and will surrender to the Company all Records at the end
of the Executive’s term of employment by the Company.

 

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Each Invention will be the sole and exclusive property
of the Company. The Executive will, at the request of the Company, make
application in due form for United States letters patent and foreign letters
patent (each, a “Patent”) on any Invention and execute any necessary documents
in connection with the Patents.  The
Executive will assign and transfer to the Company all right, title, and
interest of the Executive in any Patents or Patent applications.  The Executive agrees to cooperate with any
actions necessary to continue, renew or retain the Patents.  The Company will bear the entire expense of
applying for and obtaining the Patents.

 

For one year after the termination of the term of the
Executive’s employment by the Company, the Executive will not file any
applications for Patents on any Invention other than those filed at the request
of and on behalf of the Company.

 

The Executive, as a condition of his employment,
hereby represents that, to the best of his knowledge, there is not as of the
date of this Agreement any agreement or obligation outstanding with or to any
of his former employers or other party, which would restrict, limit or in any
way prohibit all or any portion of his work or employment, nor is there in his
possession any confidential information used by any of his former employers or
any other party (except as may have been revealed in generally available
publications or otherwise made publicly available).

 

C.            Non-Competition;
Non-Solicitation.

 

(1)           Non-Competition.  During the Term, without the consent of the
Conflicts Committee of the Board of Directors, the Executive may not directly
or indirectly engage in, or have any interest in, any business (whether as
employee, officer, director, agent, a five percent (5%) or greater security
holder, creditor, consultant, or otherwise) that competes directly with the
business of the Company (as such business may exist during the Term).

 

(2)           Non-Solicitation
of Orders.  During the Term, and
thereafter as specifically provided in Subsection 6.B.(2) or 6.D.(2), the
Executive shall not, whether for himself or on behalf of any other person or
company, directly or indirectly, solicit orders for the creation of antibodies
in transgenic animals from any person or company, who at any time within the
year prior to the end of the Term was a licensee, collaborator or customer of
the Company.

 

(3)           Non-Solicitation of Employees.  During the Term, and thereafter as
specifically provided in Subsection 6.B.(2) or 6.D.(2), the Executive shall
not, directly or indirectly induce or solicit any other employee of the Company
to terminate his or her employment with the Company for the purpose of joining
another company in which the Executive has an interest (whether as an employee,
officer, director, agent, a five percent (5%) or greater security holder, creditor,
consultant, or otherwise).

 

D.            Breach.  The Executive acknowledges that there may be
circumstances in which his breach of any covenant set forth in this Section 5.
could cause harm to the Company which may not be compensable by monetary
damages alone, and which could potentially entitle the Company to injunctive
relief.  However, by acknowledging this
possibility, the Employee is not agreeing to waive his right to require the
Company to meet its evidentiary burdens as required by law in any cause of action
brought by the Company seeking such injunctive relief.

 

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6.             TERMINATION.

 

A.            Non-Renewal.  The provisions of this Subsection 6.A apply
if the Term is not renewed pursuant to the provisions of Section 2.

 

(1)           If
the Company has given notice of non-renewal, the Company shall pay the
Executive his then existing Base Salary and continue Executive’s benefits
enumerated in Subsections 3.C.(3), 3.C.(4) and 3.C.(6) hereof (to the extent
permitted by the Company’s insurance carriers) for one year commencing with the
day following the final day of the Term; provided, however,
that this obligation shall be mitigated by earned income and benefits actually
received by or for the account of the Executive from alternative employment
during such one year period.  In
addition, notwithstanding any provisions of the stock option plan or stock
option agreement pursuant to which any stock options were granted, the
Executive shall be entitled to exercise any of Executive’s stock options vested
as of the final day of the Term until eighteen months from the final day of the
Term or the expiration of the stated period of the option, whichever period is
the shorter.

 

(2)           At
the conclusion of the Term, all other Company obligations to the Executive as
to salary and benefits shall cease.

 

(3)           If
the Executive has given notice of non-renewal, all Company obligations to the
Executive as to salary and benefits shall cease at the conclusion of the Term.

