<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For quarter ended June 30, 1999 Commission File No. 0-19312
------------- -------
MEDAREX, INC.
-------------
(Exact name of registrant as specified in its charter.)
New Jersey 22-2822175
- ---------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1545 Route 22 East, Annandale, New Jersey 08801
- ----------------------------------------- -----
(Address or principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 713-6001
--------------
Indicate by check mark whether registrant (1) has filed all reports required to
be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
The number of shares of common stock, $.01 par value, outstanding as of August
6, 1999 was 32,119,696 shares.
Page 1 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 31, June 30,
------------------ --------------
1998 1999
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 4,411 $ 3,531
Marketable securities 30,253 22,612
Trade accounts receivable, less allowance for doubtful
accounts of $5 16 47
Inventory 49 46
Prepaid expenses and
other current assets 1,796 1,578
------------------ --------------
Total current assets 36,525 27,814
Property and equipment
Machinery and equipment 4,439 4,731
Furniture and fixtures 282 322
Leasehold improvements 2,321 2,248
------------------ --------------
7,042 7,301
Less accumulated depreciation and amortization (3,703) (4,195)
------------------ --------------
3,339 3,106
Investments in, and advances to affiliates 561 561
Segregated cash 1,300 1,300
Patent nights and other assets 510 488
------------------ --------------
Total assets $ 42,235 $ 33,269
------------------ --------------
------------------ --------------
LIABILITIES AND STOCKHOLDERS EQUITY
- -----------------------------------
Current liabilities
Trade accounts payable $ 394 $ 419
Accrued liabilities 4,867 2,480
Deferred contract revenue 1,683 833
------------------ --------------
Total current liabilities 6,944 3,732
Long-term obligations 62 35
Commitments - -
Stockholders' equity
Preferred stock, $1.00 par value, 2,000,000 shares authorized;
none issued and outstanding - -
Common stock, $.01 par value, 40,000,000 shares authorized;
31,507,186 shares issued and outstanding at December 31, 1998
and 32,119,696 shares issued and 31,517,196 shares outstanding
at June 30, 1999 315 321
Capital in excess of par value 144,252 144,341
Treasury stock, at cost 0 and 602,500 shares, respectively - (3,031)
Deferred compensation - 2,970
Accumulated other comprehensive income (loss) 67 (335)
Accumulated deficit (109,405) (114,764)
------------------ --------------
Total stockholders' equity 35,229 29,502
------------------ --------------
Total liabilities and stockholders' equity $ 42,235 $ 33,269
------------------ --------------
------------------ --------------
</TABLE>
See notes to these unaudited consolidated financial statements
Page 2 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousand, except share data)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30, June 30, June 30,
1998 1999 1998 1999
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Sales 521 487 462 443
Grants, contract and license revenues 2,883 6,540 1,629 990
----------- ---------- --------- ---------
Total revenues 3,404 7,027 2,091 1,433
Costs and expenses:
Cost of sales 447 156 315 128
Research and development 10,950 10,168 5,663 4,690
General and administrative 2,204 2,616 1,146 1,334
----------- ---------- --------- ---------
Operating loss (10,197) (5,913) (5,033) (4,719)
Interest and dividend income 1,200 558 505 291
Interest expense 1,209 4 608 2
----------- ---------- --------- ---------
Net loss (10,206) (5,359) (5,136) (4,430)
----------- ---------- --------- ---------
----------- ---------- --------- ---------
Basic and diluted net loss per share ($0.46) ($0.17) ($0.23) ($0.14)
----------- ---------- --------- ---------
----------- ---------- --------- ---------
Weighted-average number of common
shares outstanding during the period
-basic and diluted 22,180,890 31,585,959 22,197,718 31,663,866
</TABLE>
See notes to these unaudited consolidated financial statements.
Page 3 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
1998 1999
---- ----
<S> <C> <C>
Operating activities:
Net loss $ (10,206) $ (5,359)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 380 385
Amortization 210 203
Non-cash interest expense 1,201 -
Changes in operating assets and liabilities, net of acquisition:
Trade accounts receivable, net (2) (31)
Inventory 3 3
Prepaid expenses and other current assets (1,125) 218
Trade accounts payable 582 25
Accrued liabilities (1,917) (2,378)
GenPharm acquisition liability (654) -
Deferred contract revenue - (850)
------------- -----------------
Net cash used in operating activities (11,528) (7,784)
Investing activities:
Purchase of property and equipment (1,218) (333)
Increase in other assets (360) -
Increase in advances to affiliate (100) -
Purchase of marketable securities - (4,000)
Sale of marketable securities 9,201 11,239
------------- -----------------
Net cash provided by investing activities 7,523 6,906
Financing activities:
Cash received from sales of securities, not 31 34
Principal payments under debt obligations (64) (36)
------------- -----------------
Net cash used in financing activities (33) (2)
------------- -----------------
Net decrease in cash and cash equivalents (4,038) (880)
Cash and cash equivalents at beginning of period 6,723 4,411
------------- -----------------
Cash and cash equivalents at end of period $ 2,685 $ 3,531
------------- -----------------
------------- -----------------
Supplemental disclosures of cash flow information
Cash paid during period for:
Income taxes $ 983 $ -
------------- -----------------
Interest $ 8 $ 4
------------- -----------------
</TABLE>
See notes to these unaudited consolidated financial statements.
Page 4 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
1. Organization and basis of presentation
The unaudited consolidated financial statements have been prepared
from the books and records of Medarex, Inc. and Subsidiaries (the "Company") in
accordance with the instruction to Form 10-Q and, accordingly, do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Interim results are not necessarily
indicative of the results that may be expected for the year. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-K for the year ended December 31, 1998.
2. Net loss per common share
Basic and diluted earnings per share is calculated in accordance with
the Financial Accounting Standards Board ("FASB") SFAS No. 128, Earnings per
Share. All earnings per share amounts for all periods have been presented, and
where appropriate, restated to conform to the requirements of SFAS No. 128.
3. Marketable Securities
Marketable securities consist of fixed income investments with a
maturity of greater than three months and other highly liquid investments which
can be readily purchased or sold using established markets. Such securities,
which are classified as available-for-sale, are carried at market with
unrealized gains and losses reported as a separate component of stockholders'
equity.
4. Inventory
Inventory consists primarily of antibodies to be sold to the research
community and to licensees pursuant to licensing arrangements for use in human
clinical testing of the Company's products and is stated at the lower of cost or
market with cost determined on a first-in-first-out basis.
5. Contingencies
In connection with the merger of the Company and Essex Medical
Products, Inc., the Company issued promissory notes to Essex Chemical
Corporation ("Essex") in the principal amount of $100, which have been
subsequently repaid, and committed to pay 20% of the Company's net after tax
income until a total of $1,000 has been paid. At the Company's option, this
obligation may be satisfied by the payment of shares of the Company's Common
Stock having a fair market value equal to the amount owed, provided such shares
are registered for sale with the Securities and Exchange Commission. Amounts up
to $1,000 will be payable to Essex, based solely on the earnings of the Company,
by March 31 of each year, to the extent of 20% of net after tax earnings of the
Company realized during the preceding fiscal year.
Page 5 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
6. Executive Deferred Compensation Plan
Effective March 31, 1999 the Company instituted an executive deferred
compensation plan to permit certain individuals to defer the gain on the
exercise of stock options to a specified future period. In June 1999, six
individuals deferred the gain on the exercise of options to purchase 602,500
shares of the Company's common stock which is included as treasury stock in the
Company's June 30, 1999 consolidated balance sheet. The Company's executive
deferred compensation plan does not permit diversification and must be settled
by the delivery of 590,521 shares of the Company's stock on June 7, 2002 and
accordingly changes in the fair value of the amount owed to the individuals is
not recognized.
7. Comprehensive Income
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130
establishes new rules for the reporting and display of comprehensive income and
its components. The adoption of SFAS 130 had no impact on the Company's results
of operations or stockholders' equity. SFAS 130 requires unrealized gains or
losses on the Company's available-for-sale securities, which prior to adoption
were reported separately in stockholders' equity to be included in other
comprehensive income. The components of comprehensive loss for the three and
six months ended June 30, are as follows:
<TABLE>
<CAPTION>
Six months ended June 30, Three months ended June 30,
1998 1999 1998 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss $(10,206) $(5,359) $(5,136) $(4,430)
Unrealized loss on securities (112) (402) (27) (460)
-------------------------------------- --------------------------------------
Total comprehensive loss $(10,318) $(5,761) $(5,163) $(4,890)
</TABLE>
8. Segment Information
The Company is an integrated monoclonal antibody-based company with
antibody discovery, development and manufacturing capabilities. The operations
of the Company and its wholly-owned subsidiaries constitute one business
segment.
Revenue from customers representing 10% or more of total revenues for the
three and six months ended June 30, 1998 and 1999 is as follows:
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
Customer 1998 1999 1998 1999
- -------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Centocor, Inc. 14% 57% 3% 0%
Merck KGaA 5% 22% 0% 34%
Genmab A/S 0% 5% 0% 26%
Centeon L.L.C. 21% 5% 17% 10%
Novartis Pharma AG 0% 3% 0% 11%
Santen Pharmaceutical Co., Ltd. 13% 0% 10% 0%
Eisai Co., Ltd. 21% 0% 34% 0%
</TABLE>
No other single customer accounted for more than 10% of the Company's total
revenues for the three and six months ended June 30, 1998 and 1999,
respectively.
Page 6 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
This Quarterly Report on Form 10-Q contains "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which represent
the Company's projections, estimates, expectations or beliefs concerning among
other things, financial items that relate to management's future plans or
objectives or to the Company's future economic and financial performance.
Forward-looking statements involve known and unknown risks and uncertainties and
are indicated by words such as "anticipates", "expects", "believes", "plans",
"could" and similar words and phrases. These risks and uncertainties include,
but are not limited to, the Company's early stage of product development,
history of operating losses and accumulated deficit, additional financing
requirements and access to capital funding, dependence on strategic alliances,
government regulation of the biopharmaceutical industry and other risks that may
be detailed from time to time in the Company's periodic reports and registration
statements filed with the Securities and Exchange Commission.
Liquidity and Capital Resources
- -------------------------------
The Company had approximately $26,100 in cash, cash equivalents and
marketable securities and approximately $1,300 in a segregated cash account as
of June 30, 1999. Operating activities consumed approximately $7,800 of cash
for the six-month period ended June 30, 1999.
To date, the Company's sources of cash have been the proceeds from the sale
of its securities through public and private placements, sales of its products
for research purposes and technology transfer and license fees.
The Company's current sources of liquidity are its cash, cash equivalents
and marketable securities, interest and dividends earned on such cash, cash
equivalents and marketable securities, sales of its products for research and
contract and licensing revenues. Management believes that under existing
operating plans its current sources of liquidity will be sufficient to meet
anticipated cash requirements for at least the next 18 months.
The Company has leased approximately 53,000 square feet of laboratory,
clinical trial production and office space in a modern facility on a research
campus in Annandale, New Jersey, that was developed by Exxon Research and
Engineering Company as its corporate research headquarters. Management believes
that this facility is well suited for clinical-grade production of bispecific
and monoclonal antibodies as it has in place most utilities required for
clinical-grade production of such antibodies, including a production unit
designed to meet cGMP standards. By leasing this facility and spending modestly
to adapt it, management believes that the Company has preserved a considerable
amount of capital that might otherwise have been used to build a
biopharmaceutical production facility.
Page 7 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Liquidity and Capital Resources (con't)
- ---------------------------------------
This lease runs through September 30, 2003. On January 8, 1998, the Company
signed a lease for laboratory and office space in San Jose, California. This
lease runs through December 2001. On July 2, 1999, the Company signed a lease
for 6,410 square feet of office space in Princeton, New Jersey. This lease runs
through July 2004. The minimum combined lease commitments for all facilities
range between $1,541 and $2,300 per year and the aggregate future minimum lease
commitments over the remainder of the lease terms are approximately $9,000. As
of June 30, 1999, the Company had commitments for approximately $680 of capital
expenditures.
Upon exhaustion of its current cash reserves, the Company's continued
operations will depend on its ability to raise additional funds through equity
or debt financing and/or enter into licensing or joint development agreements,
including collaborative research and development arrangements with large
pharmaceutical companies pursuant to which certain costs associated with the
regulatory approval process for certain of its products would be borne by the
licensees or joint developers. There can be no assurance that these sales or
financing activities will be successful.
Year 2000 Implications
- ----------------------
Many currently installed computer systems and software products are coded
to accept only two-digit entries in the date code field and cannot reliably
distinguish dates beginning on January 1, 2000 from dates prior to the year
2000. Many companies' software and computer systems may need to be upgraded or
replaced in order to correctly process dates beginning in 2000 and to comply
with the "Year 2000" requirements. The Company has determined that there are no
significant Year 2000 issues with its systems or services. With respect to its
internal systems, the Company in conjunction with expert third-party Year 2000
consultants, has completed a review of its business systems including its
research and development, financial, communication and administrative operations
and is implementing programs to address its potential exposures to the Year 2000
issue. Based on this review, systems identified as non-year 2000 compliant are
either being replaced or corrected through software upgrades. The Company
expects to replace or correct all non-compliant systems by the end of the third
quarter of 1999. The Company estimates the cost of its Year 2000 efforts to be
approximately $30, of which approximately $20 has been incurred to date. The
total cost estimate is based on management's current assessments and is subject
to change.
In addition, the Company has gathered information about the Year 2000
compliance status from its significant suppliers and subcontractors and
continues to monitor their compliance. Although the Company believes that its
systems are Year 2000 compliant, the equipment and software of its suppliers and
subcontractors may not be Year 2000 compliant. Failure of such third-party
equipment and software to properly process dates for the year 2000 and
thereafter could require the Company to incur unanticipated expenses to remedy
any problems.
Page 8 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands)
Year 2000 Implications (con't)
- ------------------------------
The Company has alternative suppliers for most of its critical materials.
However, the Company cannot accurately predict the occurrence or the outcome of
any such problems, nor can the dollar amount of any such problems be estimated.
The failure to identify and remedy Year 2000 problems could disrupt
important operations such as product development and ongoing clinical trials.
Such disruptions could affect the development and ultimate marketing of
potential products as well as put the Company at a competitive disadvantage to
companies that have corrected such problems. Additionally, these events could
have a material adverse effect on results of operations and financial condition.
The Company has not yet developed contingency plans to address these potential
problems with internal systems and with third parties. The Company intends to
develop preliminary plans during the next quarter, which may need to be refined,
as more information becomes available.
Results of Operations
- ---------------------
Six months ended June 30, 1998 and 1999
- ---------------------------------------
Revenue for the six-month period ended June 30, 1999 increased by $3,623, a
106% increase from the six-month period ended June 30, 1998. The increase
relates principally to a $4,000 milestone payment from Centocor, Inc.
("Centocor"). Centocor holds exclusive commercial licenses to develop HuMAb
antibodies to four licensed targets. Additionally, the increase reflects
payments pursuant to license agreements with Merck KGaA.
Cost of sales decreased by $291 during the first six months of 1999, a 65%
decrease as compared to the first six months of 1998. The decrease is due to
lower 1999 production of MDX-447 for Merck KGaA.
Research and development expenses decreased $782 during the first six
months of 1999, a 7% decrease from the first six months of 1998. The decrease
is principally due to a lower level of human clinical trial activity reflecting
the suspension of patient enrollment in the Phase III trial of MDX-RA. This
savings was partially offset by higher personnel costs.
General and administrative expenses increased by $412 for the first
six months of 1999, a 19% increase from the first six months of 1998. The
increase is primarily attributable to heightened business development activities
and shareholder relation expenses.
Page 9 of 14
<PAGE>
MEDAREX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Results of Operations
- ---------------------
Six months ended June 30, 1998 and 1999 (con't)
- -----------------------------------------------
Interest and dividend income decreased by $642 for the six-months ending
June 30, 1999, a 54% decrease as compared to the six months ended June 30, 1998.
Interest income in the six-month period ended June 30, 1998 included interest of
$525 on a $15 million note from Cell Genesys, Inc. ("Cell Genesys"). This note
matured and was paid in September of 1998.
Interest expense decreased by $1,205 for the six-months ending June 30,
1999, a 100% decrease as compared to the six months ended June 30, 1998.
Interest expense in the six-month period ended June 30, 1998 was attributable to
amortization of a discount associated with the accounting treatment of the value
of the liability due to the shareholders of GenPharm International, Inc.
("GenPharm") pursuant to the acquisition of GenPharm by the Company in October
1997. This liability was satisfied on various dates through September 1, 1998.
Results of Operations
- ---------------------
Three months ended June 30, 1998 and 1999
- -----------------------------------------
Revenue for the three-month period ended June 30, 1999 decreased by $658, a
31% decrease from the three-month period ended June 30, 1998. The decrease
relates principally to the fact that a $750 milestone revenue was received from
Eisai Co., Ltd. and $225 in research and development revenue was received from
Santen Pharmaceutical Co., Ltd. in 1998 and not in 1999, partially offset by
higher 1999 contract and license revenues from Centeon L.L.C..
Cost of sales decreased by $187 during the second quarter of 1999, a 59%
decrease as compared to the quarter ended June 30, 1998. The decrease is due to
lower 1999 production of MDX-447 for Merck KGaA.
Research and development expenses decreased $973 during the quarter ended
June 30, 1999, a 17% decrease as compared to the same period in 1998. The
decrease is principally due to lower clinical trial expenses reflecting the
suspension of patient enrollment in the Phase III trial of MDX-RA and lower
patent expenses.
General and administrative expenses increased by $188 for the three-month
period ending June 30, 1999, a 16% increase from the same period in 1998. The
increase is primarily attributable to increased business development costs and
shareholder relations expenses.
Interest and dividend income decreased by $214 for the three-months ending
June 30, 1999, a 42% decrease as compared to the quarter ended June 30, 1998.
Interest income in the six-month period ended June 30, 1998 included interest of
$263 on a $15 million note from Cell Genesys. This note matured and was paid in
September of 1998.
Page 10 of 14
<PAGE>
Results of Operations
- ---------------------
Three months ended June 30, 1998 and 1999 (con't)
- -------------------------------------------------
Interest expense decreased by $606 for the three-months ending June 30,
1999, a 100% decrease as compared to the same quarter ended June 30, 1998.
Interest expense in the six-month period ended June 30, 1998 was attributable to
amortization of a discount associated with the accounting treatment of the value
of the liability due to the shareholders of GenPharm pursuant to the acquisition
of GenPharm by the Company in October 1997. This liability was satisfied on
various dates through September 1, 1998.
Page 11 of 14
<PAGE>
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
At the Annual Meeting of Shareholders held on May 20, 1999, the Company
elected three Class II Directors each to serve for a term to expire in
2002 and voted to approve the Company's 1999 Stock Option Plan. In
addition, the Company voted to confirm the appointment of Ernst & Young
LLP as independent auditors for the 1999 fiscal year. Out of the
31,507,186 eligible votes, 20,939,977 were cast at the meeting either
by proxies solicited in accordance with Schedule 14A or by securities
holders voting in person. There were 10,567,209 broker non-votes which
are not included in the following table as they were not treated as
being present at the meeting. In the case of directors, abstentions are
treated as votes withheld and are included in the table. The tabulation
of votes for each nominee is set forth under Item No. 1 below, the
adoption of the Company's 1999 Stock Option Plan is set forth under
Item No. 2 below and the appointment of Ernst & Young LLP as
independent auditors for the 1999 fiscal year is set forth in Item No.
