Severance Agreement - Dr. Donald L. Drakeman

 

Exhibit 10.1

MEDAREX, INC.
707 State Road
Princeton, New Jersey 08540

November 5, 2006

Dr. Donald L. Drakeman
Chief Executive Officer
Medarex, Inc.
707 State Road
Princeton, New Jersey 08540

Dear Don:

This letter agreement (this “Agreement”) will confirm our understanding with regard to your employment with Medarex, Inc. (the “Company”).  We have agreed as follows:

1.                              This letter shall be considered as notice of non-renewal of your employment with the Company effective as of the end of the current term on January 4, 2007 (the “Separation Date”) pursuant to Section 2 of your employment agreement with the Company dated January 5, 2004 (the “Employment Agreement”).  You hereby accept this notice and waive the notice period for non-renewal provided under the Employment Agreement.

2.                              You hereby resign as a director and Chief Executive Officer of the Company (and as an officer and director of any wholly-owned subsidiaries, as well as a fiduciary of any benefit plan of the Company) as of the date hereof.  You will resign as director of Celldex Therapeutics, Inc. when it is contractually permissible for you and the Company.  From the date hereof until the Separation Date, you shall provide full-time executive level transition services to the Company as reasonably requested by it but you shall not be obligated to be in the office to provide such services except from time to time as reasonably required by the Company.

3.                              You hereby waive any right to the cash severance benefits under Section 6.A(1) of the Employment Agreement.  However, you shall retain your rights thereunder to continued medical and life insurance benefits, and to exercise the vested stock options previously granted to you for a period of eighteen (18) months following the Separation Date (or, if earlier, the expiration of the stated period of the stock options).  You shall also receive any accrued amounts for unpaid base salary, accrued but unused vacation time in accordance with the Company’s policy, and any unreimbursed business expenses in accordance with the Company’s policy.  You shall retain all of your accrued and vested rights under all of the Company’s welfare (other than severance), pension and equity compensation plans.

4.                              From January 5, 2007 until March, 25, 2007, you shall serve as an independent contractor consultant to the Company, providing executive level transition consulting services to the Company at such times as mutually agreed upon between you and the Company based on a good faith request, but in no event more than fifteen (15) hours per week.  You shall be paid a monthly fee for such consulting services of $69,825 per month, payable on each of January 5, 2007, February 5, 2007 and March 5, 2007 (pro rated).

 

 



 

5.                              Pursuant to the terms and conditions of the Medarex, Inc. 2004 Restricted Stock Unit Award and Deferred Compensation Program under the Medarex, Inc. 2001 Stock Option Plan and the Medarex, Inc. Second 2004 Restricted Stock Unit Award and Deferred Compensation Program under the Medarex, Inc. 2001 Stock Option Plan, you shall become fully vested in the unvested share units previously granted to you in respect of the Company’s match on your deferred bonus compensation.  Distribution of your account balances under such programs shall be made in shares of the Company’s common stock in accordance with the terms and conditions of such programs.

6.                              Your rights to indemnification and advancement of legal fees under the By-Laws of the Company, as well as under other organizational documents, contractually or at law, shall continue with regard to actions or inactions by you while a director or officer of the Company (and the legal fees incurred in connection with this Agreement shall be deemed covered thereby), to the extent permissible by law.  In addition, the Company shall continue to cover you under the Company’s directors’ and officers’ liability insurance policies on the same basis as other former officers and directors.

7.                              All outstanding stock options granted to you at less than fair market value on the measurement date as determined by the Company’s Special Investigation Committee shall hereby be deemed clarified and/or modified so that the exercise price thereof equals the fair market value of a share of the Company’s common stock on the measurement date.  For these purposes, the measurement date is the date used by the Company in its restated financial statements.  The Company shall notify you of the new exercise price promptly after it files its restated financial statements.

8.                              In connection with stock options granted to you at less than fair market value on the measurement date, as determined by the Company’s Special Investigation Committee, that have been exercised by you, and in full settlement of amounts due with regard thereto, you hereby agree to pay to the Company an amount to be determined later, constituting gross gains from the difference in stock price between the record grant date and the correct measurement date, plus the treasury rate interest from the date of each exercise until the date of repayment.   In addition, you shall refund to the Company the excess value of stock (over $250,000) that you received as stock bonus in 2001, valued on the day you received the stock, plus the treasury rate interest from the day you received the stock until repayment.