 

B.            Termination
for Cause by the Company.

 

(1)           This
Agreement and the Term may be terminated “for cause” by the Company pursuant to
the provisions of this Subsection 6.B. 
If the Board determines that “cause” exists for termination of the
Executive’s employment, written notice thereof must be given to the Executive
describing the state of affairs or facts deemed by the Board to constitute such
cause.  The Executive shall have
forty-five (45) days after receipt of such notice to cure the reason constituting
cause and if he does so, the Term shall not be terminated for the cause
specified in the notice.  During such
forty-five (45) day period, the Term shall continue and the Executive shall
continue to receive his full Base Salary, expenses and benefits pursuant to
this Agreement.  If such cause is not
cured to the Board’s reasonable satisfaction within such forty-five (45) day
period, the Executive may then be immediately terminated by a majority vote of
the Board excluding the Executive if the Executive is then a member of the
Board.  For purposes of this Agreement,
the words “for cause” or “cause” shall be limited to actions on the part of the
Executive which constitute gross negligence or willful misconduct in the
performance or non-performance of the Executive’s duties or a material breach
of this Agreement by the Executive so long as such material breach is not
caused by the Company.  The duties,
powers and authority of the Executive may also, on a majority vote of the Board
excluding the Executive if the Executive is then a member of the Board, be
suspended for a reasonable period of time, but with a continuation of the
Executive’s full Base Salary, expenses and benefits pursuant to this Agreement,
while a determination is made as to whether cause for termination exists.

 

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(2)           In
the event the Term is terminated by the Company for cause, the provisions of

Subsections 5.C.(2) and 5.C.(3) shall continue to apply for one year after the
conclusion of the Term.

 

(3)           In
the event the Term is terminated by the Company for cause, the Executive’s
entire right to salary and benefits hereunder (with the exception of salary and
benefits accrued prior to termination) shall cease upon such termination.

 

C.            Termination
Without Cause by the Company or for Good Reason by the Executive.

 

(1)           The
Company shall have the right to terminate the Term without cause on ninety (90)
days written notice to the Executive.

 

(2)           The
Executive shall have the right to terminate the Term for good reason on thirty
(30) days written notice to the Company. 
For purposes of this Agreement, the words “for good reason” or “good
reason” shall be limited to the following actions by the Company without the
Executive’s express written consent:  (a)
the assignment to the Executive of any duties or responsibilities that results
in a material diminution in the Executive’s position or function; provided, however, that a change in the Executive’s title or
reporting relationships shall not provide the basis for a termination with good
reason; (b) a relocation of the Executive’s business office to a location more
than fifty (50) miles from the location at which the Executive performs duties
as of the Effective Date, except for required travel by the Executive on the
Company’s business to an extent substantially consistent with the Executive’s
business travel obligations as of the Effective Date; or (c) a material breach
by the Company of any provision of this Agreement or any other material
agreement between the Executive and the Company concerning the terms and
conditions of the Executive’s employment. 
Such a termination by the Executive for good reason shall not be
considered a resignation pursuant to Subsection 6.D.(1).

 

(3)           In
the event the Term is terminated pursuant to Subsection 6.C.(1) or 6.C.(2), the
Company shall pay the Executive his then existing Base Salary and continue
Executive’s benefits enumerated in Subsections 3.C.(3), 3.C.(4)

and 3.C.(6) hereof (to the extent permitted by the Company’s insurance
carriers) for two years commencing with the day following the effective date of
the termination of the Term.  In
addition, notwithstanding any provisions of the stock option plan or stock
option agreement pursuant to which any stock options were granted, the
Executive shall be entitled to exercise any of Executive’s stock options vested
as of the final day of the Term until eighteen months from the final day of the
Term or the expiration of the stated period of the option, whichever period is
the shorter.

 

D.            Resignation
by the Executive.

 

(1)           The
Executive shall have the right to terminate the Term, by way of resignation,
upon ninety (90) days’ written notice to the Company.  A termination by the Executive for good
reason pursuant to Subsection 6.C.(2) shall not be considered a resignation pursuant
to this Subsection 6.D.(1).