3 below:
Item No. 1
----------
Nominees for Directors
----------------------
Directors Votes For Votes Withheld
- --------- --------- --------------
Michael A. Appelbaum 20,313,227 631,030
Michael W. Fanger 20,391,842 552,415
Fred Craves 20,376,542 567,715
The following persons are incumbent directors whose terms of office continue
after the Annual Meeting:
Class III Terms Expiring in 2001 Class I Terms Expiring in 2000
- -------------------------------- ------------------------------
Irwin Lerner Charles R. Schaller
Dr. Julius Vida Donald L.Drakeman
Dr. W. Leigh Thompson, Jr. Robert Iggulden
Item No. 2
----------
Approval of the 1999 Stock Option Plan:
FOR AGAINST ABSTAIN
--- ------- -------
19,589,367 996,384 358,506
Item No. 3
----------
Appointment of Ernst & Young LLP as Independent Auditors for the 1999
fiscal year:
FOR AGAINST ABSTAIN
--- ------- -------
20,313,155 331,472 17,920
Page 12 of 14
<PAGE>
Part II - Other Information (cont'd)
Item 6. Exhibits and reports on Form 8-K
(a) Reports on Form 8-K
Form 8-K filed on August 11, 1999, relating to certain material
contracts entered into by Registrant in connection with the formation
of the Genmab A/S joint venture and the license of certain of
Registrant's technology to Genmab A/S (the "Form 8-K")*
(b) Exhibits
10.80 Shareholders Agreement dated February 25, 1999 among Medarex,
Inc. GenPharm International, Inc., BankInvest, BI Asset
Management Fondsmaeglerselskab A/S, and certain other investors
(incorporated by reference to the identically numbered exhibit
to the Form 8-K)*
10.81 Evaluation and Commercialization Agreement dated as of February
25, 1999 among Medarex, Inc. GenPharm International, Inc.,
and Genmab A/S (incorporated by reference to the identically
numbered exhibit to the Form 8-K)*
10.82 Medarex, Inc. Executive Deferred Savings Plan
10.83 Agreement of Lease dated July 7, 1999 between McCarthy
Associates Limited and Medarex, Inc.
10.84 Medarex, Inc. 1997 Stock Option Plan
10.85 Medarex, Inc. 1999 Stock Option Plan
27.1 Financial Data Schedule
* Confidential treatment has been requested with respect to
specified portions of this exhibit.
Page 13 of 14
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEDAREX, INC.
-------------
(Registrant)
Date: August 13, 1999 By /s/ Michael A. Appelbaum
------------------------
Michael A. Appelbaum
Executive Vice President
Finance and Administration
(Principal Financial and
Accounting Officer)
Page 14 of 14
<PAGE>
EXHIBIT 10.82
MEDAREX, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
<PAGE>
Exhibit ____
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.................................................... 1
1.1 "Board of Directors".......................................... 1
1.2 "Committee"................................................... 1
1.3 "Credited Investment Return (Loss)"........................... 1
1.4 "Deferral Account"............................................ 1
1.5 "Deferral Amount"............................................. 1
1.6 "Deferral Election"........................................... 1
1.7 "Effective Date".............................................. 1
1.8 "Executive"................................................... 1
1.9 "Hardship".................................................... 1
1.10 "Year"........................................................ 2
1.11 "Plan"........................................................ 2
1.12 "Plan Year"................................................... 2
1.13 "Supplemental Executive Benefits"............................. 2
ARTICLE II ELIGIBILITY................................................... 2
2.1 Eligible Persons.............................................. 2
2.2 Commencement of Participation................................. 2
2.3 Termination of Participation.................................. 3
ARTICLE III STOCK OPTION GAIN DEFERRALS.................................. 3
3.1 Stock Option Gain Deferrals................................... 3
3.2 No Withdrawal................................................. 3
ARTICLE IV CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS........ 3
4.1 Deferral Account.............................................. 3
4.2 Credited Investment Return (Loss)............................. 3
ARTICLE V BENEFITS....................................................... 4
5.1 Distribution of Benefits...................................... 4
5.2 Change of Distribution Election............................... 4
5.3 Payment to Estate............................................. 4
5.4 Early Withdrawals............................................. 4
5.5 Automatic Lump-Sum Distribution for Accounts below $25,000.... 5
5.6 Tax Withholding............................................... 5
ARTICLE VI OBLIGATION TO PAY SUPPLEMENTAL EXECUTIVE BENEFITS............. 5
6.1 Benefits Paid From General Corporate Assets; Payment in Cash
or Stock...................................................... 5
-i-
<PAGE>
TABLE OF CONTENTS
(continued)
Page
----
6.2 No Secured Interest........................................... 5
ARTICLE VII ADMINISTRATION............................................... 5
7.1 Administration of the Plan.................................... 5
7.2 Indemnification............................................... 5
ARTICLE VIII MISCELLANEOUS............................................... 5
8.1 Nontransferaility............................................. 5
8.2 Binding Effect................................................ 6
8.3 No Rights as Employee......................................... 6
8.4 Reimbursement of Costs........................................ 6
8.5 Arbitration................................................... 6
8.6 Applicable Law................................................ 6
8.7 Entire Agreement.............................................. 6
8.8 Termination or Amendment of Plan.............................. 6
-ii-
<PAGE>
MEDAREX, INC. EXECUTIVE DEFERRED SAVINGS PLAN
This Medarex, Inc. Executive Deferred Savings Plan is adopted effective
March ___ 1999. Throughout the Plan, the term "Company" shall mean Medarex,
Inc., but shall also include wherever applicable (with such applicability
determined solely in the discretion of the Committee) any entity that is
directly or indirectly controlled by the Company or any entity in which the
Company has a significant equity or investment interest.
ARTICLE I
DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to include the
feminine, and the singular to include the plural, unless the context dearly
indicates otherwise, and the following definitions shall govern the Plan:
1.1 "Board of Directors" or "Board" means the Board of Directors of
------------------
Medarex, Inc.
1.2 "Committee" means an independent Committee appointed by the Board to
---------
administer this Plan and to take such other actions as may be specified herein.
1.3 "Credited Investment Return (Loss)" means the hypothetical investment
---------------------------------
return which shall be credited to Executive's Deferral Accounts pursuant to
Article IV.
1.4 "Deferral Account" means the book entry account established under the
----------------
Plan for each Executive to which shall be credited (or debited) the Executive's
Stock Option Deferral Amounts made pursuant to Article III and Executive's
Credited Investment Return (Loss) determined under Article IV and which shall be
reduced by any distributions made to Executive and any charges which may be
imposed on such Deferral Account pursuant to the terms of the Plan.
1.5 "Deferral Amount" means the Stock Option Deferral Amount which
---------------
Executive elects to contribute for Supplemental Executive Benefits pursuant to
Article III.
1.6 "Deferral Election" means the form of Stock Option Deferral Election
-----------------
as prescribed by the Committee, as modified from time to time.
1.7 "Effective Date" means March 31, 1999.
--------------
1.8 "Executive" means a highly compensated, key management employee, or
---------
other person who has been designated by the Committee as eligible to participate
in this Plan.
1.9 "Hardship" means a severe financial hardship to the Executive
--------
resulting from:
<PAGE>
(a) Sudden or unexpected illness or accident of either the Executive
or dependent of same, or
(b) Loss of the Executive's property due to casualty or other
extraordinary and unforeseeable circumstances beyond the control of the
Executive.
A severe financial hardship shall not constitute a Hardship under the Plan
to the extent that it is, or may be, relieved by:
(i) Reimbursement or compensation, by insurance or otherwise;
(ii) Liquidation of the Executive's assets to the extent that the
liquidation of such assets would not itself cause severe financial hardship.
A Hardship under the Plan does not include:
(iii) Sending a child to college; or
(iv) Purchasing a home, per IRS Rev. Proc. 95-64.
1.10 "Year" means the Company's fiscal year unless otherwise noted.
----
1.11 "Plan" shall mean this Medarex, Inc. Executive Deferred Savings Plan,
----
as it may be amended from time to time.
1.12 "Plan Year" means the 12-month period commencing on January 1 and
---------
ending on December 31.
1.13 "Supplemental Executive Benefits" means the benefits payable to
-------------------------------
Executive under this Plan.
ARTICLE II
ELIGIBILITY
2.1 Eligible Persons. Eligibility for participation in the Plan shall be
----------------
limited to employees of the Company on its U.S. payroll who, at all times, have
a base salary of at least $140,000 per annum and who are designated as eligible
by the Committee, in its sole discretion, to participate in the Plan and such
other designated individuals as are designated as eligible by the committee .
Individuals who are eligible shall be notified by the Company as to their
eligibility to participate in the Plan.
2.2 Commencement of Participation. An Executive may begin participation
-----------------------------
in the Plan immediately following the date he or she is notified of eligibility
to participate, subject to the submission of a Deferral Election at such time
period prior to the exercise of a stock option as the Committee shall designate.
-2-
<PAGE>
2.3 Termination of Participation. Active participation in the Plan shall
----------------------------
end when an Executive's employment or consultancy terminates for any reason. No
contributions to the Plan shall be made with respect to stock options exercised
after such termination date, and any election to defer stock option gain under
the Plan that was made prior to such termination of employment shall be without
further force and effect. Upon termination of employment, an Executive shall
remain an inactive participant in the Plan until all of the benefits to which he
or she is entitled thereunder have been paid in full.
ARTICLE III
STOCK OPTION GAIN DEFERRALS
3.1 Stock Option Gain Deferrals.
---------------------------
(a) Upon submitting a Deferral Election with the Company, Executive
agrees to irrevocably exercise a nonstatutory stock option at a specified time
in the future, with the minimum length of such time set by the Committee, using
for such exercise Company stock that has been held by Executive for at least six
months. Instead of receiving shares of Company stock upon such option exercise,
Executive's Deferral Account under this Plan shall be credited with an amount
equal to the difference between the closing sales price of the Company's common
stock on the date of exercise minus the per share exercise price multiplied by
the total number of shares exercised (the "Stock Option Deferral Amount"). The
Executive agrees to satisfy the Company's employment tax withholding obligations
arising from the option exercise separately, by check, payroll withholding or
such other means as the Committee, in its sole discretion, provides.
(b) Executive's Deferral Election shall be irrevocable unless
Executive terminates employment with the Company prior to the date of exercise,
in which case the Deferral Election shall be without further force and effect.
3.2 No Withdrawal. Except as provided in Section 5.3 below, the Deferral
-------------
Amounts may not be withdrawn by Executive and shall be paid only in accordance
with the provisions of this Plan.
ARTICLE IV
CREDITED INVESTMENT RETURN (LOSS) ON DEFERRAL ACCOUNTS
4.1 Deferral Account.
----------------
(a) A Deferral Account shall be established and maintained for each
Executive which shall be credited (debited) with such Executive's Stock Option
Deferral Amounts and the Credited Investment Return (Loss) as determined under
this Article IV. The Executive's Deferral Account shall be charged with the
amount of any distributions made pursuant to the Plan.
4.2 Credited Investment Return (Loss). Each Executive's Deferral Account
---------------------------------
shall be credited monthly with the Credited Investment Return (Loss)
attributable to his or her Deferral Account. The Credited Investment Return
(Loss) is the amount which the Executive's Deferral
-3-
<PAGE>
Account would have earned if the amounts credited to the Deferral Account had,
in fact, been invested in the Company Stock, purchased at the closing sales
price on the date of option exercise, and assuming reinvestment of all dividends
back into such Company Stock at the Company Stock closing sales price on the
date of the dividend distribution.
ARTICLE V
BENEFITS
5.1 Distribution of Benefits. Benefits shall be distributed in accordance
------------------------
with the elections specified within an Executive's Deferral Election.
5.2 Change of Distribution Election. The Executive may file an amended
-------------------------------
election to change the distribution election at any time which is more than one
(1) year prior to the applicable specified fixed date at which elections must
commence. For example, if an Executive elects to have distributions commence at
the earlier of termination of employment or three years following the date of
the Deferral Election, the Executive may file an amended election at any time
prior to two years following the date of the Deferral Election. Such amended
election may either (i) increase the duration of the specified fixed period at
which elections may commence (e.g., from three to five years) or the
distribution period (e.g. from 20 to 40 quarterly installments). Any amended
election which is filed within one (1) year of the applicable specified date at
which elections shall commence shall be void and without effect and the most
recently effective election shall control instead.
5.3 Payment to Estate. In the event Executive dies after installment
-----------------
payments have begun but before all of the installments are paid, the
undistributed installments shall be paid to his or her estate as they become
due.
5.4 Early Withdrawals.
-----------------
(a) Notwithstanding any other provision of this Plan, Executive may,
upon thirty (30) days prior written notice, withdraw up to ninety-two percent
(92%) of the vested amount credited to his or her Deferral Account determined at
the time of such withdrawal. Upon such withdrawal, eight percent (8%) of the
amount requested from Executive's Deferral Account shall be forfeited and
Executive shall have no further right thereto. Executive shall be prohibited
from making any further stock option gain deferrals pursuant to this Plan for
the remainder of the Plan Year in which the withdrawal occurred and for the
following Plan Year. An Executive may only make a maximum of two early
withdrawals pursuant to this Section 5.4(a).
(b) Notwithstanding any other provision of this Plan, Executive may
request to withdraw any or all of the vested amount credited to his or her
Deferral Account in the event of a Hardship. The determination of whether such
a withdrawal request shall be approved shall be made by the Committee in its
sole discretion. Executive shall be required to demonstrate to the Committee's
satisfaction that the financial burden imposed by the Hardship cannot reasonably
be satisfied out of Executive's other financial resources. Withdrawals pursuant
to a Hardship request shall only be permitted, if at all, to the extent
reasonably required to satisfy Executive's need.
-4-
<PAGE>
5.5 Automatic Lump-Sum Distribution for Accounts below $25,000.
----------------------------------------------------------
Notwithstanding any other provisions of this Plan or the provisions of an
Executive's deferral election, in the event that an Executive has less than
twenty-five thousand dollars ($25,000) credited to his or her Deferral Account
as of the date of his or her termination of employment with the Company, 100% of
his or her Deferral Account shall be distributed to him or her in a single lump-
sum payment within a reasonable amount of time following the date of such
termination of employment.
5.6 Tax Withholding. All payments under this Plan shall be subject to all
---------------
applicable withholding for state and federal income tax and to any other
federal, state or local tax which may be applicable thereto.
ARTICLE VI
OBLIGATION TO PAY SUPPLEMENTAL EXECUTIVE BENEFITS
6.1 Benefits Paid From General Corporate Assets; Payment in Stock. All
--------------------------------------------------------------
benefits payable to Executive hereunder, shall be paid by the Company out of its
general corporate assets. Payment of benefits hereunder shall be made only in
shares of Company common stock.
6.2 No Secured Interest. Deferral Accounts shall be subject to the claims
-------------------
of creditors of the Company. Executive is a general unsecured creditor of the
Company with respect to the promises of the Company made herein.
ARTICLE VII
ADMINISTRATION
7.1 Administration of the Plan. The Plan shall be administered by the
--------------------------
Committee. The Committee shall have full power and discretionary authority to
administer, construe and interpret the Plan, to establish procedures for
administering the Plan, to prescribe forms, and take any and all necessary or
desirable actions in connection with the Plan. The Committee's interpretation
and construction of the Plan shall be conclusive and binding on all persons. The
Committee may appoint a plan administrator or any other agent and delegate to
them such powers and duties in connection with the administration of the Plan as
the Committee may from time to time prescribe.
7.2 Indemnification. The committee and each of its members are
---------------
indemnified by the Company against any and all liabilities incurred by reason of
any action taken in good faith pursuant to the provisions of the Plan.
ARTICLE VIII
MISCELLANEOUS
8.1 Nontransferability. The right of Executive or any other person to the
------------------
payment of any benefits under this Plan shall not be assigned, transferred,
pledged or encumbered.
-5-
<PAGE>
8.2 Binding Effect. This Plan shall be binding upon and inure to the
--------------
benefit of the Company, its successors and assigns and Executive and his heirs,
executors, administrators and legal representatives.
8.3 No Rights as Employee. Nothing contained herein shall be construed as
---------------------
conferring upon any Executive the right to continue in the employ of the Company
as an employee.
8.4 Reimbursement of Costs. If the Company, Executive or a successor in
----------------------
interest to either of the foregoing, brings legal action to enforce any of the
provisions of this Plan, the prevailing party in such legal action shall be
reimbursed by the other party, the prevailing party's costs of such legal action
including, without limitation, reasonable fees of attorneys, accountants and
similar advisors and expert witnesses.
8.5 Arbitration. Any dispute or claim relating to or arising out of this
-----------
Plan shall be fully and finally resolved by binding arbitration conducted by the
American Arbitration Association in Princeton, New Jersey.
8.6 Applicable Law. This Plan shall be construed in accordance with and
--------------
governed by the laws of the State of New Jersey.
8.7 Entire Agreement. This Plan and any applicable deferral election
----------------
forms constitute the entire understanding and agreement with respect to the
Plan, and there are no agreements, understandings, restrictions, representations
or warranties among Executive and the Company other than those as set forth or
provided for therein.
8.8 Termination or Amendment of Plan.
--------------------------------
(a) This Plan may be amended by the Company at any time in its sole
discretion by resolution by its Board; provided, however, that no amendment may
be made which would alter the irrevocable nature of a Deferral Election or which
would reduce the amount credited to an Executive's Deferral Account on the date
of such amendment.
(b) Notwithstanding the foregoing paragraph or any other provision in
this Plan to the contrary, The Company reserves the right to terminate the Plan
in its entirety at any time upon fifteen (15) days notice to Executives. If the
Plan is terminated, all benefits shall be paid pursuant to the provisions of
Article 5 as if such Executive had voluntarily terminated employment on the date
of Plan termination.
IN WITNESS WHEREOF, the Company has caused this Plan to be executed by a
duly authorized officer effective as of the Effective Date.
MEDAREX, INC.
By:
-----------------------------------
-6-
<PAGE>
EXHIBIT 10.83
McCARTHY ASSOCIATES LIMITED
AGREEMENT OF LEASE
LANDLORD: McCARTHY ASSOCIATES LIMITED
TENANT: MEDAREX, INC.
PREMISES: 6410 rentable square feet on second floor
as shown on Exhibit "B"
-----------
BUILDING: Princeton Gateway Corporate Campus
South Building (Building "A")
707 State Road
Princeton, New Jersey 08540
DATED: July 7, 1999
<PAGE>
BASIC LEASE INFORMATION
Landlord: McCarthy Associates Limited
a New Jersey limited partnership
c/o John F. McCarthy, III, Esq.
228 Alexander Street
P. O. Box 2329
Princeton, NJ 08543-2329
Tenant: Medarex, Inc.
1545 Route 22 East
P. O. Box 953
Annandale, NJ 08801-0953
Type of Entity: A corporation of the State of New Jersey
Definition Base Year: calendar year 1999 for the initial Term
Definition Commencement Date: on or about July 2, 1999
Definition Rentable Area of Building: 37,966 rentable square feet
Definition Rentable Area of Premises: 6,410 rentable square feet
Definition Tenant's Proportionate Share: 16.88%
Definition Termination Date: (1) Fifth anniversary of the Commencement
Date; or (2) Tenth Anniversary of the Commencement Date if
Tenant exercises its first option to renew; or (3) Fifteenth
Anniversary of the Commencement Date if Tenant exercises its
second option to renew.
Section 1.3 Number of Parking Spaces: twenty-five (25)
Section 1.3 Minimum Rent Per Year: $150,635.00
Section 1.3 Minimum Rent Per Month: $12,552.91
Article 36 Security Deposit: $25,105.83
INITIALS: /s/JFM /s/DD
------ ------
Landlord Tenant
<PAGE>
TABLE OF CONTENTS
Basic Lease Information
1. Premises; Rent 3
2. Use 4
3. Commencement Date 5
4. Acceptance 6
5. Compliance with Laws and Insurance Requirements 6
6. Additional Rent 7
7. Rules and Regulations 10
8. Finish and Condition of Premises 11
9. Landlord's Right of Entry 11
10. Maintenance by Tenant: Landlord 12
11. Alterations by Tenant or Landlord 12
12. Assignment and Subletting 15
13. Surrender 17
14. Hold Over 17
15. Services and Utilities 18
16. Quiet Enjoyment 20
17. Default 21
18. Landlord's Rights Upon Tenant's Default 22
19. Landlord's Remedies Cumulative; Expenses 24
20. Subordination and Estoppel 25
21. Damage by Fire or Other Casualty 26
22. Mutual Waiver of Subrogation 27
23. Condemnation 28
24. Changes Surrounding Building 28
25. Notices 28
26. No Waiver 29
27. Landlord's Liability 30
28. Indemnification; Tenant's Liability 30
29. Tenant's Insurance 31
30. Mechanics' Lien 32
31. Definition of Landlord 32
32. Definition of Tenant 32
33. No Personal Liability 33
34. Directory 33
35. Environmental Matters 33
36. Security 34
37. Intentionally Omitted 35
38. Miscellaneous 35
39. Renewal Option 37
40. Property 38
41. Obligation of Tenant to Lease Contiguous Space 39
42. Non-disturbance 39
43. Consents, Approvals, Computations And Determinations 39
44. Landlords' Representations and Warranties 39
<PAGE>
EXHIBITS
- --------
EXHIBIT "A-1" Description of the Real Property
- -------------
EXHIBIT "A-2" Site Plan of the Real Property
- -------------
EXHIBIT "B" Floor Plan of the Premises
- -----------
EXHIBIT "C" Rules and Regulations
- -----------
EXHIBIT "D" Cleaning Specifications
- -----------
EXHIBIT "E" Operating Expense Exclusions
- -----------
EXHIBIT "F" Minimum Rent for Renewal Period
- -----------
EXHIBIT "G" Property
- -----------
<PAGE>
THIS AGREEMENT OF LEASE ("Lease") made on the 7/th/ day of July, 1999,
between McCARTHY ASSOCIATES LIMITED, a New Jersey limited partnership, having an
address c/o John F. McCarthy, III, Esq., 228 Alexander Street, P.O. Box 2329
Princeton, N.J. 08543-2329 ("Landlord"), and MEDAREX, Inc. a New Jersey
corporation, having an office and principal place of business at 1545 Route 22
East, P.O. Box 953, Annandale, N.J. 08801 ("Tenant").