9.                              You hereby generally and completely waive and release the Company and its directors, officers, employees and their respective assigns from any and all claims, liabilities and obligations, both known and unknown, that arise out of or are in any way related to events, acts, conduct, or omissions occurring at any time prior to and including the date you sign this Agreement.  This general release includes, but is not limited to: (1) all claims arising out of or in any way related to your employment with the Company or the termination of that employment; and (2) all federal, state, and local statutory claims, including, but not limited to, claims arising under the federal Civil Rights Act of 1964 (as amended), the federal Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967, as amended (“ADEA”), and the New Jersey Law Against Discrimination.  You hereby acknowledge that you have been advised by this writing, as required by the ADEA, that:  (a) your waiver and release do not apply to any rights or claims that may arise after the execution date of this Agreement; (b) you have been advised hereby that you have the right to consult with an attorney prior to executing this

 

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                                       Agreement; (c) you have twenty-one (21) days to consider this Agreement (although you may choose to voluntarily execute this Agreement earlier); (d) you have seven (7) days following the execution of this Agreement by the parties to revoke your acceptance of the Agreement; and (e) this Agreement shall not be effective until the date upon which the revocation period has expired, which shall be the eighth day after this Agreement is executed by you, provided that the Company has also executed this Agreement by that date (“Effective Date”).  Nothing contained in this paragraph shall adversely affect your rights under this Agreement or the rights to indemnification under the Company’s Certificate of Incorporation, its Bylaws or its applicable insurance policies otherwise covering officers of the Company.  A copy of the Company’s Bylaws in existence as of the date of this Agreement is attached hereto as Exhibit A.

10.                        This Agreement constitutes the entire agreement between you and the Company with respect to the subject matter hereof, and supersedes any and all prior agreements or understandings between you and the Company with respect to the subject matter hereof, whether written or oral.  However, except to the extent modified herein, the Employment Agreement remains in effect.  This Agreement may be amended or modified only by a written instrument executed by you and the Company.  This Agreement shall be governed by the laws of the State of New Jersey, without regard to the conflicts of law principles thereof.  This Agreement shall be binding upon and inure to the benefit of you and the Company and our respective successors, assigns, heirs and administrators.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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If this letter accurately reflects your understanding as to the terms of your separation arrangement with the Company, please sign and date one copy of this letter and return the same to me for the Company’s records.

 

MEDAREX, INC.

 

 

 

 

 

By:

/s/ Irwin Lerner

 

 

Name: Irwin Lerner

 

Title: Chairman of the Board of Directors

The foregoing accurately reflects our understanding regarding my separation arrangement with the Company, and I hereby confirm my agreement to the same.

Dated: November 5, 2006

/s/ Donald L. Drakeman

 

 

Donald L. Drakeman

 

 

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Exhibit A

MEDAREX, INC.

AMENDED AND RESTATED BY-LAWS

ARTICLE I
OFFICES
Section 1.               The registered office of the Corporation shall be located in Trenton, New Jersey. The principal office shall be located at 707 State Road, Suite #206, Princeton, NJ 08540.
Section 2.               The Corporation may also have offices at such other places both within and without the State of New Jersey as the Board of Directors may from time to time determine or the business of the Corporation may require.
ARTICLE II
ANNUAL MEETING OF SHAREHOLDERS
Section 1.               All meetings of shareholders for the election of Directors shall be held in the Township of Princeton, State of New Jersey, or at such other place as may be fixed from time to time by the Board of Directors.
Section 2.               Annual meetings of shareholders shall be held on the third Thursday in May in each year, if not a legal holiday, and if a legal holiday, then on the next regular business day following, at 10:00 a.m., or at such other date and time as shall be fixed from time to time by the Board of Directors and stated in the notice of meeting, at which the shareholders shall elect the members of the Board of Directors subject to election, and transact such other business as may properly be brought before the meeting.
Section 3.               Written notice of the annual meeting stating the time, place, and purpose or purposes of the meeting shall be delivered not less than ten (10) nor more than sixty (60) days

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before the date of the meeting, either personally or by mail, to each shareholder of record entitled to vote at such meeting.
Section 4.               Only persons who are nominated in accordance with the following procedures shall be eligible for election as Directors of the Corporation.  Nominations of persons for election to the Board of Directors may be made at any annual meeting of shareholders (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 4 and on the record date for the determination of shareholders entitled to vote at such annual meeting, and (ii) who complies with the notice procedures set forth in this Section 4.