 

6

 

(2)           In
the event the Term is terminated pursuant to Subsection 6.D.(1), the provisions
of Subsections 5.C.(2) and 5.C.(3) shall continue to apply for one year
after the conclusion of the Term.

 

(3)           In
the event the Term is terminated pursuant to Subsection 6.D.(1), the Executive’s
entire right to salary and benefits hereunder shall cease at the effective date
of the termination of the Term.

 

E.             Termination
Upon Change in Control.

 

(1)           For
the purposes of this Agreement, a “Change in Control” shall mean any of the
following events:

 

(a)           An
acquisition (other than directly from the Company) of any voting securities of
the Company (the “Voting Securities”) other than in a “Non-Control Acquisition”
(as defined below) by any “Person” (as the term “person” is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended,
(the “1934 Act”)) which results in such Person first attaining “Beneficial Ownership”
(within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty-one
percent (51%) or more of the combined voting power of the Company’s then
outstanding Voting Securities.  For
purposes of the foregoing, 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 Company 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 Company (a “Subsidiary”), or (ii) the
Company or any Subsidiary.

 

(b)           The
individuals who, as of the date of this Agreement, 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 a nomination for election by the Company’s shareholders, 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 1934 Act) or other actual or
threatened solicitation of the 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)           The
consummation of a transaction approved by the Company’s shareholders and
involving:  (1) a merger, consolidation
or reorganization in which the Company is a constituent corporation, unless (i)
the shareholders of the Company, immediately before such merger, consolidation
or reorganization, own, directly or indirectly immediately following such
merger, consolidation or reorganization, at least sixty-six and two-thirds
percent (66-2/3%) of the combined voting power of the outstanding voting
securities of the corporation resulting from such merger, 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 

 

7

 

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 (w) the Company, (x) any Subsidiary, (y) any employee benefit
plan (or any trust forming a part thereof) maintained by the Company, the Surviving
Corporation or any Subsidiary, or (z) any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership of fifty-one
percent (51%) or more of the then outstanding Voting Securities, has Beneficial
Ownership of fifty-one percent (51%) or more of the combined voting power of
the Surviving Corporation’s then outstanding voting securities (a transaction
described in clauses (i) and (ii) shall herein be referred to as a “Non-Control
Transaction”); (2) a complete liquidation or dissolution of the Company; or (3)
an agreement for the sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer to a
Subsidiary).

 

(d)           Notwithstanding
the foregoing, a Change in Control shall not be deemed to occur solely because
the level of Beneficial Ownership held by any Person (the “Subject Person”)
exceeds the designated percentage threshold of the outstanding Voting
Securities as a result of a repurchase or other acquisition of Voting
Securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Company,
and after such share acquisition, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which, assuming the repurchase or
other acquisition had not occurred, increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall occur.

 

(2)           The
Executive shall have the right to terminate this Agreement, for any reason, on
thirty (30) days’ written notice to the Company in the event of a Change in
Control; provided, however, that such termination
right must be exercised by the Executive within one year following such Change
in Control.  Any termination of the Term
by the Company within one year following a Change in Control shall be deemed a
termination by the Executive pursuant to the preceding sentence.

 

(3)           In
the event the Term is terminated by the Executive pursuant to Subsection
6.E.(2) for any reason, the Company shall provide the Executive the following
benefits:

 

(a)           Amount:  In addition to all compensation for services
rendered by Executive to the Company up to the date of termination, the Company
shall pay to Executive, no later than the date of such termination, a single
lump-sum payment in an amount equal to (i) thirty-six times Executive’s highest
monthly base compensation paid hereunder during the preceding twenty-four month
period, plus (ii) three times the Executive’s average annual bonus received by
the Executive during the preceding twenty-four month period.

 

(b)           Benefits:  In addition to the payment described above,
the Company shall continue to provide to Executive all benefits provided under
Subsections 3.C.(3),

 

8

 

3.C.(4) and 3.C.(6)
hereof (to the extent permitted by the Company’s insurance carriers) for a
period of twenty-four months after termination.