PRELIMINARY STATEMENT
---------------------
Landlord is the owner in fee simple of the tract of land situate, lying and
being in the Township of Princeton, Mercer County, New Jersey, and being known
and designated on the official tax maps of the Township of Princeton as Lot 160,
Section 41.04, upon which Landlord has constructed an office building containing
approximately 37,966 rentable square feet of space and other related
improvements to be known as South Building (Building "A") of Princeton Gateway
Corporate Campus. Tenant desires to lease space in said building in accordance
with, and subject to, the provisions of this Lease.
NOW, THEREFORE, Landlord and Tenant agree as follows:
DEFINITIONS
For all purposes of this Lease and all agreements supplemental thereto or
modifying this Lease, the following terms shall have the meanings herein
specified:
"Additional Rent" shall mean all sums payable by Tenant to Landlord pursuant
to various articles of this Lease.
"Alterations" shall have the meaning given to such term in Section 11.1 of
this Lease.
"Base Charge" shall have the meaning given such term in Section 6.1.3.
"Base Year" shall mean 1999 for the initial Term of this Lease, 2004 for the
First Option Period, if any, and 2009 for the Second Option Period, if any.
"Broker" shall mean Fennelly Associates, Inc. and Keller, Dodds & Woodworth,
Inc.
"Building" shall mean the building known as South Building (Building"A") of
Princeton Gateway Corporate Campus.
"Building Holidays" shall mean such holidays as are from time to time
customarily celebrated by United Stated federal offices.
"Business Hours" shall mean 8:00 a.m. to 6:00 p.m. on Mondays through
Fridays, excluding Building Holidays.
"Commencement Date" shall mean on or about July 2, 1999.
"Common Area" shall mean the portions of the Real Property which have not,
at the time in question, been leased for the exclusive use by and/or possession
of a specific tenant of the
1
<PAGE>
Building, including, without limitation, the land and facilities utilized as
parking areas, access and perimeter roads; landscaped areas; exterior walks,
stairways and ramps; interior corridors, elevators, stairs, arcades and
balconies; storm and sanitary sewers, utility lines and the like; and wash
rooms, lavatories and other public facilities. The term "Common Area" shall not
include any portion of the Real Property that is customarily leased for the
exclusive use by and/or possession of a tenant, but which, at the time in
question, is vacant.
"Excusable Delay" shall mean a delay caused by governmental action, or lack
thereof, shortages or unavailability of materials and/or supplies, labor
disputes, strikes, slow downs, job actions, picketing, secondary boycotts, fire
or other casualty, delays in transportation, acts of God, requests, acts or
failures to act of any governmental agencies or authorities, acts of declared or
undeclared war, public disorder, riot or civil commotion, or by anything else
beyond the reasonable control of Landlord, including delay caused directly or
indirectly by Tenant or Tenant's Visitors.
"Governmental Authority" shall mean Princeton Township, Mercer County, State
of New Jersey or federal government, or any agency or quasi-governmental agency,
or any fire insurance rating organization having jurisdiction or claiming
jurisdiction over the Real Property or the use of operation thereof.
"Landlord's Operating Expenses" shall have the meaning given such term in
Section 6.1 of this Lease.
"Landlord's Statement" shall have the meaning given such term in Section 6.3
of this Lease.
"Lease" or "this Lease" consists of this Lease and Exhibits "A-1" through
----------------------
"G" attached hereto and made a part hereof.
- ---
"Minimum Rent" shall mean the fixed rental payable by Tenant to Landlord in
the amounts set forth on the Basic Lease information sheet.
"Monthly Payment" shall have the meaning given such term in Section 6.4.
"Premises" shall mean the portion of the Building shown as the area marked
on the floor plan of the Building as the Medarex 6410 sq. ft., a copy of this
floor plan is annexed hereto as Exhibit "B" and made a part hereof.
-----------
"Project" shall mean only the South Building (Building "A") of the
Princeton Gateway Corporate Campus.
"Projected Expenses" shall have the meaning given such a term in Section
6.3.
"Real Property" shall mean collectively the land upon which the Building is
located as particularly described in Exhibits "A-1" and "A-2" hereto and made a
------------------------
part hereof, and the Building and all other improvements thereon, known as Lot
160, Section 41.04 on the Princeton Township Tax and Assessment Map.
2
<PAGE>
"Rentable Area of the Building" shall mean 37,966 square feet for the
purposes of this Lease.
"Rentable Area of the Premises" shall mean 6,410 square feet for the
purposes of this Lease.
"Rules and Regulations" shall mean the Rules and Regulations set forth in
Exhibit "C" annexed hereto and made a part hereof.
- -----------
"Structural Repairs" shall mean repairs to the roof, foundation, floors and
permanent exterior walls and support columns of the Building.
"Taxes" shall have the meaning given such term in Section 6.1 of this Lease.
"Tenant's Electric" shall have the meaning given such term in Section 15.2.1
hereof.
"Tenant's Proportionate Share" shall mean 16.88%.
"Tenant's Visitors" shall mean persons invited by Tenant into the Premises
as guests or doing lawful business with Tenant in the course of Tenant's
business including without limitation Tenant's agents, servants, employees,
invitees and licensees.
"Term" shall mean the time period commencing on the Commencement Date and
terminating on the Termination Date.
"Termination Date" shall mean (i) the day immediately preceding the fifth
(5/th/) anniversary of the Commencement Date, or (ii) the day immediately
preceding the tenth (10/th/) anniversary of the Commencement Date if Tenant
extends the Term in accordance with Article 39.1 hereof, or (iii) the day
immediately preceding the fifteenth anniversary of the Commencement Date if
Tenant extends the Term in accordance with Article 39.2 hereof; or (iv) such
earlier date upon which this Lease may expire or be terminated pursuant to any
provision of this Lease or pursuant to law.
ARTICLE 1
PREMISES; RENT
1.1 Landlord, for and in consideration of the covenants hereinafter
contained and made on the part of Tenant, hereby leases to Tenant and Tenant
hereby hires from Landlord the Premises for the Term, subject, however, to the
terms and conditions of this Lease.
1.2 The leasing of the Premises to and by Tenant includes the non-exclusive
right to the use of twenty-five (25) automobile parking spaces. Landlord, in
its sole judgment, shall (i) be fair and equitable to all tenants in regulating
parking; and (ii) throughout the Term, make parking available to Tenant on the
same terms and conditions then available to other tenants.
1.3 Tenant hereby covenants and agrees to pay (i) the Minimum Rent in equal
monthly installments on the first day of each calendar month during the Term,
in advance, in the amount
3
<PAGE>
set forth on the Basic Lease Information sheet (subject to the rent adjustment
set forth in Section 1.7 of this Lease); (ii) all Additional Rent as herein
provided; and (iii) Tenant's Electric as defined in Section 15.2.1 of this
Lease. Tenant covenants that all Minimum Rent and Additional Rent shall be
promptly paid to Landlord at its office or such other place as Landlord may from
time to time designate, without any notice, demand, abatement, off-set, set-off,
defense, counterclaim, suspension, deferment, deduction or diminution of any
kind whatsoever, except as expressly provided in this Lese. Except as otherwise
expressly provided herein, this Lease shall not terminate, nor shall Tenant have
any right to terminate or avoid this Lease, nor shall the obligations and
liabilities of Tenant hereunder be in any way affected for any reason. The
obligations of Tenant hereunder shall be separate and independent covenants and
agreements. If the Commencement Date or Termination Date shall fall on a day
other than the first day of a month, the Minimum Rent and any Additional Rent
payable hereunder shall be apportioned for the number of days in that month that
are within the term.
1.4 Any install or installments of Minimum Rent or Additional Rent accruing
hereunder, and all other sums payable by Tenant hereunder, which are not paid
within ten (10) days of the date when due shall be subject to a late charge
equal to four percent (4%) of the amount unpaid and shall bear interest from the
date when due at a rate per annum equal to two percent (2%) over the rate of
interest announced publicly by Citibank, N.A. (or its successor), in New York,
New York, from time to time, as its base rent (commonly referred to as its prime
commercial lending rate or "Prime Rate"), which interest shall be deemed
Additional Rent hereunder, payable upon demand therefor by Landlord.
1.5 Landlord shall have all the rights and remedies for the collection of
Additional Rent as are available to Landlord for the collection of the Minimum
Rent pursuant to the terms of this Lease.
1.6 Upon execution of this Lease by Tenant, Tenant shall pay to Landlord the
first month's Minimum Rent and Additional Rent (if any) plus the security
deposit.
ARTICLE 2
USE
2.1 The Premises shall be used by Tenant only for executive and
administrative offices and for no other use or purpose.
2.2 Tenant shall not use, or suffer or permit the use of, the Premises or
any part thereof in any manner or for any purpose or do, bring or keep anything,
or suffer or permit anything to be done, brought or kept therein (including, but
not limited to, the installation or operation of any electrical, electronic or
other equipment, but not including word processors and personal computers) (i)
which violates any covenant, agreement, term, provision or condition of this
Lease or is unlawful or in contravention of the certificate of occupancy for the
Building or for the Premises, or is a contravention of any legal, zoning or
insurance requirement to which the Building or the Premises is subject, or (ii)
which would alter, affect or interfere with or which would overload or could
cause an overload of the electrical or mechanical systems or any other component
of the Building or which would exceed the floor load per square foot which the
floor was designed to carry and which is allowed by law, or (iii) which in the
reasonable judgment of
4
<PAGE>
the Landlord may in any way impair or interfere with the proper and economic
heating or air conditioning of the Building. Tenant shall suffer or permit the
Building or any component thereof to be used in any manner or anything to be
done therein or anything to be brought into or kept thereon which, in the
judgment of Landlord, would in any way impair or tend to impair or exceed the
design criteria, the structural integrity, character or appearance of the
Building, or any system or component thereof, or result in the use of the
Building, or any component thereof, in a manner or for a purpose not intended.
Tenant shall not use, or suffer or permit the use of, the Premises or any part
thereof in any manner, or do, or suffer or permit the doing of, anything therein
or in connection with the Tenant's business or advertising which, in the
reasonable judgment of the Landlord, may be prejudicial to the business of
Landlord or the reputation of the Premises of the Building. Tenant is
responsible for complying with all provisions of the Princeton Township Zoning
ordinance.
2.3 Tenant shall take occupancy and commence business in the Premises on or
before ninety (90) days after the Commencement Date. Prior to occupancy,
Tenants may undertake some improvement to the Premises in accordance with
Article 7 of this Lease.
ARTICLE 3
COMMENCEMENT DATE
3.1 Landlord estimates that the Premises will be ready for Tenant's
occupancy (on an "as is" basis) on the Commencement Date. Landlord represents
that the Premises may be occupied by Tenant on an "as is" basis pursuant to the
certificate of occupancy previously obtained for the Premises. If Tenant
performs the alterations pursuant to Section 7.4 of this Lease, Tenant must
obtain a new Certificate of Occupancy for the Premises, at Tenant's sole cost
and expense and at no expense to Landlord. If the Premises are not ready for
occupancy on the Commencement Date because the existing tenant of the Premises
has not vacated the Premises, the Commencement Date shall be the day after the
Effective Date, the Rent shall be adjusted accordingly and this Lease shall
nevertheless continue in full force and effect. Tenant shall have the right to
rescind, cancel or terminate the same, but Landlord shall not be liable for
damages, if any, sustained by Tenant by reason of Tenant's inability to obtain
possession thereof on or before September 1, 1999.
3.2 Tenant acknowledges that as of July 1, 1999 the Premises were occupied
by Technology Management & Funding ("TMF"). TMF has agreed to vacate the
Premises on or before July 2, 1999. In the event Landlord is unable to deliver
possession of the Premises by July 2, 1999 as a result of TMF remaining in the
Premises, such failure shall not effect the validity of this Lease. Landlord
shall not be liable for any damages which Tenant may incur as a result of the
delay in obtaining possession of the Premises. In such event, Landlord agrees
to take reasonable action to acquire possession of the Premises as soon as
reasonably possible but in any event prior to September 1, 1999 as set forth in
Section 3.1 hereof. For the purposes of this Lease, the term "Effective Date"
shall mean the date on which Landlord delivers possession of the Premises to
Tenant, free of all tenancies and in broom clean condition. If Landlord is
unable to deliver occupancy on or before July 2, 1999, the Commencement Date
shall be the day after the Effective Date, subject to Tenant's right to
terminate pursuant to Section 3.1.
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ARTICLE 4
ACCEPTANCE
When Tenant takes possession of the Premises, Tenant shall be deemed to have
accepted the Premises as being satisfactory and in good condition as of the date
of such possession, subject to latent defects.
ARTICLE 5
COMPLIANCE WITH LAWS AND INSURANCE REQUIREMENTS
5.1 Tenant shall comply with all laws, rules, regulations and ordinances of
any Governmental Authority having or claiming jurisdiction over the Building.
Tenant shall not do or permit anything to be done in or to the Premises, or
bring or keep anything therein which will, in any way, be in conflict with the
certificate of occupancy for the Building, increase the cost of fire or public
liability insurance on the Real Property, or invalidate or conflict with the
fire insurance or public liability insurance policies covering the Real Property
or any personal property kept therein, by Landlord, or obstruct or interfere
with the rights of the Landlord or of other tenants, or in any other way injure
or annoy Landlord or other tenants, or subject Landlord to any liability for
injury to persons or damage to property, or interfere with the good order of the
Building, or conflict with the present or future laws, rules or regulations of
any Governmental Authority. Any increase in Landlord's Operating Expenses which
is attributable to Tenant's use or manner of use of the Premises different from
the use permitted in Section 2.1 hereof (such as any increase in fire insurance
premiums on the Building or its contents caused by the use or occupancy of the
Premises by Tenant other than as permitted in Section 2.1) and any expense or
cost incurred in consequence of the negligence, carelessness or willful action
of Tenant, shall be Additional Rent and paid to Landlord within ten (10) days of
the date of demand therefor made by Landlord to Tenant. Anything to the
contrary herein notwithstanding, Tenant shall not be required to comply, at its
own expense, with requirements of law or to pay for increases in Operating
Expenses unless such requirements are violated by or such increases are caused
by actions taken by Tenant or by Tenant's use of the Premises in a manner
different from the normal use thereof for the purposes described in Section 2.1.
5.2 Tenant will not cause or permit any "hazardous substance" or "hazardous
waste" as such terms are defined in the Environmental Cleanup Responsibility Act
of the State of New Jersey as amended by the New Jersey Industrial Site Recovery
Act, N.J.S.A. 13:1K-6 et seq. ("ISRA") to be brought, kept or stored within the
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Premises or any portion thereof (except in de minimus quantities utilized in
common maintenance, cleaning and operation of an office use, in accordance with
law) and will not engage in or permit any other person to engage in any
activity, operation or business upon the Premises or any portion thereof which
involves the generation, manufacture, refining, transportation, treatment,
storage, handling or disposal of hazardous substances or hazardous wastes, above
or below ground, or which would or could result in Tenant or the Premises being
subject to the provisions of ISRA. In the event Tenant fails to comply with
this Section, Tenant shall immediately furnish to Landlord evidence satisfactory
to Landlord of the cessation of such activity, operation or business and that
Tenant has complied with all applicable provisions of ISRA.
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5.3 Tenant shall pay to the Princeton Township Bureau of Fire Safety all
inspection fees for the Premises and shall correct, at Tenant's cost and
expenses, any violations of the Uniform Fire Code, N.J.A.C. 5:70-1 et seq. due
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to Tenant's act or negligence. Landlord shall deliver the Premises to Tenant in
compliance with all laws and ordinances of any Governmental Authority.
ARTICLE 6
ADDITIONAL RENT
6.1 For the purposes of this Lease, the following terms shall have the
meanings set forth below:
6.1.1 "Taxes" shall mean all real estate taxes and assessments or
substitutes therefor or supplements thereto, upon, applicable,
attributable or assessed against the Real Property or any part
thereof, or any improvement thereon owned by Landlord and used in
connection with the operation of the Building. If and to the extent
that due to a change in the method of taxation or assessment any
franchise, capital stock, capital, rent, income, profit or other tax
or charge shall be substituted by the applicable taxing authority
for the Taxes nor or hereafter imposed upon the Real Property, such
franchise, capital stock, capital, rent, income, profit, or other
tax or charge shall be deemed included in the term "Taxes" for the
purposes of this Article, provided, however, that the amount of such
tax, assessment, levy, imposition, charge or fee deemed to be
included in the term "Taxes" shall be determined as if the Real
Property were the only asset of Landlord and as if the rent received
therefrom were the only income of Landlord.
6.1.2 "Landlord's Operating Expenses" shall mean those costs or
expenses paid by Landlord for operating, managing, maintaining and
repairing the Real Property, including but not limited to the cost
of Common Area electricity, water, steam, fuel, window cleaning,
heating, cooling, janitorial service, and exterminating, insurance
of all kinds carried in good faith by Landlord and applicable to the
Real Property (including, without limitation, rent insurance), snow
removal, maintenance and cleaning of the parking lot, landscape
maintenance, cost of surveys of electricity consumption, repairs of
any kind for which Landlord is not reimbursed, painting of Common
Areas, replacement of worn out mechanical or damaged equipment,
uniforms, management fees, costs of maintenance and service
agreements, fire protection and alarm systems and equipment,
building supplies, sundries, sales or use taxes on supplies or
services, security guard services and/or alarm systems and
equipment, wages, salaries, fringe benefits and other labor costs of
all persons engaged by Landlord for the operation, maintenance and
repair of the Real Property, payroll taxes and workmen's
compensation for such persons, legal and accounting expenses (except
legal expenses incurred in preparing leases or enforcing the terms
of Leases), licenses, permits and other governmental charges, and
any other expense or cost which, in accordance with generally
accepted accounting principles and
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the standard management practices for office buildings comparable to
the Building, would be considered as an expense of operating,
managing, maintaining or repairing the Real Property. Excluded from
Landlord's Operating Expenses (unless otherwise herein provided) are
the exclusions set forth on Exhibit "F" hereof and Taxes, capital
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improvement costs, costs reimbursed by insurance, the cost of work
or services performed specifically for any other tenant in the
Building whether or not such tenant reimburses Landlord, costs in
connection with preparing space for a new tenant, advertising
expenses, real estate brokers' commissions, franchise, transfer,
inheritance or capital stock taxes or other taxes imposed upon or
measured by the income or profits of Landlord, administrative wages
and salaries or any other general and administrative overhead of
Landlord and the cost of any electricity furnished to any space in
the Building occupied by other tenants.
6.1.3 "Base Year" shall mean 1999. "Base Charge" shall mean Tenant's
Proportionate Share of the aggregate of Taxes and Landlord's
Operating Expenses for the Base Year.
6.2 Tenant shall pay to Landlord, as Additional Rent, Tenant's Proportionate
Share of the amount by which the aggregate of Taxes and Landlord's Operating
Expenses for any calendar year during the Term of this Lease exceed the Base
Charge, provided, however, that if any special assessments may be payable in
installments, Landlord shall elect to pay same over the longest period allowed
by law. Tenant's Proportionate Share of said Taxes and Landlord's Operating
Expenses for less than a year shall be prorated and apportioned. In the event
the Building is less than 100% occupied during any calendar year during the
Term, the Taxes and Landlord's Operating Expenses for each such year shall be
normalized and annualized as if the Building were 100% occupied during each such
year.