In addition to any other applicable requirements, for a nomination to be made by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the date of the annual meeting of shareholders; provided, however, that in the event that less than seventy (70) days’ notice or prior public disclosure of the date of the meeting is given to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

To be in proper written form, a shareholder’s notice to the Secretary must set forth (a) as to each person whom the shareholder proposes to nominate for election as a Director

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(i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (ii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by the person, and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the shareholder giving the notice (i) the name and record address of such shareholder, (ii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such shareholder, (iii) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (iv) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, and (v) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of Directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a Director if elected.

No person shall be eligible for election as a Director of the Corporation unless nominated in accordance with the procedures set forth in this Section 4. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing

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procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

No business may be transacted at an annual meeting of shareholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the annual meeting by any shareholder of the Corporation (i) who is a shareholder of record on the date of the giving of the notice provided for in this Section 4 and on the record date for the determination of shareholders entitled to vote at such annual meeting and (ii) who complies with the notice procedure set forth in this Section 4.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a shareholder, such shareholder must have given timely notice thereof in proper written form to the Secretary of the Corporation.

To be timely, a shareholder’s notice to the Secretary must be delivered to or mailed and received at the principal offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the date of the annual meeting of shareholders; provided, however, that in the event that less than seventy (70) days’ notice or prior public disclosure of the date of the meeting is given to shareholders, notice by the shareholder to be timely must be so received not later than the close of business on the tenth (10th) day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the annual meeting was made, whichever first occurs.

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To be in proper written form, a shareholder’s notice to the Secretary must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and record address of such shareholder, (iii) the class or series and number of shares of capital stock of the Corporation that are owned beneficially or of record by such shareholder, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business, and (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 4, provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 4 shall be deemed to preclude discussion by any shareholder of any such business. If the chairman of an annual meeting determines that business was not properly brought before the annual meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

ARTICLE III
SPECIAL MEETINGS OF SHAREHOLDERS
Section 1.               Special meetings of shareholders for any purpose other than the election of Directors may be held at such time and place within or without the State of New Jersey as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

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Section 2.               Special meetings of shareholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called only by the Chairman of the Board of Directors, the President of the Corporation, or the Board of Directors.
Section 3.               Written notice of a special meeting stating the time, place, and purpose or purposes of the meeting for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the President, the Secretary, or the officer or persons calling the meeting, to each shareholder of record entitled to vote at such meeting.
Section 4.               Business transacted at any special meeting shall be confined to the purpose or purposes stated in the notice thereof.
Section 5.               No business shall be conducted at a special meeting of shareholders except business brought before the special meeting in accordance with the procedures set forth in Section 4 of Article II of these Bylaws, provided, however, that, once business has been properly brought before the special meeting in accordance with such procedures, nothing in that Section 4 of Article II shall be deemed to preclude discussion by any shareholder of any such business at such special meeting. If the chairman of a special meeting determines that business was not properly brought before the special meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.
ARTICLE IV
QUORUM AND VOTING OF STOCK
Section 1.               The holders of a majority of the shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the

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certificate of incorporation. If, however, a quorum shall not be present or represented at any meeting of the shareholders, the shareholders present in person or represented by proxy shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.
Section 2.               If a quorum is present, the affirmative vote of a majority of the votes cast on a given matter shall be the act of the shareholders with respect to that matter unless the vote of a greater number of shares of stock is required by law or by the certificate of incorporation.
Section 3.               Each outstanding share of stock, having voting power, shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, unless otherwise provided in the certificate of incorporation. A shareholder may vote either in person or by proxy executed in writing by the shareholder or by his agent.

In all elections for Directors, every shareholder entitled to vote, shall have the right to vote, in person or by proxy, the number of shares of stock owned by him, for as many persons as there are Directors to be elected and for whose election he has a right to vote.

ARTICLE V
DIRECTORS
Section 1.               The number of directors which shall constitute the entire Board of Directors shall be not less than three (3) nor more than ten (10). The exact number of Directors within such maximum and minimum shall be determined from time to time by resolution of the Board of Directors or by the shareholders at an annual meeting or special meeting. Directors need not be residents of the State of New Jersey nor shareholders of the Corporation. The first Board of Directors shall hold office until the first annual meeting of shareholders.