 

(c)           Acceleration
of Options:  All of the Executive’s
outstanding options and/or equity awards shall become fully and immediately
vested to the extent not already so provided under the terms of such options
and equity awards.  Notwithstanding any
provisions of the stock option plan or stock option agreement pursuant to which
any stock options subject to the preceding sentence were granted, the Executive
shall be entitled to exercise such options until three years from the date of
termination of employment or the expiration of the stated period of the option,
whichever period is the shorter.

 

(d)           Golden
Parachute Payment Provisions:  If any
payment or benefit the Executive would receive pursuant to a Change in Control
from the Company or otherwise (“Payment”) would (i) constitute a “parachute
payment” within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the “Code”), and (ii) but for this sentence, be subject to
the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
such Payment shall be reduced to the Reduced Amount.  The “Reduced Amount” shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment
being subject to the Excise Tax or (y) the largest portion, up to and including
the total, of the Payment, whichever amount, after taking into account all
applicable federal, state and local employment taxes, income taxes, and the
Excise Tax (all computed at the highest applicable marginal rate), results in
the Executive’s receipt, on an after-tax basis, of the greater amount of the
Payment notwithstanding that all or some portion of the Payment may be subject
to the Excise Tax. If a reduction in payments or benefits constituting “parachute
payments” is necessary so that the Payment equals the Reduced Amount, reduction
shall occur in the following order unless the Executive elects in writing a
different order (provided, however, that such
election shall be subject to Company approval if made on or after the effective
date of the event that triggers the Payment): reduction of cash payments;
cancellation of accelerated vesting of stock options or equity awards;
reduction of employee benefits.  In the
event that acceleration of vesting of stock option or equity award compensation
is to be reduced, such acceleration of vesting shall be cancelled in the
reverse order of the date of grant of the Executive’s stock options or equity
awards unless the Executive elects in writing a different order for
cancellation.

 

The accounting firm engaged by the Company for general
audit purposes as of the day prior to the effective date of the Change in
Control shall perform the foregoing calculations.  If the accounting firm so engaged by the
Company is also serving as accountant or auditor for the individual, entity or
group effecting the Change in Control, the Company shall appoint a nationally
recognized accounting firm to make the determinations required hereunder.  The Company shall bear all expenses with
respect to the determinations by such accounting firm required to be made
hereunder.

 

The accounting firm engaged to make the determinations
hereunder shall provide its calculations, together with detailed supporting
documentation, to the Company and the Executive within fifteen (15) calendar
days after the date on which the Executive’s right to a Payment is triggered
(if requested at that time by the Company or the Executive) or such other time
as requested by the Company or the Executive. 
If the accounting firm determines that no Excise Tax is payable with
respect to a Payment, either before or after 

 

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the application of
the Reduced Amount, it shall furnish the Company and the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to such Payment. 
Any good faith determinations of the accounting firm made hereunder shall
be final, binding and conclusive upon the Company and the Executive.

 

F.             Termination
for Disability.

 

(1)           Should
the Executive be absent from work as a result of personal injury, sickness or
other disability as provided for in Subsection 3.C.(5) for any continuous
period of time exceeding one hundred eighty (180) days, the Term may be
terminated by the Company, upon written notice given to the Executive, because
of the Executive’s disability.

 

(2)           In
the event the Term is terminated pursuant to Subsection 6.F.(1), then,
following such Termination, the Executive shall continue to be entitled to
benefits pursuant to Subsections 3.C.(3), 3.C.(4) and 3.C.(6) hereof (to the
extent permitted by the Company’s insurance carriers) for one hundred eighty
(180) days after the conclusion of the Term. 
In addition, notwithstanding any provisions of the stock option plan or
stock option agreement pursuant to which any stock options were granted, the
Executive shall be entitled to exercise any of Executive’s stock options vested
as of the final day of the Term until eighteen months from the final day of the
Term or the expiration of the stated period of the option, whichever period is
the shorter.