6.3 On or about April 1, 2000, and thereafter within ninety (90) days
following the first day of each calendar year within the Term, Landlord shall
determine or estimate the Taxes and the Landlord's Operating Expenses for such
calendar year (the "Projected Expenses") and shall submit such information to
Tenant in a written statement ("Landlord's Statement").
6.4 Commencing on the first day of the month next succeeding the calendar
month in which Landlord submitted any Landlord's Statement, and continuing
thereafter until Landlord renders the next Landlord's Statement, Tenant shall
pay to Landlord on account of its obligation under Section 6.2 of this Lease, a
sum (the "Monthly Payment") equal to one-twelfth (1/12) of Tenant's
Proportionate Share of the amount by which the Projected Expenses for such
calendar year exceed the Base Charge. Tenant's first Monthly Payment after
receipt of Landlord's Statement shall be accompanied by the payment of an amount
equal ro the product of the number of full months, if any, within the calendar
year which shall have elapsed prior to such first Monthly Payment, times the
Monthly Payment minus any Additional Rent already paid by Tenant on account of
its obligation under Section 6.2 of this Lease for such calendar year. All
payments required to be made pursuant to this Section shall be deemed Additional
Rent.
6.5 Each Landlord's Statement shall reconcile the payments made by Tenant
pursuant to the preceding Landlord's Statement with Tenant's Proportionate Share
of the actual amount by which the Taxes and the Landlord's Operating Expenses
for said calendar year in question
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exceed the Base Charge. Any balance due to Landlord shall be paid by Tenant
within thirty (30) days of Tenant's receipt of Landlord's Statement and any
surplus shall be applied by Landlord against the next accruing monthly
installment of Additional Rent, or if this Lease shall have expired, such
surplus shall be refunded to Tenant within thirty (30) days of the Termination
Date; provided, however, that if this Lease shall have expired as a result of a
default by Tenant, Landlord shall have the right to retain such surplus to the
extent Tenant owes any Minimum Rent or Additional Rent.
6.6
6.6.1 If Landlord shall receive any refund of Taxes in respect of a
calendar year and if Tenant shall have paid Additional Rent based on
the Taxes paid prior to the refund, Landlord shall deduct from such
tax refund any expenses reasonably incurred in obtaining such tax
refund, including, but not limited to, attorney's fees and appraisal
fees, and out of the remaining balance of such tax refund, Landlord
shall credit to Tenant Tenant's Proportionate Share of such refund.
Any expenses reasonably incurred by Landlord in contesting the
validity or the amount of the assessed valuation of the Real
Property or any Taxes of any year after the year of the Real Estate
Tax Base, to the extent not offset by a tax refund, shall be
included as an item of Taxes for the tax year in which such contest
shall be finally determined for the purpose of computing the
Additional Rent due Landlord or any credit due to Tenant hereunder.
Notwithstanding anything to the contrary contained herein, Tenant
shall not have the right to contest or appeal the validity or the
amount of the assessed valuation of the Real Property or any Taxes
without the prior written consent of Landlord.
6.6.2 While proceedings for the reduction in assessed valuation for any
year are pending, the computation and payment of Additional Rent
shall be based upon the original assessments for such year.
6.7 Tenant shall also pay to Landlord upon demand the amount of all
assessments, impositions of taxes made, levied or assessed against or imposed
upon any and all improvements in, on or about the Premises which were made by or
on behalf of Tenant.
6.8 Landlord's Operating Expenses shall include Landlord's cost or expense,
together with the interest factor described below, for any capital improvement
made to the Building by Landlord which results in a reduction of Landlord's
Operating Expenses through a reduction in the consumption or use of any item
enumerated as such in Section 6.1.2 of this Lease. The interest and
amortization expense shall be attributable to each respective calendar year or
portion thereof within the term of this Lease from the date of completion of the
capital improvement, but the portion thereof included in Landlord's Operating
Expense for any calendar year within the Term shall not exceed the reduction in
Landlord's Operating Expenses for said year resulting from such capital
improvement, as calculated by Landlord. The capital improvements referred to in
this Section shall be amortized on a straight line basis over such period as
permitted by the Internal Revenue Code of 1986, as the same may be amended from
time to time, and interest on the unamortized balance shall be computed at a
rate per annum equal to one percent (1%) over the rate of interest announced
publicly by Citibank, N.A. (or its
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successor) in New York, New York, from time to time, as its base rate (commonly
referred to as its prime commercial lending rate).
6.9 Tenant or its representative shall have the right to examine Landlord's
books and records with respect to the items in the foregoing Landlord's
Statement during normal business at any time within thirty (30) days following
the delivery by Landlord to Tenant of such Landlord's Statement. Unless Tenant
shall take written exception to any item contained therein within thirty (30)
days after the delivery of same, such Landlord's Statement shall be considered
as final and accepted by Tenant. If Tenant disputes such Landlord's Statement,
Tenant shall pay the monies set forth thereon as a condition precedent to
contesting said obligation.
6.10 Additional Rent chargeable under this Article 6 shall be prorated for
the final year of the Term if such year covers a period of less than twelve (12)
months. In no event shall any adjustment in Tenant's obligation to pay
Additional Rent under this Article 6 result in a decrease in the Minimum Rent
payable hereunder. Tenant's obligation to pay Additional Rent and Landlord's
Obligation to credit to Tenant any amount referred to in this Article 6 for the
final year of the Term shall survive the Termination Date or earlier expiration
of this Lease.
6.11 The provisions of Section 26.4 of this Lease shall apply to Landlord's
Statement.
6.12 In addition to reimbursing Landlord for Tenant's Proportionate Share
of Landlord's Operating Expenses and Taxes, Tenant shall reimburse Landlord for
the cost of work or services performed specifically for the Tenant. In the
event Landlord does not provide certain services for all the tenants in the
Building (for example cleaning services) during any calendar year during the
Term, Landlord's Operating Expense for each such year shall be normalized and
annualized as if Landlord provided such services to all tenants in the Building
during each such year.
ARTICLE 7
FINISH AND CONDITION OF PREMISES
7.1 Other than constructing a demising wall and painting the Premises (which
Landlord shall do at Landlord's expense prior to Tenant's occupancy of the
Premises), Tenant hereby takes the Premises and each fixture and other item
constituting a portion thereof AS IS, and Tenant acknowledges that neither
Landlord (whether acting as landlord hereunder of in any other capacity) nor any
agent or representative of Landlord has made any representation or warranty,
express or implied, with respect to the Premises.
7.2 In performing the Alterations pursuant to Section 7.4 of this Lease
Landlord shall obtain, at its expense, a certificate of occupancy for the
Premises permitting Tenant to occupy the Premises for the purposes permitted in
this Lease. Tenant shall obtain, at its expense, all other permits, licenses or
authorizations of any nature required in connection with the operation of
Tenant's business at the Premises.
7.3 In performing the work necessary to obtain a certificate of occupancy,
Landlord and Tenant shall comply with the provisions of Article 11 of this
Lease.
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7.4 Prior to Tenant's occupancy of the Premises, Landlord shall, at
Landlord's cost, paint the Premises and put in a demising wall of approximately
three feet in width as shown on Exhibit B to separate the Premises from the
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adjacent space.
ARTICLE 8
RULES AND REGULATIONS
Tenant and Tenant's Visitors shall comply with the Rules and Regulations
with respect to the Real Property which are set forth in Exhibit "C" annexed to
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this Lease and are expressly made a part hereof. Landlord shall have the right
to make reasonable amendments thereto from time to time for the safety, care and
cleanliness of the Real Property, the preservation of good order therein and the
general convenience of all the tenants, and Tenant shall comply with such
amended Rules and Regulations after twenty (20) days' written notice thereof
from Landlord. Landlord shall enforce the Rules and Regulations in a non-
discriminatory manner.
ARTICLE 9
LANDLORD'S RIGHT OF ENTRY
9.1 Landlord and Landlord's agents and representatives shall have the right
to enter into or upon the Premises, or any part thereof upon reasonable notice
(which shall be at least 24 hours)at all reasonable hours for any reasonable
purpose, including but not limited to the following purposes: (1) examining the
Premises; (2) making such repairs or alterations therein as may be necessary in
Landlord's sole judgment for the safety and preservation of the Building or the
Premises; (3) erecting, maintaining, repairing or replacing wires, cables,
conduits, vents or plumbing equipment running in, to or through the Premises;
(4) conducting surveys of electric energy consumption; (5) (within the last 9
months of the term or any renewal) showing the Premises to prospective new
tenants; and (6) showing the Premises during the Term to any mortgagees or
prospective purchasers of the Real Property.
9.2 Landlord may enter upon the Premises at any time in case of emergency
without prior notice to Tenant.
9.3 Landlord, in exercising any of its rights under this Article 9, shall
not be deemed guilty or an eviction, partial eviction, constructive eviction of
disturbance of Tenant's use or possession of the Premises and shall not be
liable to Tenant for same; provided Landlord complies with Section 9.4 of this
Lease.
9.4 All work inspections and work performed by or on behalf of Landlord in
or on the Premises pursuant to this Article 9 shall be performed with as little
inconvenience to Tenant's business as is reasonably possible; provided, however,
Landlord shall not be required to conduct such inspections or work after
Tenant's business hours or on weekends.
9.5 Tenant shall not change any locks or install any additional locks on
doors entering into the Premises without the consent of Landlord, and if any
change is made, a copy of any such lock key shall be given to Landlord. If in
an emergency Landlord is unable to gain entry to the Premises by unlocking entry
doors thereto, Landlord may force or otherwise enter the
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Premises without liability to Tenant for any damage resulting directly or
indirectly therefrom. Tenant shall be responsible for all damages created or
caused by its failure to give the Landlord a copy of any key to any lock
installed by Tenant controlling entry to the Premises.
ARTICLE 10
MAINTENANCE BY TENANT; LANDLORD
10.1 Tenant shall take good care of the Premises throughout the Term and
maintain and preserve same in the condition delivered to Tenant on the
Commencement Date, except for normal wear and tear. Tenant shall not injure,
overload, deface or commit waste of the Premises. Tenant shall be responsible
for all injury or damage of any kind or character to the Real Property,
including the windows, floors, walls, ceilings, lights, electrical equipment and
heating, ventilating and air-conditioning equipment, caused by Tenant's
negligence or the negligence of Tenant's Visitors. Landlord shall repair the
same and Tenant shall pay the costs incurred therefor to Landlord immediately
upon demands as Additional Rent. All repairs, replacements and improvements to
be made by Tenant under this Article shall be performed in a good and workman-
like manner, shall be at least equal in quality, utility and usefulness to the
original work, shall be of first class, modern character, and shall not diminish
the overall value of the Real Property. In making such repairs, Tenant shall
have reasonable access to the Common Areas of the Building, including exterior
areas. Tenant's obligations under this Section 10.1 are subject to the
provisions of Article 21 in the event of damage or destruction by fire or other
casualty.
10.2 Landlord shall be responsible for all Structural Repairs (except those
resulting from damage caused by the negligence of Tenant or the negligence of
Tenant's Visitors) and shall maintain, repair and replace all plumbing, heating,
air conditioning, electrical and mechanical fixtures (exclusive of (i) starters,
ballasts, fluorescent lamps and (ii) electrical and mechanical fixtures
installed by Tenant) which shall be standard for the Building, when required,
and maintain and make repairs to the parking area and the exterior of the
Building, except those repairs or replacements arising from the negligence of
Tenant or Tenant's Visitors. Any work required or undertaken by Landlord under
this Article 10 or other provision of this Lease shall be performed with
commercially reasonable due diligence. Any repairs made by Landlord under this
Section 10.2 shall be free of any claim against Tenant by Landlord, or anyone
claiming through Landlord, for the cost of any repairs for which Landlord is
covered by insurance.
ARTICLE 11
ALTERATIONS BY TENANT OR LANDLORD
11.1
11.1.1 Tenant shall not make or perform, or permit the making or
performance of any alterations or improvements, additions or
other physical changes in or about the Premises (referred to,
collectively, as "Alterations") without Landlord's prior
consent. Landlord shall not unreasonably withholds its consent
(so long as there is no default by Tenant under this Lease) to
interior non-structural Alterations provided the aggregate
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cost of such Alterations does not exceed $25,000.00 and provided
such Alterations do not affect, alter, interfere with or disrupt
any of the electrical, mechanical, plumbing, heating, air
conditioning, ventilating or other systems of the Building nor
affect the outside appearance or roof of any structural element
of the Building. All Alterations shall be made and performed in
conformity with municipal and state building standards;
Alterations shall be made only by contractors or mechanics
utilizing labor approved by Landlord, which approval Landlord
shall not unreasonably withheld or delayed. No Alterations shall
be made to the partition separating the Premises and the public
corridors or to the entrance doors of the Premises. No
alteration shall affect any part of the Building other than the
Premises or adversely affect any service required to the
furnished by Landlord to Tenant or to any other tenant or
occupant of the Building or reduce the value or utility of the
Building. No Alteration shall affect the outside appearance or
the strength of the Building or any of its structural parts. All
business machines and mechanical equipment shall be placed and
maintained by Tenant in settings sufficient, in Landlord's
judgment, to absorb and prevent vibration, noise and annoyance
to other tenants or occupants of the Building. Tenant shall
submit to Landlord detailed plans and specifications (including
layout, architectural, mechanical and structural drawings) for
each proposed Alteration and shall not commence any such
Alteration without first obtaining Landlord's written approval
of such plans and specifications. Prior to the commencement of
each proposed Alteration, Tenant shall furnish to Landlord
duplicate original policies of worker's compensation insurance
covering all persons to be employed in connection with such
Alteration, including those to be employed by all contractors
and subcontractors, and of comprehensive public liability
insurance (including property damage coverage) in which Landlord
shall be named as insured, which policies shall be issued by
companies acceptable to Landlord, and shall be in form and
amounts satisfactory to Landlord and shall be maintained by
Tenant until the completion of such Alteration. All electrical
and air conditioning certificates, and all other permits,
approvals and certificates required by all Governmental
Authorities shall in a timely manner be obtained by Tenant at
Tenant's sole cost and expense and submitted to Landlord.
Notwithstanding Landlord's approval of plans and specifications
for any Alteration, all Alterations shall be made and performed
in ful compliance with all applicable laws, orders and
regulations of Governmental Authorities and all building codes,
rules and regulations and the Rules and Regulations of this
Lease. All materials and equipment to be incorporated into the
Premises as a result of all Alterations shall be new and of
first quality. No such materials or equipment shall be subject
to any lien, encumbrance, chattel mortgage or title retention or
security agreement, and all Alterations shall be made and
performed in a good and workmanlike manner. Landlord shall
promptly respond to Tenant's submissions pursuant to this
Article 11.
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11.1.2 Tenant shall not make any addition, improvement or alteration of
the Premises having an aggregate cost in excess of $25,000.00
("Major Work") unless (i) Tenant submits to Landlord detailed
plans and specifications therefor and Landlord approves such
plans and specifications in writing (which such approval shall
be at Landlord's sole and absolute discretion) and (ii) all of
the conditions specified in Sections 2.2 and 11.1.1 are
satisfied in connection with the Major Work. Tenant shall obtain
bids from independent, licensed contractors reasonably
acceptable to Landlord utilizing qualified labor.
11.2 Tenant shall not, at any time prior to or during the Term, directly or
indirectly employ or permit the employment of any contractor, mechanic or
laborer in the Premises, whether in connection with any Alteration or otherwise,
if such employment will interfere or cause any conflict with other contractors,
mechanics, or laborers engaged in the construction, maintenance or operation of
the Building by Landlord, Tenant or others. In the event of any such
interference or conflict, Tenant, upon demand of Landlord, shall cause all
contractors, mechanics or laborers causing such interference or conflict to
leave the Building immediately.
11.3 All Alterations permanently affixed to or comprising a portion of the
Building shall, upon installation, become the property of Landlord and shall
remain upon and be surrendered with the Premises, unless Tenant procures from
Landlord no later than thirty (30) days prior to the Termination Date or earlier
expiration of this Lease, Landlord's consent to remove the same. If Landlord so
consents to the removal of any Alterations, the same shall be removed from the
Premises by Tenant prior to the Termination Date or earlier expiration of this
Lease and the Premises restored to the condition existing prior to the
installation of such Alterations at Tenant's sole expense. Nothing in this
Article shall be construed to give Landlord title to or to prevent Tenant's
removal of trade fixtures or moveable office furniture and equipment. Upon
removal of any such items form the Premises or upon removal of any other
installation as may be permitted by Landlord, Tenant shall immediately and at
its expense repair any damage to the Premises or the Real Property incurred
during such removal and restore the Premises to the condition existing prior to
the installation. All property permitted or required to be removed by Tenant at
the end of the Term remaining on the Premises after the Termination Date shall
be deemed abandoned to Landlord and may be removed from the Premises by Landlord
at Tenant's expense, and Landlord shall have no duty, obligation or liability to
Tenant with respect to such property.
11.4 Landlord reserves the right to make changes, alterations, additions,
improvements, repairs or replacements in or to the Building (including the
Premises) and the fixtures and equipment thereof, as well as in or to the street
entrances, halls, passages, elevators, escalators and stairways and other parts
of the Building, and to erect, maintain and use pipes, ducts and conduits in and
through the Premises, all as it may reasonably deem necessary or desirable;
provided, however, that there be no unreasonable obstruction of the means of
access to the Premises or unreasonable interference with Tenant's use of the
Premises, that the square foot area of the Premises is not reduced thereby, and
that Landlord enclosed any pipes, ducts and/or conduits erected in and passing
through the Premises. Nothing contained in this paragraph shall be deemed to
relieve Tenant of any duty, obligation or liability to Tenant with respect to
making any repair, replacement or improvement or complying with any law, order
or requirement of any Governmental Authority.
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11.5 Landlord specifically reserves for itself and/or for any designee of
Landlord such utility and access easements over, under and across any and all
areas or any parts of the Premises, surrounding, adjacent to or contiguous with
the building areas of the Premises, as may be from time to time required by the
Landlord, or its designee, in connection with the use, ownership or operation or
any part of the balance of the Building. No such easements as contemplated by
this Section 11.5 shall unreasonably interfere with Tenant's use of the
Premises.
ARTICLE 12
ASSIGNMENT AND SUBLETTING
12.1 Tenant for itself, its heirs, distributees, successors and assigns,
expressly covenants that it shall not be operation of law or otherwise assign,
sublet, encumber or mortgage this Lease, or any part thereof, or permit the
Premises to be used by others without the prior written consent of Landlord in
each instance. Any attempt by Tenant to assign, sublet, encumber or mortgage
this Lease without Landlord's prior written consent shall be null and void. The
consent by Landlord to any assignment, mortgage, encumbrance, subletting or use
of the Premises by others shall not constitute a waiver of Landlord's right to
withholds its consent to any other or further assignment, sublet, mortgage,
encumbrance or use of the Premises by others. Without the prior written consent
of Landlord, this Lease shall not pass by operation of law or otherwise and
shall not be subject to garnishment or sale under execution in any suit or
proceeding which may be brought against or by Tenant. The absolute and
unconditional prohibitions contained in this Section and Tenant's agreement
thereto are material inducements to Landlord to enter into this Lease with
Tenant and any breach thereof shall constitute a material default hereunder
permitting Landlord to exercise all remedies provided for herein or by law or in
equity on a default of Tenant.
12.2
12.2.1 If Tenant requests Landlord's consent to an assignment of this
Lease or a subletting of all or any part of the Premises, Tenant
shall submit to Landlord: (1) the name of the proposed assignee
or subtenant; (2) the terms of the proposed assignment or
subletting together with a conformed or photostatic copy of the
proposed assignment or sublease; (3) the nature of business of
the proposed assignee or subtenant's business and its proposed
use of the Premises; (4) such information as to financial
responsibility and general reputation of the proposed assignee
or subtenant as Landlord may require; and 95) a summary of plans
and specifications for revising the floor layout of the
Premises.
12.2.2 Upon the receipt of such information from Tenant, Landlord shall
have the option, to be exercised in writing within thirty (30)
days after such receipt, to cancel and terminate this Lease if
the request is to assign this Lease or to sublet all of the
Premises or, if the request is to sublet a portion of the
Premises only, to cancel and terminate this Lease with
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respect to such portion, in each case as of the date set forth
in Landlord's notice of exercise of such option.