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Section 2.               The Board of Directors shall be classified with respect to the duration of the term for which they severally hold office into three classes as nearly equal in number as possible. Such classes shall originally consist of one class of directors (“Class I”) who shall be elected at the annual meeting of shareholders held in 1991 for a term expiring at the annual meeting of shareholders to be held in 1994; a second class of Directors (“Class II”) who shall be elected at the annual meeting of shareholders held in 1991 for a term expiring at the annual meeting of shareholders to be held in 1993; and a third class of Directors (“Class III”) who shall be elected at the annual meeting of shareholders held in 1991 for a term expiring at the annual meeting of shareholders to be held in 1992. The Board of Directors shall increase or decrease the number of Directors, in order to ensure that the three classes shall be as nearly equal in number as possible; provided, however, that no decrease shall have the effect of shortening the term of any incumbent Director. At each annual meeting of shareholders beginning in 1992, the successors of the class of Directors whose term expires at that meeting shall be, elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election. Provided a quorum is present, in any election of Directors, the persons receiving a plurality of the votes cast, up to the number of Directors to be elected in such election, shall be deemed elected.
Section 3.               Unless otherwise provided in the certificate of incorporation, any directorship not filled at the annual meeting, any other vacancy, however caused, occurring in the Board of Directors and newly created directorships resulting from an increase in the authorized number of Directors may be filled by the affirmative vote of a majority of the remaining Directors. Any Director so elected by the Board of Directors shall hold office until the

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next succeeding annual meeting of shareholders and until his successor shall have been elected and qualified.
Section 4.               Any directorship not filled by the Board of Directors may be filled by the shareholders at an annual meeting or at a special meeting of shareholders called for that purpose.
Section 5.               The business affairs of the Corporation shall be managed by its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the shareholders.
Section 6.               The Directors may keep the books and records of the Corporation, except such as are required by law to be kept within the state, outside of the State of New Jersey, at such place or places as they may from time to time determine.
Section 7.               The Board of Directors, by the affirmative vote of a majority of the Directors then in office, and irrespective of any personal interest of any of its members, shall have authority to establish reasonable compensation of Directors for services to the Corporation as Directors.
ARTICLE VI
MEETINGS OF THE BOARD OF DIRECTORS
Section 1.               Meetings of the Board of Directors, regular or special, may be held either within or without the State of New Jersey.
Section 2.               The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the shareholders at the annual meeting, and no notice of such meeting shall be necessary to the newly elected Directors in order legally to constitute the meeting, provided a quorum of Directors shall be present, or the Board of

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Directors may convene at such place and time as shall be fixed by the consent in writing of all the Directors.
Section 3.               Regular meetings of the Board of Directors may be held upon such notice, or without notice, and at such time and at such place as shall from time to time be determined by the Board of Directors.
Section 4.               Notice of the time and place of special meetings shall be given to each Director at that Director’s address as it is shown on the records of the Corporation. Notice of such special meeting of the Board of Directors stating the place, date and hour of the meeting shall be given to each Director either (i) by mail not less than three (3) days before the date of the meeting, or (ii) personally, by telephone, facsimile, telecopy, telegram, telex or other similar means of communication on twenty-four (24) hours’ notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Any oral notice given personally or by telephone may be communicated either to the Director or to a person at the office of the Director whom the person giving the notice has reason to believe will promptly communicate it to the Director. Notice need not be given to any other Director who signs a waiver of notice, whether before or after the meeting.
Section 5.               Attendance by a Director at any meeting shall constitute a waiver of notice of such meeting, except where a Director attends the meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

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Section 6.               A majority of the Directors shall constitute a quorum for the transaction of business unless a greater or lesser number is required by statute or by the certificate of incorporation. The act of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater or lesser number is required by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of Directors, the Directors present thereat may adjourn the meeting, without notice other than announcement at the meeting, until such time as a quorum shall be present.
Section 7.               Unless otherwise provided by the certificate of incorporation, any action required or permitted to be taken at a meeting of the Board of Directors, or any committee thereof, shall be deemed to be the action of the Board of Directors or of a committee thereof, if all Directors or committee members, as the case may be, execute either before or after the action is taken, a written consent thereto, and the consent is filed with the records of the Corporation.
ARTICLE VII
COMMITTEES
Section 1.               The Board of Directors, by resolution adopted by a majority of the number of Directors fixed by the by-laws or otherwise, may designate one or more Directors to constitute an executive committee, and one or more other committees, which committee(s), to the extent provided in such resolution, shall have and exercise all of the authority of the Board of Directors in the management of the Corporation, except as otherwise required by law. Vacancies in the membership of the committee(s) shall be filled by the Board of Directors at a regular or special meeting of the Board of Directors. The executive committee and such other committee(s)shall keep regular minutes of its proceedings and report the same to the Board when required.