 

G.            Termination
Upon Death.  If not earlier
terminated, the Term shall terminate upon the death of the Executive and the
Company shall have no further obligation to the Executive or his estate except
to pay the Executive’s estate any Base Salary accrued but remaining unpaid
prior to his death, any expenses accrued but remaining unpaid prior to his
death, and any benefits accrued but remaining unpaid prior to his death.  In addition, the Company shall continue for
the benefit of Executive’s dependents Executive’s benefits enumerated in
Subsections 3.C.(4) and 3.C.(6) hereof (to the extent permitted by the Company’s
insurance carriers) for two years commencing with the day following Executive’s
death.  In addition, notwithstanding any
provisions of the stock option plan or stock option agreement pursuant to which
any stock options were granted, the Executive shall be entitled to exercise any
of Executive’s stock options vested as of the final day of the Term until
eighteen months from the final day of the Term or the expiration of the stated
period of the option, whichever period is the shorter.

 

H.            COBRA. 
If the Company continues benefits for Executive and his dependents
pursuant to

Subsection 6.A, 6.C, 6.E, 6.F or 6.G, Executive and his dependents, as
applicable, shall, upon the request of the Company, be required to elect to
receive such continued coverage under the provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), and any
analogous state law, and the Company’s provision of such continued coverage for
all purposes shall be considered continuation coverage under COBRA and any
analogous state law.  In the event
Executive is required to make an election pursuant to the preceding sentence,
the Company will reimburse the Executive for his COBRA and any analogous state
law costs incurred during the periods set forth in Subsection 6.A, 6.C, 6.E,
6.F or 6.G, as applicable, unless and until Executive becomes a full-time
employee of another entity.

 

10

 

7.             MISCELLANEOUS.

 

A.            Notice.  Any notice to be given hereunder shall either
be delivered personally and/or sent by first class certified mail and regular
mail.  The address for service on the
Company shall be its registered office, and the address for service on the
Executive shall be his last known place of residence.  A notice shall be deemed to have been served
as follows:

 

(1)           if
personally delivered, at the time of delivery; and/or

 

(2)           if
posted, at the expiration of 48 hours (10 days if international) after the
envelope containing the same was delivered into the custody of the postal authorities.

 

B.            Disability.  The Company acknowledges its obligations
under state and federal law to provide reasonable accommodations to the
Executive in the event of a disability, and nothing in this Agreement is
intended to relieve the Company of that responsibility.

 

C.            Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their
respective heirs, personal representatives, successors and assigns, provided
that neither Party shall assign any of its rights or privileges hereunder
without the prior written consent of the other Party except that the Company
may assign its rights hereunder to a successor in ownership of all or
substantially all the assets of the Company.

 

D.            Severability.  Should any part or provision of this
Agreement be held unenforceable by a court of competent jurisdiction, the
validity of the remaining parts or provisions shall not be affected by such
holding, unless such enforceability substantially impairs the benefit of the
remaining portions of the Agreement.

 

E.             Waiver.  No failure or delay on the part of either
Party in the exercise of any right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
privilege preclude other or further exercise thereof or of any other right of
privilege.

 

F.             Captions.  The captions used in this Agreement are for
convenience only and are not to be used in interpreting the obligations of the
Parties under this Agreement.

 

G.            Choice
of Law.  The validity, construction
and performance of this Agreement and the transactions to which it relates
shall be governed by the laws of the State of New Jersey, without regard to
choice of laws provisions, and the Company and the Executive irrevocably consent
to the exclusive jurisdiction and venue of the federal and state courts located
within New Jersey, and courts with appellate jurisdiction therefrom, in
connection with any matter based upon or arising out of this Agreement.

 

H.            Entire
Agreement.  This Agreement embodies
the entire understanding of the Parties as it relates to the subject matter
contained herein and as such, supersedes any prior agreement or understanding
between the Parties relating to the terms of employment of the Executive.  No amendment or modification of this
Agreement shall be valid or binding upon the Parties unless in writing executed
by the Parties.

 

11

 

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the day and year
first written above.

 

	
   

  	
  MEDAREX,
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Irwin Lerner

  	
   

  
	
   

  	
   

  	
  Irwin Lerner

  
	
   

  	
   

  	
  Chairman of the Compensation and 

  Organization Committee of the 

  Board of Directors of Medarex, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Christian S.
  Schade

  	
   

  
	
   

  	
  Christian S.
  Schade

  

 

12EXHIBIT 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.

 

 

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.

 

 

(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

 

 

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

 

 

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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