12.2.3 If Landlord shall terminate this Lease under Section 12.2.2,
Tenant shall surrender possession of the Premises, or the
portion of the Premises which is the subject of the request, as
the case may be, on the date set forth in such notice in
accordance with the provisions of this Lease relating to
surrender of the Premises. If this Lease shall be canceled as
to a portion of the Premises only, the Minimum Rent and
Additional Rent payable by Tenant hereunder shall be abated
proportionately according to the ratio that the number of square
feet in the portion of space surrendered (as computed by
Landlord) bears to the Rentable Area of the Premises.
12.3
12.3.1 If Landlord shall fail to exercise its option to cancel and
terminate this Lease with respect to all or a part of the
Premises as above provided at the expiration of the 30 day
period, Landlord shall thereby be deemed to have consented to
the proposed assignment or subletting, unless Landlord gives a
statement to Tenant setting forth Landlord's reasons for not
consenting. Landlord agrees not to unreasonably withhold its
consent to an assignment or subletting.
12.3.2 If Landlord shall in its reasonable discretion consent to a
sublease or an assignment pursuant to the request from Tenant,
Tenant shall cause to be executed by its assignee or subtenant
an agreement to perform faithfully or to comply with all of the
terms, covenants, conditions, provisions and agreements of this
Lease for the period covered by the assignment or sublease and
to the extent of the space sublet or assigned. An executed
counterpart of each sublease or assignment and assumption of
performance by the sublessee or assignee, in form and substance
approved by Landlord, shall be delivered to Landlord within five
(5) days prior to the commencement of occupancy set forth in
such assignment or sublease. No such assignment or sublease
shall be binding on Landlord until Landlord has received such
counterpart as required herein.
12.3.3 If Landlord shall give its consent to any assignment of this
Lease or to any sublease, Tenant shall in consideration therefor
pay to Landlord as Additional Rent the following amounts less
the actual expenses incurred by Tenant in connection with such
assignment or subletting including legal fees, brokerage
commissions and costs of making alterations, as the case may be:
12.3.3.1 In the case of an assignment, an amount equal to fifty
percent (50%) of all sums and other considerations paid to
Tenant by the assignee for or by reason of such assignment,
(excluding above
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Minimum Rent and Additional Rent, and sums paid for the sale
of Tenant's fixtures, leasehold improvements, equipment,
furniture, furnishings or other personal property); and
12.3.3.2 In the case of a sublease, fifty percent (50%) of any
rents, additional charge or other consideration payable
under the sublease to Tenant by the subtenant which is in
excess of the Minimum Rent and Additional Rent accruing
during the term of the sublease in respect to the subleased
space (at the rate per quare foot payable by Tenant
hereunder) pursuant to the terms hereof (excluding sums paid
for the sale or rental of Tenant's fixtures, leasehold
improvements, equipment, furniture, furnishing or other
personal property).
The sums payable under this Section 12.3.3 shall be paid
to Landlord as Additional Rent if, as and when paid by the
assignee or subtenant to Tenant.
12.4 In no event shall any assignment or subletting to which Landlord may
consent release or relieve Tenant from its obligations to fully observe or
perform all of the terms, covenants and conditions of this Lease on its part to
be observed or performed, and Tenant remains fully responsible for the
performance of such obligations upon and subsequent to any assignment or
subletting to which Landlord may consent.
12.5 Notwithstanding the foregoing, Tenant may assign or sublease to an
entity controlled by, controlling or under common control with the Tenant.
ARTICLE 13
SURRENDER
Upon the Termination Date, or prior expiration of the Term of this Lease,
Tenant shall peaceably and quietly quit and surrender to Landlord the Premises,
broom clean, in as good condition as on the Commencement Date, ordinary wear and
tear, repairs and replacement by Landlord, and alterations, additions and
improvements permitted hereunder excepted. Tenant's obligation to observe or
perform this covenant shall survive the Termination Date or prior expiration of
the Term. If the Termination Date falls on a Sunday or a legal holiday, this
Lease shall expire at 12 noon on the last business day preceding said date.
ARTICLE 14
HOLDING OVER
If Tenant holds over possession of the Premises beyond the Termination Date
or prior expiration of the Term, such holding over shall not be deemed to extend
the Term or renew this Lease but such holding over shall continue upon the
terms, covenants and conditions of this Lease, except that the charge for use
and occupancy of the Premises for each calendar month or portion thereof that
Tenant holds over (even if such part shall be one day) shall be one-
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twelfth (1/12th) of one and one half (1.5) the Minimum Rent and Additional Rent
required to be paid by Tenant during the calendar year preceding the Termination
Date or earlier expiration of the Term. If the Premises are not surrendered upon
the expiration of this Lese, Tenant shall indemnify and hold harmless Landlord
against any and all losses and liabilities resulting therefrom, including,
without limitation, any claims made by any succeeding tenant founded upon such
delay. Nothing contained in this Lease shall be construed as a consent by
Landlord to the occupancy or possession by Tenant of the Premises beyond the
Termination Date or prior expiration of the Term, and Landlord, upon said
Termination Date or prior expiration of the Term, shall be entitled to the
benefit of all legal remedies that now may be in force or may be hereafter
enacted relating to the immediate repossession of the Premises. The provisions
of this Article shall survive the Termination Date or earlier expiration of the
Term.
ARTICLE 15
SERVICES AND UTILITIES
15.1 As part of Landlord's Operating Expenses, Landlord shall furnish to
the Premises the following services: (i) electricity to the Common Area; (ii)
heating and cooling to the Premises; (iii) water and sanitary sewer services to
the Premises; (iv) janitorial services for the Premises (other than on Saturdays
and Sundays and during Business Holidays) as set forth in Exhibit "D" and (v)
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repair of all exterior window and exterior glass door replacement and repair
unless damage caused by the negligence of Tenant. Heating and cooling shall be
furnished to the extent necessary to keep the temperature inside the Premises
within the temperature range from 66?F to 74?F, inclusive, between the hours of
8:00 a.m. and 7:00 p.m. only, Mondays through Fridays, Business Holidays
excluded; provided, however, that if the exterior temperature exceeds 94?F, the
interior temperature need only be 20?F cooler than the exterior temperature. If
Tenant requires Landlord to provide heating or cooling at any time other than
the hours provided herein for such service, Landlord shall furnish such to
Tenant within 48 hours of Tenant's request therefor, and Tenant shall pay
provided to Landlord as Additional Rent on demand, the special hourly overtime
charge which shall be twenty-five ($25.00) per hour.
15.2
15.2.1 Throughout the Term, Landlord shall supply electrical energy,
i.e. lights and outlets ("Tenant's Electric") to the Premises
upon the following terms and conditions: (i) Tenant shall pay
for such electrical energy as provided by this paragraph 15.2;
(b) Landlord shall not be liable in any way to Tenant (a) for
any loss, damage, failure, defect or change in the quantity or
character of electricity furnished to the Premises; (b) or if
such quantity or character of electricity furnished to the
Premises is no longer available or suitable for Tenant's
requirements; or (c) for any cessation, diminution or
interruption of the supply thereof; (iii) Tenant agrees that the
independent electrical engineering consultant selected by
Landlord shall from time to time make a survey of the electric
power demanded of the electric lighting fixtures and the
electric equipment of Tenant used in the Premises to determine
the average monthly electric consumption thereof. Until such
survey is made, Tenant shall pay to
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Landlord as Additional Rent, an established amount equal to
$667.71 per month of the first day of each calendar month,
commencing on the Commencement Date. The estimate is based on
$1.25 per square foot of the rentable area of the Premises. The
findings of said consultant as to the average monthly electric
consumption of Tenant shall be conclusive and binding on the
parties hereto unless Tenant disputes the findings of Landlord's
consultant by notice given to Landlord within thirty (30) days
after Tenant's receipt of said findings which Tenant reasonably
believes are incorrect based upon an electrical survey conducted
by Tenant's consultant. In such event, Landlord's consultant and
Tenant's consultant shall use their best efforts to reach
agreement with regard to Tenant's electrical power demand and
Tenant's average monthly electric consumption. If said
consultants are unable to agree within fifteen (15) days after
the giving of Tenant's notice, then said consultants shall
select an independent consultant to conduct another electrical
survey. The findings of said independent consultant shall be
conclusive and binding upon the parties hereto and the parties
hereby expressly agree to share equally the costs and expenses
incurred in connection with said survey. After Landlord's
consultant has submitted its report, or, if Tenant has disputed
said report, after Landlord's consultant and Tenant's consultant
have filed a joint report or have obtained a report from an
independent consultant, whichever the case may be, Tenant shall
(i) in the case of an underpayment by Tenant, pay to Landlord,
the amount determined to be owing from the Commencement Date or
during the months in which said survey was being conducted and
(ii) in the case of an overpayment by Tenant, receive a credit
against the next succeeding installment(s) of Additional Rent
equal to the amount determined to be overpaid from the
Commencement Date or during the months in which said survey was
being conducted; thereafter, Tenant shall pay to Landlord on the
first day of every month, in advance, the amounts set forth as
the monthly consumption in said report. Said amounts shall be
deemed Additional Rent due hereunder; (iii) if there shall be an
increase or decrease in the rate schedule of the public utility
supplying electric energy to the Building, or the imposition of
any tax with respect to such electrical energy or any increase
in such tax following the Commencement Date, the Additional Rent
payable hereunder shall be equitably adjusted as of the
effective date of such increase, decrease or tax; (iv) Tenant
shall be responsible for replacing all light bulbs, fluorescent
lamps, non-Building standard lamps and bulbs, and all ballasts
used by Tenant in the Premises. At the option of the Landlord,
Tenant shall purchase from Landlord all fluorescent lamps, light
bulbs and ballasts used in the Premises and pay Landlord for the
cost of same. Total electric charges for Building collected by
Landlord cannot exceed actual total cost.
15.2.2 Tenant covenants that its use of electricity in the Premises
shall be limited to and for the operation of (i) the building
standard lighting, and (ii) electric typewriters, calculators,
copy machines, fax machines,
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personal computers and printers, refrigerator, coffee machine,
microwave oven and other small office machines and for no other
use except with the written consent of Landlord.
15.2.3 Tenant shall make no alteration to the existing electrical
equipment or connect any fixtures, appliances or equipment
without the prior written consent of Landlord in each instance.
Should Landlord grant such consent, all additional risers or
other equipment required therefor shall be provided by Landlord
and the cost thereof shall be paid by Tenant as Additional Rent
upon Landlord's demand. as a condition to granting such
consent, Landlord shall require an increase in the Additional
Rent by an amount which will reflect the cost of the additional
equipment and service to be furnished by Landlord. If Landlord
and Tenant cannot agree on such increase the Additional Rent
increase shall be determined by an independent electrical
engineer, to be selected by Landlord and whose fee for services
rendered shall be paid by Tenant upon demand and shall
constitute Additional Rent.
15.2.4 Landlord shall not be liable in the event of any interruption in
the supply of electricity, or of any other utility, including
but not limited to air-conditioning, heat or water, unless
caused by the negligence of Landlord, its agents, servants or
employees, and Tenant agrees that such supply may be interrupted
for inspection, initiation of service repairs, replacement and
in emergencies.
15.2.5 Landlord reserves the right to cause Tenant's consumption or use
of electrical energy to be separately metered from the
consumption or use thereof by other tenants of the Building and,
in such event, Tenant shall pay the cost of such electrical
energy promptly upon receipt of the bill therefor. In such event
Tenant shall not be required to pay to Landlord the amount of
$1.25 per square foot as Additional Rent for Tenant Electric as
set forth above.
15.3 The failure of Landlord to furnish any service hereunder, or the
interruption of any utility service to the Premises, including but not limited
to electricity, air-conditioning, heat or water, except when caused by the
intentional or negligent conduct of Landlord, shall not be construed as a
constructive eviction of Tenant and shall not excuse Tenant from failing to
perform any of its obligations hereunder and shall not give Tenant any claims
against Landlord for damages for failure to furnish such service.
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ARTICLE 16
QUIET ENJOYMENT
Landlord covenants and agrees that, upon the performance of Tenant of all of
the covenants, agreements and provisions hereof on Tenant's part to be kept and
performed, Tenant shall have, hold and enjoy the Premises, subject and
subordinate to the rights set forth in Article 20, provided, however, that no
diminution or abatement of the Minimum Rent, Additional Rent or other payment to
Landlord shall be claimed by or allowed to Tenant for inconvenience or
discomfort arising from the making of any repairs or improvements to the
Premises or Real Property, nor for any space taken to comply with any law,
ordinance or order of any Governmental Authority, except as provided for herein.
Tenant's rights hereunder are and shall be subject to existing and future
easements affecting the Real Property, including by way of illustration and not
limitation, easements for storm and sanitary sewers, drainage ditches and public
utilities, and to all existing and future mortgages, liens or real estate taxes
and those items set forth on Exhibit "A-1" hereof.
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ARTICLE 17
DEFAULT
17.1 If during the Term any one or more of the following acts or
occurrences (any one of such occurrences or acts being hereinafter called an
Event of Default) shall happen:
17.1.1 If Tenant shall default in making the payment of any installment
of the Minimum Rent or the Additional Rent or default in any
other way curable by the payment of money after written notice
by Landlord to Tenant and a three day opportunity to cure after
the payment shall be due and payable; or
17.1.2 If Tenant shall default in the observance or performance of or
compliance with any of the other covenants, agreements, terms or
conditions of this Lease or any other contract or agreement with
Landlord to be observed or performed by Tenant (other than any
default curable by payment of money or any default described in
Sections 17.1.3, 17.1.4, 17.1.5 or 17.1.6), and such default
shall continue for a period of fifteen (15) days after written
notice thereof from Landlord to Tenant, or, in the case of a
default which cannot with due diligence be cured within fifteen
(15) days, Tenant shall fail to proceed promptly (except for
unavoidable delays) after the giving of such notice and with all
due diligence to cure such default and thereafter to prosecute
the curing thereof with all due diligence (ir being intended
that as to a default not susceptible of being cured with due
diligence within fifteen (15) days, the time within which such
default may be cured shall be extended for such period as may be
reasonably necessary to permit the same to be cured with all due
diligence); or
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17.1.3 If Tenant shall file a voluntary petition in bankruptcy or shall
be adjudicated a bankrupt or insolvent, or shall file any
petition or answer seeking any reorganization, composition,
readjustment or similar relief under any present or future
bankruptcy or other applicable law, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver, or
liquidator of Tenant or of all or any substantial part of its
properties or of all or any part of the Premises; or
17.1.4 If within sixty (60) days after the filing of an involuntary
petition in bankruptcy against Tenant, or the commencement of
any proceeding against Tenant seeking any reorganization,
composition, readjustment or similar relief under any law and
such proceeding shall not have been dismissed; or, if within
sixty (60) days after the appointment (without the consent or
acquiescence of Tenant) of any trustee, receiver or liquidator
of Tenant, or of all or any substantial part of the properties
of Tenant or of all or any part of the Premises, and such
appointment shall not have been vacated or stayed on appeal or
otherwise; or, if, within sixty (60) days after the expiration
of any such stay, such appointment shall not have been vacated;
or, in within sixty (60) days after the taking of possession
(without the consent or acquiescence of Tenant) of the property
of Tenant by any governmental office or agency pursuant to
statutory authority for the dissolution or liquidation of
Tenant, such taking shall not have been vacated or stayed on
appeal or otherwise;
17.1.5 If the Premises shall be abandoned by Tenant for a period of
forty-five (45) consecutive days; or
17.1.6 If Tenant shall fail to take actual occupancy of the Premises
within ninety (90) days after the Commencement Date or shall
thereafter vacate the Premises for a period in excess of thirty
(30) days;
then, in any of the foregoing events, Landlord may exercise the rights
set forth in Article 18 of this Lease or otherwise provided at law or in
equity.
17.2 Notwithstanding any provisions of this Lease permitting Tenant to cure
any event constituting an Event of Default, if any Event of Default occurs more
than four (4) times within any six (6) month period then, notwithstanding that
each such Event of Default shall have been cured, then upon any further Event of
Default, Landlord may exercise the remedies provided herein or at law or in
equity upon giving notice as provided in Section 18.1 of this Lease without
affording Tenant an opportunity to cure such Event of Default.
ARTICLE 18
LANDLORD'S RIGHTS UPON TENANT'S DEFAULT
18.1 If any Event of Default occurs, Landlord may at its option,
notwithstanding the fact that Landlord may have other remedies hereunder or at
law or in equity, by notice to Tenant designate a date, not less than ten (10)
days after the giving of such notice, on which this
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Lease shall terminate; and thereupon, on such date the Term of this lease and
the estate hereby granted shall expire and terminate with the same force and
effect as if the date specified in such notice was the Termination Date and all
rights of Tenant hereunder shall expire and terminate by Tenant shall remain
liable as provided in this Lease, and Landlord shall have the right to remove
all persons, goods, fixtures and chattels from the Premises, in accordance with
New Jersey eviction laws, without liability or damages to Tenant.
18.2 If this Lease is terminated as provided in Section 18.1, or as
permitted by law, Tenant shall peaceably quit and surrender the Premises to
Landlord, and Landlord may, without further notice, enter upon, re-enter,
possess and repossess the same by summary proceedings, ejectment or other legal
proceeding, and again have, repossess and enjoy the same as if this Lease had
not been made, and in any such event neither Tenant nor any person claiming
through or under Tenant by virtue of any law or an order of any court shall be
entitled to possession or to remain in possession of the Premises but shall
forthwith quit and surrender the Premises, and Landlord at its option shall
forthwith, notwithstanding any other provision of this Lease, be entitled to
recover from Tenant as and for liquidated damages either:
18.2.1 an amount equal to (i) all Minimum Rent, Additional Rent and
other amounts payable by Tenant hereunder then due or accrued
and unpaid; plus (ii) all Minimum Rent and Additional Rent
(conclusively presuming the Additional Rent to be the same as
was payable for the calendar year immediately preceding such
termination) reserved hereunder for the unexpired portion of the
Term discounted at the rate of six percent (6%) per annum to
then present worth; plus (iii) all other damages and expenses
(including attorneys' fees and expenses) which Landlord shall
have sustained by reason of the breach of any provision of this
Lease. Under this option, Landlord shall reimburse Tenant for
any rent collected should Landlord relet the Premises for the
period reflected in the payments.
18.2.2 amounts equal to (i) the Minimum Rent and Additional Rent (as
above presumed) which would have been payable by Tenant from
time to time had this Lease not so terminated, or had Landlord
not so reentered the Premises, payable on the date that such
payments would have otherwise been payable following such
termination and until the Termination Date, plus (ii) all other
damages and expenses (including attorneys' fees and expenses)
which Landlord shall have sustained by reason of the breach of
any provision of this Lease; provided, however, that if Landlord
shall relet the Premises during said period, Landlord shall
credit Tenant with the net rents received by Landlord from such
reletting, such net rents to be determined by first deducting
from the gross rents as and when received by Landlord from such
reletting, the expenses incurred or paid by Landlord from such
reletting, the expenses incurred or paid by Landlord in
terminating this Lease or in re-entering the Premises and in
securing possession thereof, as well as the expenses if
reletting, including altering and preparing the Premises for new
tenants, legal fees, brokers' commissions, and all other
expenses properly chargeable against the Premises and the rental
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therefrom, it being understood that any such reletting may be
for a period shorter or longer than the remaining term of this
Lease, but in no event shall Tenant be entitled to receive any
excess of such net rents over the sums payable by Tenant to
Landlord hereunder, nor shall Tenant be entitled in any suit for
the collection of damages pursuant to this Subsection to a
credit in respect of any net rents from a reletting, except to
the extent that such net rents are actually received by
Landlord. If the Premises or any part thereof shall be relet in
combination with other space, then proper apportionment on a
square foot basis (for equivalent space) shall be made of the
rent received from such reletting and of the expenses of
reletting. Suit or suits for the recovery of such damages, or
any installments of such damages, may be brought by Landlord
from time to time at its election, and nothing contained herein
shall be deemed to require Landlord to postpone suit until the
date when the term of this Lease would have expired if it had
not been so terminated under the provisions of Section 18.1, or
under any provision of law, or had Landlord not reentered the
Premises.