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ARTICLE VIII
NOTICES
Section 1.               Whenever, under the provisions of the statutes or of the certificate of incorporation or of these by-laws, notice is required to be given to any shareholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such shareholder, at such shareholder’s address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail.
Section 2.               Whenever any notice whatever is required to be given under the provisions of the statutes or under the provisions of the certificate of incorporation or these by-laws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE IX
OFFICERS
Section 1.               The officers of the Corporation shall be chosen by the Board of Directors and may include a chairman of the board, a President, a Vice President, a Secretary, a Treasurer and such additional officers as may be designated by the Board of Directors from time to time.
Section 2.               The Board of Directors at its first meeting after each annual meeting of shareholders shall choose a President, a Secretary and a Treasurer, none of whom need be a member of the Board of Directors.
Section 3.               The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

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Section 4.               The salaries of all officers and agents of the Corporation shall be fixed, from time to time, by the Board of Directors or a committee thereof.
Section 5.               The officers of the Corporation shall hold office until their successors are chosen and qualified. Any officer elected or appointed by the Board or Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.
Section 6.               Chairman.  The Chairman, if one is designated by the Board of Directors, shall preside at all meetings of the shareholders and the Board of Directors, and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
Section 7.               President.  The President shall be the chief executive officer of the Corporation and shall have general management of the business of the Corporation. In addition, the President, in the absence or inability of the Chairman or if no Chairman is designated by the Board, shall perform the duties and exercise the powers of the Chairman, and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
Section 8.               The President shall execute bonds, mortgages and other contracts requiring a seal, under the seat of the Corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.
Section 9.               Vice President.  The Vice President, or if there shall be more than one, the Vice Presidents in the order determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President and shall

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perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
Section 10.             Secretary and Assistant Secretaries.  The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings of the meetings of the Corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the President, under whose supervision he shall be. He shall have custody of the corporate seal of the Corporation and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.
Section 11.             The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
Section 12.             Treasurer and Assistant Treasurers.  The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other

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valuable effects in the name and to the credit of the Corporation in such depositories as may be designated from time to time by the Board of Directors.
Section 13.             The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation.
Section 14.             If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.
Section 15.             The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.
ARTICLE X
CERTIFICATES FOR SHARES
Section 1.               The shares of the Corporation shall be represented by certificates signed by the Chairman or Vice Chairman of the Board of Directors, or the President or Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, and may be sealed with the seal of the Corporation or a facsimile thereof.

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When the Corporation is authorized to issue shares of more than one class, there shall be set forth upon the face or back of the certificate, or the certificate shall have a statement that the Corporation will furnish to any shareholder upon request and without charge, a full statement of the designations, preferences, limitations and relative rights of the shares of each class authorized to be issued and, if the Corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences between the shares of each such series so far as the same have been fixed and determined and the authority of the Board of Directors to fix and determine the relative rights and preferences of subsequent series.

Section 2.               The signatures of the officers of the Corporation upon a certificate may be facsimiles if the certificate is countersigned by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of its issue.
Section 3.               Lost Certificates.  The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed. When authorizing such issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may prescribe such terms and conditions as it deems expedient, and may require such indemnities as it deems adequate, to protect the Corporation from any claim that may be made against it with respect to any such certificate alleged to have been lost or destroyed.
Section 4.               Transfers of Shares.  Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares duly endorsed or accompanied by

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proper evidence of succession, assignment or authority to transfer, a new certificate shall be issued to the person entitled thereto, and the old certificate canceled and the transaction recorded upon the books of the Corporation.
Section 5.               Closing of Transfer Books.  For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or entitled to receive payment of any dividend or allotment of any right, or entitled to give a written consent to any action without a meeting, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not to exceed, in any case, sixty (60) days. If the stock transfer books shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. If the stock transfer book shall be closed for the purpose of determining shareholders entitled to give a written consent to any action without a meeting, such books may not be closed for more than sixty (60) days before the date fixed for tabulation of consents or if no date has been fixed for tabulation, the books may not be closed for more than sixty (60) days before the last day on which consents received may be counted. In lieu of closing the stock transfer books, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken and, in case of determining shareholders entitled to give a written consent the record date may not be more than sixty (60) days before the date fixed for tabulation of the consents or, if no date has been fixed for the tabulation, more than sixty (60) days before the last day on which consents may be