18.3 Nothing herein contained shall be construed to limit or preclude
recovery by Landlord against Tenant of any sums or damages to which,
in addition to the damages particularly provided above, Landlord may
lawfully be entitled by reason of any default hereunder on the part
of Tenant. Nothing herein contained shall be construed to limit or
prejudice the right of Landlord to prove for and obtain as damages
by reason of the termination of this Lease or re-entry on the
Premises for the default of Tenant under this Lease, an amount equal
to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages
are to be proved whether or not such amount be greater, equal to, or
less than any of the sums referred to in Section 18.2. Nothing
herein contained shall limited or prejudice the right of Landlord in
any bankruptcy or reorganization or insolvency proceeding to prove
for and obtain as damages by reason of such termination an amount
equal to the maximum allowed by any bankruptcy or reorganization or
insolvency proceedings or to prove for and obtain as damages by
reason of such termination any amount equal to the maximum allowed
by any statute or rule of law provided, however, such amount shall
be greater than al the sums recovered in Section 18.2.
18.4 Landlord may retain, as a credit against the damages herein
provided form any Minimum Rent or Additional Rent or monies received
by it from Tenant or others on behalf of Tenant.
18.5 If Landlord takes possession of the Premises pursuant to the
provisions of this Article 18, Tenant hereby agrees that Landlord
shall have the right to take possession of any furniture or fixtures
of Tenant then found upon the Premises, to sell the same at any
private or public sale and to apply the proceeds therefrom to any
amount due; Tenant agrees further that all such furniture and
fixtures shall be deemed abandoned by Tenant and that Landlord shall
have no liability whatsoever to Tenant in connection with or as
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a result of the disposition of any such furniture or fixtures.
Tenant waives any right to notice of execution or levy in connection
therewith.
18.6 Landlord shall take commercially reasonable action to mitigate
damages.
ARTICLE 19
LANDLORD'S REMEDIES CUMULATIVE; EXPENSES
19.1 No right or remedy conferred upon or reserved to Landlord shall be
exclusive of any other right or remedy, and any right or remedy shall be
cumulative and in addition to every other right or remedy given hereunder or now
or hereafter existing as law. The failure of Landlord to insist at any time
upon the strict performance of any covenant or agreement or to exercise any
right, power or remedy contained in this Lease shall not be construed as a
waiver or relinquishment thereof for the future. A receipt by Landlord of any
installment of the Minimum Rent or the Additional Rent with knowledge of the
breach of any covenant or agreement contained in this Lease shall not be deemed
a waiver of such breach and shall not be deemed to have been waived unless
expressed in writing and signed by Landlord. Landlord shall be entitled, to the
extent permitted by applicable law, to injunctive relief in case of the
violation, or attempted or threatened violation, of any covenant, agreement,
condition or provision of this Lease or to a decree compelling performance of
any covenant, agreement, condition or provision of this Lease, or to any other
remedy allowed Landlord by law.
19.2 If either Landlord or Tenant shall be in default in the performance of
any of their respective obligations under this Lease and an action shall be
brought for the enforcement thereof in which it shall be determined by a court
of competent jurisdiction that the other party was in default, the party in
default shall pay to the other, on demand, the expenses incurred in connection
therewith, including reasonable attorneys' fees.
19.3 For the purposes of any suit brought by Landlord, this Lease shall be
construed to be a divisible contract, to the end that successive actions may be
maintained on this Lease as successive periodic sums mature hereunder.
19.4 If Tenant shall default in the keeping, observance or performance of
any covenant, agreement, term, provision, or condition herein contained,
Landlord, without thereby waiving such default, may perform the same for the
account and at the expense of Tenant (i) immediately or at any time thereafter
and without notice in the case of emergency or in case such default will result
in a violation of any legal or insurance requirement, or in the imposition of
any lien, charge or encumbrance against all or any portion of the Premises and
(ii) in any other case if such default continues after thirty (30) days from
the date of the giving by Landlord to Tenant of notice of Landlord's intention
so to perform the same. All reasonable costs and expenses incurred by Landlord
in connection with any such performance by it for the account of Tenant and also
all costs and expenses, including reasonable counsel fees and disbursements
incurred by Landlord in any action of proceeding (including any summary
dispossess proceeding) brought by Landlord to enforce any obligation of Tenant
under the Lease and/or right of Landlord in or to the Premises, shall be paid by
Tenant to Landlord upon demand.
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ARTICLE 20
SUBORDINATION AND ESTOPPEL
20.1 Tenant agrees that this Lease is subject and subordinate to all ground
or underlying leases and to the lien of any mortgages or deeds of trust now on
or which at any time may be made a lien upon the Real Property, and to any
modification thereof, and to all advances made or hereafter to be made upon the
security thereof. This subordination provision shall be self-operative and not
further instrument of subordination shall be required, provided, however, that
Tenant agrees to execute and deliver upon request, such further instrument or
instruments confirming this subordination as shall be requested by Landlord or
by any mortgagee or proposed mortgagee of the Real Property. Tenant hereby
constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any
such instrument or instruments. Tenant further agrees that at the option of the
holder of any mortgage or of the trustee under any deed of trust affecting the
Real Property, this Lease may be made superior to said mortgage or deed of trust
by the insertion therein of a declaration that this Lease is superior to said
mortgage or deed of trust.
20.2 Each party shall at any time and from time to time within ten (10)
days of receipt of written request therefor, execute, acknowledge and deliver to
the other an estoppel certificate certifying (i) that this Lease is unmodified
and in full force and effect (or, if there have been modifications, that the
same are in full force and effect as modified and stating the modifications),
(ii) the dates to which the Minimum Rent and Additional Rent have been paid in
advance, if any, (iii) whether any options granted to Tenant pursuant to the
provisions of this Lease have been exercised, and (d) whether or not to the best
knowledge of the signer, the other party is in default in performance of any of
its obligations under this Lease, and if so, specifying each such default of
which such party may knowledge, it being intended that any such certificate
delivered pursuant to this Section 20.2 may be relied upon by a prospective
purchaser of Landlord's interest or a mortgage of Landlord's interest or
assignee of any mortgage upon Landlord's interest in the Real Property or any
other party which Landlord wishes to receive said estoppel certificate or any
assignee or creditor of Tenant.
ARTICLE 21
DAMAGE BY FIRE OR OTHER CASUALTY
21.1 If the Building or the Premises shall be partially or totally damaged
or destroyed by fire or other cause, then, whether or not the damage or
destruction shall have resulted from the fault or neglect of Tenant or Tenant's
Visitors (and if this Lease shall not have been terminated as in this Article 21
hereinafter provided), Landlord shall repair the damage and restore and rebuild
the Building and/or the Premises, at its expense, with reasonable dispatch after
notice to it of the damage or destruction; provided, however, that Landlord
shall not be required to repair or replace any of Tenant's property.
21.1 If the Building or the Premises shall be partially damaged or
partially destroyed by fire or other cause, the rents payable hereunder shall be
abated to the extent that the Premises shall have been rendered unusable to
Tenant in the conduct of its business and for the period from the date of such
damage or destruction to the date the damage shall be repaired or
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restored. If the Premises or a major part thereof shall be totally (which shall
be deemed to include substantially totally) damaged or destroyed or rendered
completely (which shall be deemed to include substantially completely) unusable
to Tenant in the conduct of its business on account of fire or other cause, the
rents shall completely abate as of the date of the damage or destruction and
until Landlord shall repair, restore and rebuild the Building and the Premises,
provided, however, that should Tenant reoccupy a portion of the Premises for the
conduct of Tenant's business operations during the period the restoration work
is taking place and prior to the date that the same are made completely
tenantable, rents allocable to such portion shall be payable by Tenant from the
date of such occupancy.
21.3 If (a) the Building shall be totally damaged or destroyed by fire or
other cause, or (b) the Building shall be so damaged or destroyed by fire or
other cause (whether or not the Premises are damaged or destroyed) as to require
a reasonably estimated expenditure of more than twenty-five (25%) of the full
insurable value of the Building immediately prior to the casualty and Landlord
intends to demolish or not to rebuild the Building, or (c) during the final year
of the current Term (without extension thereof) the Premises are damaged or
destroyed whether partially or totally; then in either such case and
notwithstanding anything elsewhere provided in this Article 21 Landlord may
terminate this Lease by giving Tenant notice to such effect within one hundred
twenty (120) days after the date of the casualty.
21.4 In case of any damage or destruction mentioned in this Article 21,
Tenant or Landlord may terminate this Lease, by notice to Tenant, if the
Premises and the Building are not reasonably capable of restoration within six
(6) months from the date of such damage or destruction, or if Landlord has not
completed the making of the required repairs and restored and rebuilt the
Building and the Premises within six (6) months from the date of such damage or
destruction.
21.5 No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the Premises or of the Building pursuant to this
Article. Landlord shall use its best efforts to effect such repair or
restoration promptly and in such manner as to not unreasonably interfere with
Tenant's use and occupancy.
21.6. Notwithstanding any of the foregoing provisions to the contrary,
Landlord's obligation to repair the damage and restore and rebuild the Building
and/or the Premises pursuant to this Article shall be subject to (i) Landlord's
obtaining all necessary approvals from the Governmental Authorities; (ii) the
approval and consent of the holder of any superior mortgage or the lessor of any
superior lease and the willingness of such mortgagee and lessor to make the
proceeds of casualty insurance policies available to Landlord for such purposes;
and (iii) Landlord's receipt of casualty insurance proceeds in an amount
sufficient to cover the full cost to repair the damage and restore and rebuild
the Premises and/or the Building. Landlord shall have the right to terminate
this Lease within sixty (60) days after Landlord determines that any one of the
foregoing conditions have not been satisfied by giving Tenant notice to such
effect.
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ARTICLE 22
MUTUAL WAIVER OF SUBROGATION
Each insurance policy carried by Landlord insuring the Real Property against
loss by fire and causes covered by standard extended coverage, and each
insurance policy carried by Tenant and insuring the Premises and its fixtures
and contents against loss by fire and causes covered by standard extended
coverage, shall be written in a manner so as to provide that the insurance
company waives all right of recovery by way of subrogation against Landlord or
Tenant in connection with any loss or damage covered by such policies. Neither
Landlord nor Tenant shall be liable to the other for any loss or damage caused
by fire, water or any of the risks enumerated in standard extended coverage
insurance, provided such insurance was in effect at the time of such loss or
damage. If such insurance policies cannot be obtained, or are obtainable only
by the payment of an additional premium charge above that charged by companies
carrying such insurance without such waiver of subrogation, the party
undertaking to carry such insurance shall notify the other party of such fact
and such other party shall have a period of ten (10) days after the giving of
such notice either (a) to place such insurance in companies which are reasonably
satisfactory to the first party and will carry such insurance with waiver of
such subrogation; or (b) to agree to pay such additional premium if such policy
is obtainable at additional cost; and if neither (a) or (b) is done, this
Article shall be null and void for so long as either such insurance cannot be
obtained or the party in whose favor a waiver of subrogation is desired shall
refuse to pay the additional premium charge.
ARTICLE 23
CONDEMNATION
23.1 If the Premises are acquired or condemned by eminent domain or
condemnation proceedings, or a suit or other action shall be instituted for the
taking of condemnation therefor, or if in lieu of any formal condemnation
proceedings or actions, Landlord shall grant an option to purchase and/or shall
sell and convey the Premises or any portion thereof, or the Building or Real
Property of which the Premises form a part, to any government or other public
authority, agency, body or public utility, seeking to take said Real Property,
Building and/or Premises or any portion thereof, the Term shall cease and
terminate from the date of title vesting pursuant to such proceeding or
agreement. If only a portion of the Premises or the Building shall be so
condemned or acquired, this Lease shall cease and terminate at Landlord's
option, and if such option is not exercised by Landlord, an equitable adjustment
of the Minimum Rent and Additional Rent payable by Tenant for the remaining
portion of the Premises shall be made. If more that 25% of the Premises shall
be so condemned or acquired, or if by reason of such a condemnation or
acquisition the Premises are rendered unfit for Tenant's intended use, this
Lease shall cease and terminate at Tenant's option. If a termination occurs
under this Article 23, Tenant shall have no claim against Landlord or the
condemning authority for the value of the unexpired Term, and Tenant shall have
no claim against Landlord, other than for the adjustment of the Minimum Rent and
Additional Rent as hereinbefore mentioned, or be entitled to any portion of any
amount that may be awarded as damages or paid as a result of such proceedings or
as the result of any agreement made by the condemning authority with Landlord.
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23.3 Tenant may make an independent claim in such proceedings for its
personalty, trade fixtures and moving expenses only; provided, however, that any
such claim shall in no way affect and portion of any award which the Landlord or
the holder of any mortgage affecting the Premises or the Real Property shall be
entitled to receive.
ARTICLE 24
CHANGES IN SURROUNDING BUILDING
This Lease shall not be affected or impaired by any change in any sidewalk,
alley or street adjacent to or around the Building, except as otherwise provided
in Article 23.
ARTICLE 25
NOTICES
Unless otherwise indicated differently, all notices, payments, requests,
reports, information or demands which any party hereto may desire or may be
required to give to any other party hereunder, shall be in writing and shall be
personally delivered or sent by confirmed facsimile transmission (answer back
received), nationally recognized courier, or first-class certified or registered
United States mail, postage prepaid, return receipt requested, and sent to the
party at its address appearing below or such other addresses as any party shall
hereafter inform the other party hereto by written notice given as aforesaid:
If to Tenant:
Medarex, Inc.
1545 Route 22 East
P. O. Box 953
Annandale, NJ 08801-0953
Att: Donald L. Drakeman, President and CEO
with a copy to:
Sattlerlee Stephens Burke & Burke LLP
230 Park Avenue
New York, NY 10169
If to Landlord:
McCarthy Associates Limited
A New Jersey limited partnership
c/o John F. McCarthy, III
228 Alexander Street
P.O. Box 2329
Princeton, NJ 08543-2329
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or to such other person or place as a party may designate by notice as
aforesaid. Notice by mail shall be deemed given on the third business day
following deposit in the mail.
ARTICLE 26
NO WAIVER
26.1 No waiver by Landlord of any breach by Tenant of any of the terms,
covenants, agreements or conditions of this Lease shall be effective unless such
waiver is contained in a writing subscribed by Landlord and no such waiver shall
be deemed to constitute a waiver of any succeeding breach thereof, or a waiver
of any breach of any of the terms, covenants, agreements and conditions herein
contained.
26.2 No employee of Landlord or of Landlord's agents shall have any
authority to accept the keys of the Premises prior to the Termination Date and
the delivery of keys to any employee of Landlord or Landlord's agents shall not
operate as an acceptance of a termination of this Lease or an acceptance of a
surrender of the Premises.
26.3 The receipt by Landlord of the Minimum Rent and Additional Rent with
knowledge of the breach of any covenant of this Lease shall not be deemed a
waiver of such breach. No payment by Tenant or receipt by Landlord of a lesser
amount than the monthly Minimum Rent or a lesser amount of the Additional Rent
the due shall be deemed to be other than on account of the earliest stipulated
amount then due, nor shall any endorsement or statement on any check or payment
as Minimum Rent or additional Rent be deemed in accord and satisfaction and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance of such Minimum Rent or Additional Rent or to pursue any
other remedy provided in this Lease.
26.4 Landlord's failure during the Term to prepare and deliver any of the
statements, notice or bills set forth in this Lease shall not in any way cause
Landlord to forfeit or surrender its rights to collect any amount that may have
become due and owing to it during the term of this Lease.
ARTICLE 27
LANDLORD'S LIABILITY
Landlord or its agents shall not be liable to Tenant for any injury or any
loss (by theft or otherwise) or damage to property of Tenant in the Premises or
on the Real Property, unless caused by or due to the negligence or wilful
misconduct of Landlord or its agents.
ARTICLE 28
MUTUAL INDEMNIFICATION TENANT'S LIABILITY
28.1 Tenant shall indemnify and save Landlord harmless against any
liability to and claim by or on behalf of any person, firm, Governmental
Authority, corporation or entity for personal injury, death or property damage
arising from:
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28.1.1 the use or occupancy by Tenant of the Premises or from any work
or things whatsoever done or omitted to be done thereat by
Tenant or Tenant's Visitors.
28.1.2 any breach or default by Tenant of and/or under any of the
terms, covenants and conditions of this Lease.
28.1.3 any negligence of Tenant.
28.1.4 any accident, injury or damage whatsoever caused to any person,
firm, or corporation or to any property (other than those caused
by Landlord or its agents, servants, employees or contractors)
occurring during the term hereof, in or about the Premises.
and including all reasonable costs, counsel fees, expenses and penalties
incurred by Landlord in connection with any such liability or claim, provided,
however, that Tenant shall have the prior opportunity, at Tenant's cost and
expense to defend, settle or compromise any such liability or claim with counsel
of Tenant's choosing.
28.2 Landlord shall not be liable for any damage to property of Tenant or
of others entrusted to employees of the Building, nor shall Landlord be liable
for the loss of or damage to any property of Tenant by theft or otherwise unless
due to the negligence or wilful misconduct of Landlord, its servants, agents or
employees, nor for any damage caused by other tenants or persons in the Building
or caused by operations in construction of any work on behalf of third parties
unless due to the negligence or wilful misconduct of Landlord.
28.3 Landlord shall indemnify and save Tenant harmless against any
liability to and claim by or on behalf of any person, firm, Governmental
Authority, corporation or entity for personal injury, death or property damage
arising from:
28.3.1 any breach or default by Landlord of and/or under any of the
terms, covenants and conditions of this Lease;
28.3.2 any negligence or wilful misconduct of Landlord.
and including all reasonable costs, counsel fees, expenses and penalties
incurred by Tenant in connection with any such liability or claim, provided,
however, that Landlord shall have the prior opportunity, at Landlord's cost and
expense, to defend, settle or compromise any such liability or claim with
counsel of Landlord's choosing.
ARTICLE 29
TENANT'S INSURANCE
29.1 Tenant will maintain with admitted insurers, authorized to do business
in the State of New Jersey and which are rated A-Plus/X in Best's Key Rating
Guide, comprehensive general liability insurance (including, during any period
when Tenant is making alterations or
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improvements to the Premises, coverage for any construction on or about the
Premises) against claims for bodily injury, personal injury, death or property
damage occurring on, or in about the Premises and the adjoining streets,
sidewalks and passageways, or as a result of ownership of facilities located on
the Premises in amounts not less than $5,000,000.00 for each claim with respect
to bodily injury, personal injury or death, $5,000,000.00 with respect to any
one occurrence, and $5,000,000.00 with respect to all claims for property damage
with respect to any one occurrence.
29.2 The policy of insurance required to be maintained by Tenant pursuant
to Section 29.1 shall name as the insured parties Landlord and Tenant as their
respective interests may appear, shall be reasonably satisfactory to Landlord
and shall (a) bear a standard first mortgage endorsement in favor of any holder
or holders of a first mortgage lien on the Premises with loss payable to such
holder or holders, (b) include a waiver of all rights or subrogation against
Landlord, such holder or holders and Tenant, (c) provide, for the benefit of
such holder or holders, that thirty (30) days' prior written notice of
suspension, cancellation, termination, modification, non-renewal or lapse or
material change of coverage shall be given and that such insurance shall not be
invalidated by any act or negligence of Landlord or Tenant or any owner of the
Premises, nor by any foreclosure or other proceedings or notices thereof
relating to the Premises or any interest therein, nor by any change in the title
or ownership of the Premises, nor by occupation of the Premises for purposes
more hazardous than are permitted by such policy, (c) not contain a provision
relieving the insurer thereunder of liability for any loss by reason of the
existence of other policies of insurance covering the Premises against the peril
involved, whether collectible or not, and (e) include a contractual liability
endorsement evidencing coverage of Tenant's obligation to indemnify Landlord
pursuant to Section 28 hereof.
29.3 Prior to the Commencement Date, Tenant shall deliver to Landlord
original or duplicate policies or certificates of the insurers evidencing all of
the insurance which is required to be maintained hereunder by Tenant, and,
within ten (10) days prior to the expiration of any such insurance, other
original or duplicate policies or certificates evidencing the renewal of such
insurance.
29.4 Tenant shall not obtain or carry separate insurance concurrent in form
or contributing in the event of loss with that required by Section 29.1 unless
both Landlord and Tenant are named as insureds therein.