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counted. If the stock transfer books are not closed and no record date is fixed, the record date for a shareholders’ meeting shall be the close of business on the day next preceding the day on which notice is given, or, if no notice is given, the day next preceding the day on which the meeting is held; and the record date for determining shareholders for any other purpose shall be at the close of business on the day on which the resolution of the Board relating thereto is adopted. When a determination of shareholders of record for a shareholders’ meeting has been made as provided in this section, such determination shall apply to any adjournment thereof unless the board fixes a new record date for the adjourned meeting.
Section 6.               Registered Shareholders.  The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of New Jersey.
Section 7.               List of Shareholders.  The officer or agent having charge of the transfer books for shares shall make, and certify a complete list of the shareholders entitled to vote at a shareholders’ meeting, or adjournment thereof, arranged in alphabetical order within each class, series, or group of shareholders maintained by the Corporation for convenience of reference, with the address of, and the number of shares held by each shareholder, which list shall be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. Such list shall be prima facie

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evidence as to who are the shareholders entitled to examine such list or to vote at any meeting of the shareholders.
ARTICLE XI
GENERAL PROVISIONS
Section 1.               Dividends.  Subject to the provisions of the certificate of incorporation relating thereto, if any, dividends may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid by the Corporation in cash, in its bonds, in its own shares or other property including the shares or bonds of other corporations subject to any provisions of law and of the certificate of incorporation.
Section 2.               Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall think conducive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.
Section 3.               Checks.  All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.
Section 4.               Fiscal Year.  The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.
Section 5.               Seal.  The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, New Jersey.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

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ARTICLE XII
AMENDMENTS
Section 1.               These by-laws may be altered, amended, or repealed or new by-laws may be adopted by the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Board, subject to any provision in the certificate of incorporation reserving to the shareholders the power to adopt, amend, or repeal by-laws, but the shareholders may alter or repeal any by-laws made by the Board and may adopt new by-laws. The shareholders or these by-laws may prescribe that any by-law made by the shareholders shall not be altered or repealed by the Board without the approval of the shareholders.
ARTICLE XIII
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES,
MEMBERS OF THE SCIENTIFIC ADVISORY BOARD AND AGENTS
Section 1.               The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that he is or was a Director, officer, employee, a member of the Scientific Advisory Board or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the defense or settlement of such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, or itself,

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create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 2.               The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that he is or was a Director, officer, employee, a Member of the Corporation’s Scientific Advisory Board or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be provided in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.
Section 3.               To the extent that such director, officer, employee, a Member of the Corporation’s Scientific Advisory Board or agent has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 1 and 2 of this Article XIII, or

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in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection therewith.
Section 4.               Any indemnification under Section 1 or 2 of this Article XIII (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director, officer, employee, a Member of this Corporation’s Scientific Advisory Board or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 1 or 2, as the case may be. Such determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even if obtainable, a quorum of disinterested Directors so directs, by independent legal counsel in a written opinion, or (iii) by the shareholders of the Corporation.
Section 5.               Expenses incurred in defending a civil or criminal action, suit or proceeding may be paid by this Corporation in advance of the final disposition of such action, suit or proceeding as authorized by the Board of Directors, in the specific case upon receipt of an undertaking by or on behalf of the Director, officer, employee, Member of the Corporation’s Scientific Advisory Board or agent to repay such amount unless it shall ultimately be determined that he is entitled to be indemnified by this Corporation as authorized in this Article XIII.
Section 6.               The indemnification provided by this Article XIII shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under any other by-law, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, officer, employee, Member of the

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Corporation’s Scientific Advisory Board or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
Section 7.               The Corporation, when authorized by the Board of Directors, shall purchase and maintain insurance on behalf of the person who is or was a Director, officer, employee, Member of the Corporation’s Scientific Advisory Board or agent of the Corporation, or is or was serving at the request of this Corporation as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this Article XIII.
ARTICLE XIV
WRITTEN CONSENT
Section 1.               Unless otherwise provided in the certificate of incorporation, any action required by this chapter to be taken at any annual or special meeting of shareholders of the Corporation, or any action that may be taken at any annual or special meeting of such shareholders, may be taken without a meeting, without prior notice, and without a vote if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.
Section 2.               Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those shareholders who have not consented in writing. If the action which is consented to is such as would have required the filing of a certificate under any section of the New Jersey Business Corporation Act (the “NJBCA”) had the action been voted on by shareholders at a meeting thereof, then the certificate filed under such