29.5 Landlord and Tenant mutually agree that with respect to any loss which
is covered by insurance then being carried by the parties, or required to be
carried, the one carrying or required to carry such insurance and suffering such
loss hereby releases the other or and from any and all claims with respect to
such loss to the extent of such insurance carried or required to be carried.
Landlord and Tenant also agree that their respective insurance companies shall
have no right of subrogation against the other on account thereof. Nothing
contained in this Section 29.5 shall be deemed to modify or otherwise effect any
releases herein or either party from liability for claims.
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ARTICLE 30
MECHANICS' LIEN
If, because of any act or omission of Tenant, any mechanics' or other lien,
charge or order for the payment of money, or otherwise shall be filed against
the Premises or the Building (whether or not such lien, charge or order is valid
or enforceable as such), Tenant, at Tenant's expense, shall cause it to be
canceled or discharged of record by bonding or otherwise within thirty (30) days
after such filing, and Tenant shall, in any event, forever indemnify and save
Landlord harmless against and shall pay all costs, expenses, losses, fires and
penalties, including, without limitation, attorneys' fees related thereto or
resulting therefrom.
ARTICLE 31
DEFINITION OF LANDLORD
The term "Landlord" as used in this Lease means only the present owner of
the Real Property. In the event of any transfer of title to Real Property, the
Landlord shall be and hereby is entirely freed and relieved of all covenants and
obligations of Landlord hereunder except for liabilities which arose prior to
such transfer and this Lease shall be deemed and construed as a covenant running
with the land without further agreement between the parties to their successors
in interest.
ARTICLE 32
DEFINITION OF TENANT
The term "Tenant" as used in this Lease includes Tenant, its successors and
assigns and any person or entity claiming by, through or under Tenant.
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ARTICLE 33
NO PERSONAL LIABILITY
Landlord shall be under no personal liability with respect to any of the
provisions of this Lease. If Landlord is in breach or default with respect to
its obligations or otherwise, no recourse or relief shall be had under any rule
of law, statute or constitution or by any enforcement of any assessments or
penalties or otherwise, or based on or in respect of this Lease (whether by
breach of any obligation, monetary or non-monetary), against Landlord, it being
expressly understood that all obligations of Landlord under or relating to this
Lease are solely obligations payable out of the Premises and are compensable
solely therefrom. It is expressly understood that all such liability is and is
being expressly waived and released as a condition of and as a condition for the
execution of this Lease, and Tenant expressly waives and releases all such
liability as a condition of, and as a consideration for, the execution of this
Lease by Landlord. Landlord hereby agrees to maintain with an insurer selected
by it a general liability insurance policy against claims for bodily injury,
personal injury, death or property damage occurring on or about the Real
Property in amounts not less than $5,000,000.00 for each claim with respect to
bodily injury, personal injury or death, $5,000,000.00 with respect to any one
occurrence, and $5,000,000.00 with respect to all claims for property damage
with respect to any one occurrence.
ARTICLE 34
DIRECTORY
Landlord shall furnish and service near the entrance of the Building a
directory, listing therein such reasonable and customary number of names that
Tenant may from time to time request to be listed in such directory. Nothing in
this Article shall be construed to require Landlord to list in the directory
more names for Tenant than Tenant's Proportionate Share of the total number of
listings available in the directory.
ARTICLE 35
ENVIRONMENTAL MATTERS
35.1 Tenant represents and warrants that although it may be an "industrial
establishment" as defined in the Environmental Cleanup Responsibility Act as
amended by the New Jersey Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq.
-------- ------
("ISRA") it will not engage in operations which involve the generation,
manufacture, refining, transportation, treatment, storage, handling, or disposal
of hazardous substances or hazardous wastes on-site, above or below ground at
the Real Property. Tenant agrees that the Landlord shall have the right to
conduct or have conducted by its agents or contractors, such environmental
inspections as the Landlord shall reasonably deem necessary or advisable from
time to time. Tenant shall cooperate with such inspection efforts, such
cooperation shall include, without limitation, supplying such information
concerning the operations conducted, and "hazardous substances" or "hazardous
wastes", as such term is defined in the applicable environmental laws, located
at the Premises.
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35.2 In the event that Tenant now is or hereafter becomes an "industrial
establishment", then in additional to all of Landlord's rights and remedies
herein, Tenant shall comply with all requirements or ISRA, however arising,
related directly or indirectly to the Tenant's operations at the Premises.
35.3 Tenant shall not cause or permit the Premises to be in violation of,
or do anything which would subject the Premises to any remedial obligations
under, any applicable environmental law and shall promptly notify Landlord, in
writing, or any existing, pending or threatened investigation or inquiry by any
governmental authority in connection with any applicable environmental law.
35.4 Tenant shall not cause or permit to exist, as a result of any
intentional or unintentional action or omission on the part of Tenant in or
about the Real Property, a releasing, spilling, leaking, pumping, emitting,
pouring, emptying or dumping of a "hazardous substance" or "hazardous wastes",
as such terms are defined in the applicable environmental laws, into waters or
onto the lands of the State of New Jersey, or into waters outside the
jurisdiction of the State of New Jersey, where damage may result to the lands,
waters, fish, shellfish, wildlife, biota, air and other resources owned,
managed, held in trust or otherwise controlled by the State of New Jersey,
unless said release, spill, leak, etc., is pursuant to and in compliance with
the conditions of a permit issued by the appropriate federal or state
governmental authorities.
35.5 At no expense to Landlord or Tenant, Tenant and Landlord each agree to
promptly provide all information requested by the other for preparation of non-
applicability affidavits and shall promptly sign such affidavits when
requested. Tenant shall indemnify, defend and hold Landlord harmless from all
fines, suits, procedures, claims and actions of any kind arising out or in any
way connected with any spills or discharges of hazardous substances or wastes at
the Premises which occur during the Term of this Lease by reason of Tenant's
beach of the provisions of this Article. Landlord shall indemnify, defend and
hold Tenant harmless from and against all any and all liabilities, losses and
costs which Tenant may incur arising out of the presence of any hazardous
substance or hazardous waste on the Premises where such presence: (1) predates
occupancy of the Premises by Tenant, or (2) was caused solely by the negligence
or wilful misconduct of Landlord.
35.6 This Article shall survive the expiration or sooner termination of
this Lease.
ARTICLE 36
SECURITY
36.1 Tenant has deposited with Landlord a sum representing two months
Minimum Rent as security for the faithful performance and observance by Tenant
of the terms, provisions and conditions of this Lease. In the event Tenant
defaults in respect of any of the terms, provisions and conditions of this
Lease, including, but not limited to, the payment of Minimum Rent or Additional
Rent, Landlord may use, apply or retain the whole or any part of the security so
deposited to the extent required for the payment of any Minimum Rent and
Additional Rent or any other sum as to which Tenant is in default or for any sum
which Landlord may expend or may be required to expend by reason of Tenant's
default in respect of any of the terms, covenants and conditions of this Lease,
including, but not limited to, any damages or deficiency
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in the reletting of the Premises, whether such damages or deficiency accrued
before or after summary proceedings or other re-entry by Landlord. Landlord
shall have not duty to hold such security in a trust account and may co-mingle
such security with its own funds. Tenant acknowledges and agrees that no
interest shall be payable to Tenant on such security deposit.
36.2 In the event that Tenant shall fully and faithfully comply with all of
the terms, provisions, covenants and conditions of this Lease, the security
shall be returned to Tenant, without interest, within thirty (30) days after the
date fixed as the end of this Lease and after delivery of entire possession of
the Premises to Landlord. In the event of a sale of the Real Property, Landlord
shall have the right to transfer the security to the vendee and, provided the
transferee acknowledges in writing receipt of such security, Landlord shall
thereupon be released by Tenant from all liability for the return of such
security and Tenant shall thereupon look to the new landlord solely for the
return of said security. It is agreed that the provisions hereof shall apply to
every transfer or assignment made of the security to a new landlord.
36.3 Tenant further covenants that it will not assign or encumber or
attempt to assign or encumber the monies deposited herein as security, and that
neither Landlord nor its successor or assigns shall be bound by any such
assignment, encumbrance, attempted assignment or attempted encumbrance.
ARTICLE 37
INTENTIONALLY OMITTED
ARTICLE 38
MISCELLANEOUS
38.1 Entire Agreement. This Lease contains the entire agreement between
----------------
the parties, and any attempt hereafter made to change, modify, waive, discharge
or effect an abandonment of it in whole or in part shall be void and ineffective
unless in writing and signed by the party against whom enforcement of the
change, modification, waiver, discharge or abandonments is sought.
38.2 Jury Trial Waiver. Landlord and Tenant do hereby waive trial by jury
-----------------
in any action, proceeding or counterclaim brought by either of the parties
hereto against the other on any matter whatsoever arising out of or in any
connection with this Lease, the relationship of Landlord and Tenant, Tenant's
use or occupancy of the Premises, and/or any claim, injury or damage, or any
emergency or statutory remedy.
38.3 Broker. Tenant represents to Landlord that it has not dealt with any
------
real estate broker or sales representative other than Fennelly Associates and
Keller, Dodds & Woodworth, Inc.. in connection with this Lease. Tenant agrees
to indemnify, defend and hold harmless Landlord and the respective directors,
officers, employees and partners of the foregoing entities or of any partner of
the foregoing entities, from and against all threatened or asserted claims,
liabilities, costs or damages (including reasonable attorneys' fees and
disbursements) which they may incur as a result of a breach of this
representation. Landlord shall pay commissions to
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the above named brokers pursuant to a separate written agreement between
Landlord and such brokers.
38.4 Separability. If any term or provision of this Lease or the
------------
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provision to persons or circumstances other than those to which it
is held invalid or unenforceable, shall not be affected thereby and all other
terms and provisions of this Lease shall be valid and enforced to the fullest
extent permitted by law.
38.5 Interpretation.
--------------
38.5.1 Whenever in this Lease any words of obligation or duty are used,
such words or expressions shall have the same force and effect
as though made in the form of covenants.
38.5.2 Words of any gender used in this Lease shall be held to include
any other gender, and words in the singular number shall be held
to include the plural, when the sense requires.
38.5.3 All pronouns and any variations thereof shall be deemed to refer
to the neuter, masculine, feminine, singular or plural as the
identity of the Tenant requires.
38.5.4 This Lease shall not be strictly construed either against
Landlord or Tenant.
38.5.5 No remedy or election given by any provision in this Lease shall
be deemed exclusive unless so indicated, but each shall,
wherever possible, be cumulative with all other remedies in law
or equity as otherwise specifically provided.
38.5.6 Each provision hereof shall be deemed both a covenant and a
condition and shall run with the land.
38.5.7 If, and to the extent that, any of the provisions of any rider
to this Lease conflict or are otherwise inconsistent with any of
the preceding provisions of this Lease, or of the Rules and
Regulations appended to this Lease, whether or not such
inconsistency is expressly noted in the rider, the provisions of
the rider shall prevail, and in case of inconsistency with said
Rules and Regulations, shall be deemed a waiver of such Rules
and Regulations with respect to Tenant to the extent of such
inconsistency.
38.5.8 Tenant agrees that all of Tenant's covenants and agreements
herein contained providing for the payment of money and Tenant's
covenant to remove mechanics' liens shall be deemed conditions
as well as
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covenants, and if default be made in any such covenants,
Landlord shall have all of the rights provided for herein.
38.5.9 The parties mutually agree that the Basic Lease Information
cover sheet, headings and captions contained in this Lease are
inserted for convenience of reference only, and are not to be
deemed part of or to be used in construing this Lease. If, and
to the extent that, any of the provisions set forth on the cover
sheet conflict or are otherwise inconsistent with any of the
provisions of the Lease, the provisions of the Lease shall
prevail.
38.5.10 The covenants and agreements herein contained shall, subject to
the provisions of this Lease, bind and inure to the benefit of
Landlord, its successors and assigns, and Tenant, its successors
and assigns, except as otherwise provided herein.
38.5.11 This Lease has been executed and delivered in the State of New
Jersey and shall be construed in accordance with the laws of the
State of New Jersey, and Landlord and Tenant acknowledge that
all of the applicable statutes of the State of New Jersey are
superimposed on the rights, duties and obligations of Landlord
and Tenant hereunder, and this Lease shall not otherwise provide
that which said statutes prohibit.
38.5.12 Landlord has made no representations or promises with respect to
the Premises or the Real Property, except as expressly contained
herein.
38.5.13 Tenant has inspected the Premises and agrees to take the same in
an "as is" condition, except as otherwise expressly set forth
herein.
38.5.14 Landlord shall have no obligation, except as herein set forth,
to do any work in and to the Premises to render them ready for
occupancy and use by Tenant.
38.6 No Recording. Tenant shall not record this Lease or a memorandum
------------
thereof.
38.7 Not Offer, Option, etc. The submission of this Lease to Tenant for
-----------------------
examination does not constitute by Landlord a reservation of, or an option to
Tenant for, the Premises, or an offer to lease on the terms set forth herein,
and this Lease shall become effective as a lease agreement only upon execution
and delivery thereof by Landlord and Tenant.
38.8 Force Majeure. If, by reason of a strike, labor troubles or cause
-------------
beyond Landlord's control, including, but not limited to, governmental
preemption in connection with a national emergency or any rule, order or
regulation of any Governmental Authority, or conditions of supply and demand
which are affected by war or other emergency, Landlord shall be unable to
fulfill its obligations under this Lease or shall be unable to supply any
service which Landlord is obligated to supply, this Lease and Tenant's
obligation to pay Minimum Rent and Additional Rent hereunder shall in no way be
affected, impaired or excused.
38
<PAGE>
ARTICLE 39
RENEWAL OPTION
39.1 Provided (a) no Event of Default has occurred and remained uncured as
of the date Tenant exercised its renewal option and (b) Tenant has not assigned
this Lease or sublet all of the Premises, then Tenant shall have the right to
extend the Term for one (1) additional period of five (5) years (the "First
Option Period") by notice given to Landlord not more than one year and less than
one hundred and eighty (180) days prior to the fifth (5/th/) anniversary of the
Commencement Date (time being of the essence with respect to the giving of such
notice). If Tenant exercises its renewal option for a second five year term,
all terms and conditions of this Lease shall remain in effect during the First
Option Period, except that the Minimum Rent shall be computed in the manner set
forth in Exhibit "F". Prior to commencement of the First Option Period,
-----------
Landlord shall not be obligated to perform any work to the Premises.
39.2 Provided (a) no Event of Default has occurred and remained uncured
as of the date Tenant exercised its renewal option and (b) Tenant has not
assigned this Lease or sublet all of the Premises, then Tenant shall have the
right to extend the Term for one (1) additional period of five (5) years (the
"Second Option Period") by notice given to Landlord not more than one year and
less than one hundred and eighty (180) days prior to the tenth (10/th/)
anniversary of the Commencement Date (time being of the essence with respect to
the giving of such notice). If Tenant exercises its renewal option during the
First Option Period, all terms and conditions of this Lease shall remain in
effect during the Second Option Period, except that the Minimum Rent shall be
computed in the manner set forth in Exhibit "F". Prior to the commencement of
-----------
the Second Option Period, Landlord shall not be obligated to perform any work to
the Premises, and Tenant shall not be allowed to extend the Term beyond the
expiration of the Second Option Period.
ARTICLE 40
PROPERTY
Tenant shall purchase from Landlord the personal property and fixtures set
forth in Exhibit G attached hereto ("Property"), as amended by this Article 40,
---------
for $30,000.00, such payment to be made to Landlord at the same time as the
first month's rent and security deposit is paid. Exhibit G shall be amended to
---------
include the security system and to exclude one fax machine and the copier.
Additionally, prior to the Commencement Date, Landlord may, at Landlord's
option, take ownership of certain personal property set forth on Exhibit G,
---------
exclusive of the conference table in the large room, and in such event the
purchase price shall be adjusted accordingly on a pro rata basis and Tenant
shall receive a credit towards the next ensuing installment or installments of
Rent in the amount of the adjustment. Tenant accepts the Property in an "as
is" condition. Landlord makes no representations or warranties regarding the
Property other than as set herein. Landlord has represented to Tenant that the
Property is presently owned by TMF and encumbered by UCC-1 financing statements,
a copy of which have been provided to Tenant's counsel. If Landlord is unable to
transfer to Tenant good and marketable title to the Property free and clear of
all liens, claims and encumbrances (as determined by Tenant's counsel) by
October 1, 1999 (or by such later date if agreed to by Landlord and Tenant),
Tenant may, at Tenant's option, receive either (a) a refund of the purchase
price or (b) a credit
39
<PAGE>
in the amount of the purchase price towards the next ensuing installment or
installments of Rent. In such event Tenant shall return the Property to
Landlord. Landlord shall transfer ownership of the Property to Tenant by a Bill
of Sale prepared by Landlord and acceptable to Tenant.
ARTICLE 41
OBLIGATION OF TENANT TO LEASE CONTIGUOUS SPACE
41.1 "Contiguous Space" shall mean and refer to 4600 square feet of
rentable space in the Building designated as the "Technology Management 4600 SF"
contiguous to the Premises as shown as Exhibit "B" attached hereto. As long as
-----------
(1) Tenant has fully and faithfully performed all the terms, conditions and
covenants of this Lease on its part to be performed; (2) the Contiguous Space
becomes available for lease during the Term, Landlord shall first notify Tenant
that the Contiguous Space is available by giving Tenant written notice
("Availability Notice") specifying the date of availability of such Contiguous
Space and sending Tenant an addendum to the Lease whereby Tenant shall lease
this Contiguous Space. Within ten (10) calendar days of Tenant's receipt of the
Availability Notice, Tenant shall execute and deliver to Landlord the addendum
to the Lease whereby Tenant shall lease the Contiguous Space for a term to be
the same as the remaining initial Term of this Lease.
41.2 All of the terms, covenants, and conditions of this Lease shall apply
and obtain to the Contiguous Space except that (a) if the Contiguous Space
becomes available in 1999 or 2000, the Minimum Rent shall be $23.50 per square
foot and the Base Year will not change, but if the Contiguous Space becomes
available after 2000, the Minimum Rent shall be computed in the manner set forth
in Exhibit "F" and the Base Year with respect to the Contiguous Space shall be
------------
the year in which the rental of the Contiguous Space commences, and (b) the
Tenant's Proportionate Share, Additional Rent, Security Deposit and all other
charges shall be adjusted accordingly based on an additional 4600 square feet as
part of the Premises, for Premises consisting of a total of 11,010 square feet.
ARTICLE 42
NON-DISTURBANCE
It is agreed that Landlord will exercise its best efforts to secure from the
mortgagee of any mortgage or mortgages currently or hereafter placed on the
Premises an agreement on the part of the mortgagee (i) not to disturb Tenant's
occupancy so long as Tenant performs its obligations under this Lease and (ii)
not unreasonably to withhold or delay any consent or approval required to be
obtained from such mortgagee by Tenant on condition that Tenant, when requested
by the mortgagee, shall execute an attornment agreement to the mortgagee should
the mortgagee succeed to the rights of Landlord under this Lease.
40
<PAGE>
ARTICLE 43
CONSENTS, APPROVALS, COMPUTATIONS AND DETERMINATIONS
It is agreed that no consent or approval of Landlord referred to in this
Lease shall be unreasonably withheld or delayed, and that no computation or
determination by Landlord shall be made except in a reasonable manner
ARTICLE 44
LANDLORDS' REPRESENTATIONS AND WARRANTIES
Landlord represents and warrants that:
44.1 Landlord has good and marketable title to the Real Property and
the Building.
44.2 Landlord has no knowledge of any pending or contemplated
condemnation or eminent domain proceeding which would affect the Building or the
Premises or any part thereof and there is no litigation, proceeding (zoning or
otherwise) or governmental investigation pending or, to the knowledge of
Landlord, threatened against Landlord or the Building which would affect the
Building or the Premises.
44.3 There are no pending tax abatement or exemption proceedings and no
existing tax abatements or exemptions, total or partial, in respect of the Real
Property or the Building, nor have any been applied for.
44.4 Neither Landlord nor the Real Property nor the Building is subject
to any order issued by any governmental agency prohibiting the release,
discharge or deposit of, or directing clean-up or payment for clean-up of, any
hazardous or toxic substances, except as disclosed in the report entitled "Phase
I Environmental Site Assessment dated April 26, 1999 prepared by Professional
Services Industries, Inc., Project No. 512-9F006."