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section shall state, in lieu of any statement required by such section concerning any vote of shareholders, that written notice and written consent have been given as provided in Section 14A:5-6 of the NJBCA.
Section 3.               In order that the Corporation may determine the shareholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any shareholder of record seeking to have the shareholders authorize or take corporate action by written consent shall, by written notice to the secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within ten (10) days of the date on which such a request is received, the record date for determining shareholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of New Jersey, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded, to the attention of the Secretary of the Corporation. Delivery shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining shareholders entitled to consent to corporate action in writing

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without a meeting shall be at the close of business on the date on which the Board of Directors adopts the resolution taking such prior action.
Section 4.               In the event of the delivery to the Corporation of a written consent or consents purporting to authorize or take corporate action and/or related revocations (each such written consent and any revocation thereof is referred to in this Section 4 as a “Consent”), the Secretary of the Corporation shall provide for the safekeeping of such Consents and shall as soon as practicable thereafter conduct such reasonable investigation as he deems necessary or appropriate for the purpose of ascertaining the validity of such Consents and all matters incident thereto, including, without limitation, whether the holders of shares having the requisite voting power to authorize or take the action specified in the Consents have given consents. No consent to corporate action in writing without a meeting shall be effective unless delivered to the Corporation within sixty (60) days following the record date relating thereto fixed pursuant to Section 3 above.
 

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Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (the “Agreement”) is entered into this 5th day of January, 2004 (the “Effective Date”), between Donald L. Drakeman (the “Executive”) and Medarex, Inc. (the “Company”) (collectively, the Executive and the Company shall be referred to as the “Parties”). In consideration of the mutual promises and agreements contained herein, the Parties agree as follows:

 

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

 

2. Effective Date and Term. This Agreement shall be effective, and its term (the “Term”) shall commence as of the Effective Date. The Term shall continue through and until January 4, 2007 (the “Initial Term”), unless terminated sooner as provided by this Agreement or extended by the Parties. The Term shall be automatically renewed for successive periods of one year each (each, a “Renewal Term”), unless either Party gives to the other written notice of intent not to renew at least ninety (90) days prior to the expiration of the Initial Term or any Renewal Term. This Agreement supersedes in its entirety that Employment Agreement between the Company and the Executive dated May 20, 1991, as amended on June 4, 1991, October 2, 1995 and November 7, 1997.

 

3. Compensation.

 

A. Salary. During the Term the Company shall pay or cause to be paid to the Executive, in bi-weekly installments, a salary of $760,000 per annum or such greater amount as may from time to time be determined by the Board of Directors (the “Board”) of the Company (the “Base Salary”). The Base Salary shall be reviewed annually by the Board and, if appropriate, may be increased. The Board may also pay the Executive such bonuses as it deems appropriate. Notwithstanding the foregoing, no increase in Base Salary or bonus shall be paid to the Executive unless and until approved by a committee of the Board, a majority of which is comprised of Directors who are not employees of the Company.

 

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

 

C. Benefits.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4. Duties of the Executive.

 

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

 

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

 

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

 

5. Restrictions on the Executive.

 

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

 

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

 

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

 

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of keeping or surrendering Records and will surrender to the Company all Records at the end of the Executive’s term of employment by the Company.

 

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

 

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

 

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

 

C. Non-Competition; Non-Solicitation.

 

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

 

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

 

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

 

D. Breach. The Executive acknowledges that there may be circumstances in which his breach of any covenant set forth in this Section 5. could cause harm to the Company which may not be compensable by monetary damages alone, and which could potentially entitle the Company to injunctive relief. However, by acknowledging this possibility, the Employee is

 

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not agreeing to waive his right to require the Company to meet its evidentiary burdens as required by law in any cause of action brought by the Company seeking such injunctive relief.

 

6. Termination.

 

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

 

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

 

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

 

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

 

B. Termination for Cause by the Company.

 

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

 

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(2) In the event the Term is terminated by the Company for cause, the provisions of Subsections 5.C.(2) and 5.C.(3) shall continue to apply for one year after the conclusion of the Term.