41
<PAGE>
44.5 Upon delivery of possession of the Premises to Tenant, the
Premises will be in conformity with all applicable laws, orders and regulations
of Governmental Authorities and all building codes, rules, regulations and
standards.
IN WITNESS WHEREOF, the parties hereto have executed this Lease
on the date first above written.
LANDLORD:
MCCARTHY ASSOCIATES LIMITED
ATTEST: By: Princeton Gateway Corporation, Inc.
/s/ John F. McCarthy, III
- -------------------------------- --------------------------------
Name: John F. McCarthy, Jr. Name: John F. McCarthy, III
Title: Secretary Title: President
ATTEST: TENANT:
Medarex, Inc.
/s/ Donald L. Drakeman
- -------------------------------- --------------------------------
Name: Name: Donald L. Drakeman
Title: Title: President and CEO
42
<PAGE>
EXHIBIT 10.84
Medarex, Inc. 1997 Stock Option Plan
<PAGE>
MEDAREX, INC.
1997 STOCK OPTION PLAN
Section 1. Purpose of the Plan. The purpose of the 1997 Stock Option
Plan (the "Plan") is to aid Medarex, Inc. (the "Corporation") and its
subsidiaries in securing and retaining directors, consultants, officers and
other key employees of outstanding ability and to motivate such employees 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 that two (2)
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. 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 directors,
consultants, officers and other key employees of the Corporation and its
subsidiaries to whom AWARDS may from time to time be granted hereunder; (ii)
determine whether incentive stock options (under Section 422 of the Internal
Revenue Code of 1986, as the same may be amended from time to time, hereinafter
referred to as the "Code"), 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
<PAGE>
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.
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 750,000. The total number of shares of stock with
respect to which AWARDS may be granted to any participant in any year is 100,000
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; and
provided further that, with respect to incentive stock options, no such
adjustment shall be authorized to the extent that such adjustment would
constitute a modification as defined in Section 424(h)(3) of the Code or cause
the Plan to violate Section 422(b)(1) of the Code or any successor provision
thereto. 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. Directors, consultants, officers and
other key employees of the Corporation and its subsidiaries who are responsible
for the management, growth, profitability and protection of the business of the
Corporation and its subsidiaries are eligible to be granted AWARDS under the
Plan (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
2
<PAGE>
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 Code.
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, but
will be not less than 100% of the fair market value of the Stock on the date of
the grant of the option, as determined in accordance with procedures established
by the Committee. Notwithstanding the foregoing, the purchase price per share of
the Stock purchasable under any incentive stock option granted to any person who
is the beneficial owner of more than 10% of the Corporation's issued and
outstanding Stock (a "10% owner") shall not be less then 110% of the fair market
value of the Stock on the date of the grant of the option, as determined in
accordance with procedures established by the Committee.
(b) Option Period. The term of each stock option shall
be fixed by the Committee, but no incentive stock option shall be exercisable
after the expiration of 10 years from the date the option is granted.
Notwithstanding the foregoing, no incentive stock option granted to a 10% owner
shall be exercisable after the expiration of five 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) Solely for Federal income tax purposes, to
the extent that the aggregate fair market value of Stock with respect to which
incentive stock options are exercisable for the first time by a participant
during any calendar year exceeds $100,000.00 (as of the date of grant), such
options shall be treated as options which are not incentive stock options. For
purposes of this rule, options shall be taken into account in the order in which
they were granted.
(3) As used herein, "Change of Control" shall
mean any of the following events:
3
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(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.
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 April 30, 1991
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
4
<PAGE>
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 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 securities
which increase 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 (x)
an optionee (other than an optionee who initiated a Change of Control in a
capacity other than as an officer or director of the Corporation) who is an
officer or director of the Corporation (within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder), during the
60-day period after six (6) months after a Change of Control, with respect to an
option that is unaccompanied by a stock appreciation right and (y) any other
optionee, during the 60-day period from and after a Change of Control, who at
the time of exercise is not an officer or director with respect to an option
that is unaccompanied by a stock appreciation right shall, unless the Committee
shall determine otherwise at the time of grant, 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. However, any officer,
director or 10% owner (collectively, "Insider") may settle the right granted by
this proviso by either (A) settling the right to the extent that such settlement
falls within one of four ten-day periods, each period beginning on the third
business day following the release of the Company's quarterly or annual
financial summary statements of sales and earnings (the "Summary Statements"),
as the case may be, and ending on the twelfth business day following each such
date (each such period being a "Window Period") and provided that the Company
shall have been subject to Section 13(a) of the Exchange Act for at least a year
prior to such settlement and has filed all reports and statements required to be
filed thereunder for that year; or (B) pursuant to an irrevocable election to
settle the right no earlier than six (6) months after the date of such election,
which election need not occur during a Window Period and provided further that
the transaction giving rise to the award of the right is approved by the
Company's shareholders (excluding Insider shareholders).
5
<PAGE>
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 the case of
the nonqualified stock option, 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, except that in the case of an
incentive stock option, any right to make payment in unrestricted stock already
owned must be included in the option at the time of 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:
(i) with respect to an election by an optionee
to receive cash in respect of a stock option which is not an
incentive stock option, the "Change of Control Fair Market
Value", as defined below; and
(ii) with respect to an election by an optionee
to receive cash in respect of a stock option which is an
incentive stock option, the fair market value of the Stock on
the date of exercise, 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.
(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. Incentive stock options may not be transferred by an optionee other
than by will or by the laws of descent.
(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, for a period of 15
months from the date of such death or until the expiration of the stated period
of the option whichever period is the shorter.
(g) Termination by Reason of Retirement or 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
6
<PAGE>
reason of retirement or permanent disability, any stock option held by such
optionee may thereafter be exercised in full, but may not be exercised after
three years from the date of such termination or the expiration of the stated
period of the option, whichever period is the shorter; provided, however, that
if the optionee dies within such three-year period, any unexercised stock option
held by such optionee shall thereafter be exercisable to the extent to which it
was exercisable at the time of death for a period of 12 months from the date of
the optionee's death or for the stated period of the option, whichever period is
the shorter.
(h) 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 retirement, the stock option shall thereupon terminate;
provided, however, that if such termination is by action of the Corporation and
other than discharge for reason of willful violation of the rules of the
Corporation or by voluntary resignation of the optionee, in either case within
18 months following a Change of Control, any stock options held by the optionee
may be exercised by the optionee until the earlier of six months and one day
after such termination or the expiration of such options in accordance with
their terms.
(i) Option Buyout. The Committee may at any time offer
to repurchase an option (other than an option which has been held for less than
six months by an Insider) based on such terms and conditions as the Committee
shall establish and communicate to the optionee at the time that such offer
is made.
(j) 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 other than with respect to incentive stock options 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, as follows: (i) in the case of a nonqualified stock option, such
rights may be granted either at the time of the grant of such option or at any
subsequent time during the term of the option; and (ii) in the case of an
incentive stock option, such rights may be granted only at the time of the grant
of the option. A "stock 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.
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(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, an Insider (as
previously defined in Section 5) may only settle a stock
appreciation right by satisfying either of the following
conditions:
(A) the stock appreciation right is (i)
settled at least six (6) months after its date of grant and
(ii) such settlement occurs during a Window Period and
provided that the Company shall have been subject to Section
13(a) of the Exchange Act for at least a year prior to such
settlement and has filed all reports and statements required
to be filed thereunder for that year; or else
(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, which election need not occur during a
Window Period.
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 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 which is not an incentive stock option, the "Change of
Control Fair Market Value."
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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 ("NASDAQ") system 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 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.
(v) Stock appreciation rights granted in
connection with incentive stock options may be exercised only
when the market price of the Stock subject to the incentive
stock option exceeds the option price of the incentive stock
option.
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 directors,
9
<PAGE>
consultants, officers and key 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.
1997 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., 1545
Route 22 East, Annandale, New Jersey 08801."
(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 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,
10
<PAGE>
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 directors,
consultants, officers and key 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, the Committee may provide for a minimum payment 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.
(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
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<PAGE>
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"), subject in
each case to the approval of the Committee and under such
terms as are determined by the Committee, all in its sole
discretion.
(vi) Each deferred stock AWARD shall be confirmed
by a deferred stock agreement or other instrument executed by
the Committee and by the participant.
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 directors,
consultants, officers and key 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
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<PAGE>
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 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.
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<PAGE>
(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) except as is provided in Section 3 of the Plan,
increase the total number of shares available for the purpose of the
Plan;
(b) subsequent to the date of grant decrease the option
price of any stock option to less than 100% (110% in the case of a 10%
owner of an incentive stock option) of the fair market value on the
date of the granting of the option;
(c) extend the maximum option period under Section 5(b)
of the Plan; or
(d) 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
14
<PAGE>
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.
(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:
(i) granted in substitution for outstanding
AWARDS or in lieu of any other right to payment by the
Corporation shall be the fair market value of shares
15
<PAGE>
at the date such substitute AWARDS are granted or shall be
such fair market value at that date reduced to reflect the
fair market value of the AWARDS or other right to payment
required to be surrendered by the participant as a condition
to receipt of the substitute AWARD; or
(ii) retroactively granted in tandem with
outstanding AWARDS shall be either the fair market value of
shares at the date of grant of later AWARDS or the fair market
value of shares at the date of grant of earlier AWARDS.
(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. (a) 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.
(b) Notwithstanding any provisions to the contrary in this
Section 15, an Insider may only satisfy tax withholding requirements with the
settlement of a stock appreciation right or with shares of the Company's Common
Stock if he has held such stock or stock appreciation right for at least six (6)
months and (i) makes an election and settlement during a Window Period; or (ii)
makes an election in advance during a Window Period to take effect the next
following Window Period, or (iii) the cash settlement of the tax obligation
occurs no earlier than six (6) months after the date of an irrevocable election
made by an Insider, which election need not occur during a Window Period;
provided that the Company shall have been subject to Section 13(a) of the
Exchange Act for at least a year prior to any such election and has filed all
reports and statements required to be filed thereunder for that year.
Section 16. Effective Date of the Plan. The Plan shall be
effective on the date it is approved by the vote of the holders of a majority of
all outstanding shares of Common Stock.
Section 17. Term of the Plan. No AWARD shall be granted
pursuant to the Plan after May 14, 2007, but AWARDS theretofore granted may
extend beyond that date.
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EXHIBIT 10.85
Medarex, Inc. 1999 Stock Option Plan
<PAGE>
MEDAREX, INC.
1999 STOCK OPTION PLAN
Section 1. Purpose of the Plan. The purpose of the 1999 Stock Option Plan
(the "Plan") is to aid Medarex, Inc. (the "Corporation") and its subsidiaries in
securing and retaining directors, consultants, officers and other key employees
of outstanding ability and to motivate such employees 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 that two (2) 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. 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 directors, consultants,
officers and other key employees of the Corporation and its subsidiaries to whom
AWARDS may from time to time be granted hereunder; (ii) determine whether
incentive stock options (under Section 422 of the Internal Revenue Code of 1986,
as the same may be amended from time to time, hereinafter referred to as the
"Code"), 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
<PAGE>
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.
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 750,000. The total number of shares of stock with respect to
which AWARDS may be granted to any participant in any year is 100,000 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; and
provided further that, with respect to incentive stock options, no such
adjustment shall be authorized to the extent that such adjustment would
constitute a modification as defined in Section 424(h)(3) of the Code or cause
the Plan to violate Section 422(b)(1) of the Code or any successor provision
thereto. 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. Directors, consultants, officers and other key
employees of the Corporation and its subsidiaries who are responsible for the
management, growth, profitability and protection of the business of the
Corporation and its subsidiaries are eligible to be granted AWARDS under the
Plan (each an "Eligible Person" and collectively "Eligible Persons"). The
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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 Code.
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, but will
be not less than 100% of the fair market value of the Stock on the date of the
grant of the option, as determined in accordance with procedures established by
the Committee. Notwithstanding the foregoing, the purchase price per share of
the Stock purchasable under any incentive stock option granted to any person who
is the beneficial owner of more than 10% of the Corporation's issued and
outstanding Stock (a "10% owner") shall not be less then 110% of the fair market
value of the Stock on the date of the grant of the option, as determined in
accordance with procedures established by the Committee.
(b) Option Period. The term of each stock option shall be fixed by
the Committee, but no incentive stock option shall be exercisable after the
expiration of 10 years from the date the option is granted. Notwithstanding the
foregoing, no incentive stock option granted to a 10% owner shall be exercisable
after the expiration of five 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) Solely for Federal income tax purposes, to the extent that the
aggregate fair market value of Stock with respect to which incentive stock
options are exercisable for the first time by a participant during any calendar
year exceeds $100,000.00 (as of the date of grant), such options shall be
treated as options which are not incentive stock options. For purposes of this
rule, options shall be taken into account in the order in which they were
granted.
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(3) 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.
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 April 30, 1991 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
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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 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 securities which increase 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 (x) an optionee (other than an
optionee who initiated a Change of Control in a capacity other than as an
officer or director of the Corporation) who is an officer or director of the
Corporation (within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder), during the 60-day period after six (6)
months after a Change of Control, with respect to an option that is
unaccompanied by a stock appreciation right and (y) any other optionee, during
the 60-day period from and after a Change of Control, who at the time of
exercise is not an officer or director with respect to an option that is
unaccompanied by a stock appreciation right shall, unless the Committee shall
determine otherwise at the time of grant, 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. However, any officer, director or
10% owner (collectively, "Insider") may settle the right granted by this proviso
by either (A) settling the right to the extent that such settlement falls within
one of four ten-day periods, each period beginning on the third business day
following the release of the Company's quarterly or annual financial summary
statements of sales and earnings (the "Summary Statements"), as the case may be,
and ending on the twelfth business day following each such date (each such
period being a "Window Period") and provided that the Company shall have been
subject to Section 13(a) of the Exchange Act for at least a year prior to such
settlement
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and has filed all reports and statements required to be filed thereunder for
that year; or (B) pursuant to an irrevocable election to settle the right no
earlier than six (6) months after the date of such election, which election need
not occur during a Window Period and provided further that the transaction
-------- -------
giving rise to the award of the right is approved by the Company's shareholders
(excluding Insider shareholders).
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 the case of
the nonqualified stock option, 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, except that in the case of an
incentive stock option, any right to make payment in unrestricted stock already
owned must be included in the option at the time of 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:
(i) with respect to an election by an optionee to receive cash in
respect of a stock option which is not an incentive stock option, the
"Change of Control Fair Market Value", as defined below; and
(ii) with respect to an election by an optionee to receive cash
in respect of a stock option which is an incentive stock option, the
fair market value of the Stock on the date of exercise, 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.
(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.
Incentive stock options may not be transferred by an optionee other than by will
or by the laws of descent.
(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
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of the optionee under the will of the optionee, for a period of 15 months from
the date of such death or until the expiration of the stated period of the
option whichever period is the shorter.
(g) Termination by Reason of Retirement or 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 retirement or permanent
disability, any stock option held by such optionee may thereafter be exercised
in full, but may not be exercised after three years from the date of such
termination or the expiration of the stated period of the option, whichever
period is the shorter; provided, however, that if the optionee dies within such
three-year period, any unexercised stock option held by such optionee shall
thereafter be exercisable to the extent to which it was exercisable at the time
of death for a period of 12 months from the date of the optionee's death or for
the stated period of the option, whichever period is the shorter.
(h) 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
retirement, the stock option shall thereupon terminate; provided, however, that
if such termination is by action of the Corporation and other than discharge for
reason of willful violation of the rules of the Corporation or by voluntary
resignation of the optionee, in either case within 18 months following a Change
of Control, any stock options held by the optionee may be exercised by the
optionee until the earlier of six months and one day after such termination or
the expiration of such options in accordance with their terms.
(i) Option Buyout. The Committee may at any time offer to repurchase
an option (other than an option which has been held for less than six months by
an Insider) based on such terms and conditions as the Committee shall establish
and communicate to the optionee at the time that such offer is made.
(j) 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 other than with respect to incentive stock options 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, as follows: (i) in the case of a nonqualified stock option, such rights
may be granted either at the time of the grant of such option or at any
subsequent time during the term of the option; and (ii) in the case of an
incentive stock option, such rights may be granted only at the time of the grant
of the option. A "stock 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
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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, an Insider (as previously defined in Section 5) may only settle a
stock appreciation right by satisfying either of the following
conditions:
(A) the stock appreciation right is (i) settled at least six
(6) months after its date of grant and (ii) such settlement occurs
during a Window Period and provided that the Company shall have been
subject to Section 13(a) of the Exchange Act for at least a year prior
to such settlement and has filed all reports and statements required
to be filed thereunder for that year; or else
(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, which election
need not occur during a Window Period.
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 the first six months of its term. The fair
market value of the Stock on the date of exercise of
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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 which is not an incentive
stock 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 ("NASDAQ") system 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.
(v) Stock appreciation rights granted in connection with
incentive stock options may be exercised only when the market price of
the Stock subject to the incentive stock option exceeds the option
price of the incentive stock option.
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 directors, consultants,
officers and key 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. 1999 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., 1545 Route 22 East, Annandale, New Jersey 08801."
(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:
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(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 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 directors,
consultants, officers and key 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, the Committee may provide for a minimum payment 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
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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.
(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"), subject in each case to the approval of the Committee and
under such terms as are determined by the Committee, all in its sole
discretion.
12
<PAGE>
(vi) Each deferred stock AWARD shall be confirmed by a deferred
stock agreement or other instrument executed by the Committee and by
the participant.
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 directors, consultants, officers
and key 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
13
<PAGE>
limitations imposed with respect to any Other Stock-based AWARD under
this Section 9, including any provision providing for the forfeiture
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) except as is provided in Section 3 of the Plan, increase the total
number of shares available for the purpose of the Plan;
14
<PAGE>
(b) subsequent to the date of grant decrease the option price of any
stock option to less than 100% (110% in the case of a 10% owner of an
incentive stock option) of the fair market value on the date of the
granting of the option;
(c) extend the maximum option period under Section 5(b) of the Plan;
or
(d) 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.
15
<PAGE>
(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:
(i) granted in substitution for outstanding AWARDS or in lieu of
any other right to payment by the Corporation shall be the fair market
value of shares at the date such substitute AWARDS are granted or
shall be such fair market value at that date reduced to reflect the
fair market value of the AWARDS or other right to payment required to
be surrendered by the participant as a condition to receipt of the
substitute AWARD; or
(ii) retroactively granted in tandem with outstanding AWARDS
shall be either the fair market value of shares at the date of grant
of later AWARDS or the fair market value of shares at the date of
grant of earlier AWARDS.
(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. (a) 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.
(b) Notwithstanding any provisions to the contrary in this Section
15, an Insider may only satisfy tax withholding requirements with the settlement
of a stock appreciation right or with shares of the Company's Common Stock if he
has held such stock or stock appreciation right for at least six (6) months and
(i) makes an election and settlement during a Window Period; or (ii) makes an
election in advance during a Window Period to take effect the next following
Window Period, or (iii) the cash settlement of the tax obligation occurs no
earlier than six (6) months after the date of an irrevocable election made by an
Insider, which election need not occur
16
<PAGE>
during a Window Period; provided that the Company shall have been subject to
-------- ----
Section 13(a) of the Exchange Act for at least a year prior to any such election
and has filed all reports and statements required to be filed thereunder for
that year.
Section 16. Effective Date of the Plan. The Plan shall be effective on
the date it is approved by the vote of the holders of a majority of all
outstanding shares of Common Stock.
Section 17. Term of the Plan. No AWARD shall be granted pursuant to the
Plan after May 20, 2009, but AWARDS theretofore granted may extend beyond that
date.
17
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for the six months ended June 30, 1999 and is qualified in
its entirety by reference in such statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,531
<SECURITIES> 22,612
<RECEIVABLES> 52
<ALLOWANCES> (5)
<INVENTORY> 46
<CURRENT-ASSETS> 27,814
<PP&E> 7,301
<DEPRECIATION> (4,195)
<TOTAL-ASSETS> 33,269
<CURRENT-LIABILITIES> 3,732
<BONDS> 0
0
0
<COMMON> 321
<OTHER-SE> 29,181
<TOTAL-LIABILITY-AND-EQUITY> 33,269
<SALES> 487
<TOTAL-REVENUES> 7,027
<CGS> 156
<TOTAL-COSTS> 12,940
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4)
<INCOME-PRETAX> (5,359)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,359)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,359)
<EPS-BASIC> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