 

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

 

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

 

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

 

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

 

(3) In the event the Term is terminated pursuant to Subsection 6.C.(1) or 6.C.(2), the Company shall pay the Executive his then existing Base Salary and continue Executive’s benefits enumerated in Subsections 3.C.(3), 3.C.(4) and 3.C.(6) hereof (to the extent permitted by the Company’s insurance carriers) for two years commencing with the day following the effective date of the termination of the Term. In addition, notwithstanding any provisions of the stock option plan or stock option agreement pursuant to which any stock options were granted, the Executive shall be entitled to exercise any of Executive’s stock options vested as of the final day of the Term until eighteen months from the final day of the Term or the expiration of the stated period of the option, whichever period is the shorter.

 

D. Resignation by the Executive.

 

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

 

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

 

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

 

E. Termination Upon Change in Control.

 

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

 

(a) An acquisition (other than directly from the Company) of any voting securities of the Company (the “Voting Securities”) other than in a “Non-Control Acquisition” (as defined below) by any “Person” (as the term “person” is used for purposes of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, (the “1934 Act”)) which results in such Person first attaining “Beneficial Ownership” (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of fifty-one percent (51%) or more of the combined voting power of the Company’s then outstanding Voting Securities. For purposes of the foregoing, a “Non-Control Acquisition” shall mean an acquisition by (i) an employee benefit plan (or a trust forming a part thereof) maintained by (x) the Company or (y) any corporation or other Person of which a majority of its voting power or its equity securities or equity interest is owned directly or indirectly by the Company (a “Subsidiary”), or (ii) the Company or any Subsidiary.

 

(b) The individuals who, as of the date of this Agreement, were members of the Board (the “Incumbent Board”) cease for any reason to constitute at least 66 2/3% of the Board; provided, however, that if the election, or a nomination for election by the Company’s shareholders, of any new director was approved by a vote of at least 66 2/3% of the Incumbent Board, such new director shall be considered as a member of the Incumbent Board; provided further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of either an actual or threatened “Election Contest” (as described in Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened solicitation of the proxies or consents by or on behalf of a Person other than the Board (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Election Contest or Proxy Contest; or

 

(c) The consummation of a transaction approved by the Company’s shareholders and involving: (1) a merger, consolidation or reorganization in which the Company is a constituent corporation, unless (i) the shareholders of the Company, immediately before such merger, consolidation or reorganization, own, directly or indirectly immediately following such merger, consolidation or reorganization, at least sixty-six and two-thirds percent (66 2/3%) of the combined voting power of the outstanding voting securities of the corporation resulting from such merger, consolidation or reorganization (the “Surviving Corporation”) in substantially the same proportion as their ownership of the voting securities immediately before such merger, consolidation or reorganization, (ii) the individuals who were

 

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members of the Incumbent Board immediately prior to the execution of the agreement providing for such merger, consolidation or reorganization constitute at least 66 2/3% of the members of the board of directors of the Surviving Corporation, and (iii) no Person other than (w) the Company, (x) any Subsidiary, (y) any employee benefit plan (or any trust forming a part thereof) maintained by the Company, the Surviving Corporation or any Subsidiary, or
(z) any Person who, immediately prior to such merger, consolidation or reorganization had Beneficial Ownership of fifty-one percent (51%) or more of the then outstanding Voting Securities, has Beneficial Ownership of fifty-one percent (51%) or more of the combined voting power of the Surviving Corporation’s then outstanding voting securities (a transaction described in clauses (i) and (ii) shall herein be referred to as a “Non-Control Transaction”); (2) a complete liquidation or dissolution of the Company; or (3) an agreement for the sale or other disposition of all or substantially all of the assets of the Company to any Person (other than a transfer to a Subsidiary).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

F. Termination for Disability.

 

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

 

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

 

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

 

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

 

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7. Miscellaneous.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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In Witness Whereof, the parties hereto have caused this Agreement to be duly executed as of the day and year first written above.

 

MEDAREX, INC.

 

 

By:

 

/s/ Irwin Lerner

 

 


 

 

 

Irwin Lerner

Chairman of the Compensation and

Organization Committee of the

Board of Directors of Medarex, Inc.

 

/s/ Donald L. Drakeman

 


 

Donald L. Drakeman

 

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