SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12.
MEDAREX, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
__________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
__________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
__________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
__________________________________________________________________________
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
__________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
__________________________________________________________________________
(3) Filing Party:
__________________________________________________________________________
(4) Date Filed:
__________________________________________________________________________
MEDAREX, INC.
707 State Road #206
Princeton, New Jersey 08540
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of Shareholders of
Medarex, Inc. (the "Company"). The meeting will be held at 10:00 a.m., on
Wednesday, May 23, 2001, at the East Brunswick Hilton, located at 3 Tower Center
Boulevard, East Brunswick, New Jersey 08816. The formal notice of the meeting
follows on the next page. The notice identifies the four proposals to be voted
upon at the meeting. We have also enclosed a proxy statement explaining the
matters to be voted on and a separate proxy card on which you can cast your vote
by mail.
Management will report on the Company's activities since the last annual meeting
of shareholders held on Thursday, May 18, 2000 and shareholders will have an
opportunity to ask questions.
Your interest in the affairs of the Company is welcomed and encouraged. It is
very important that you promptly cast your votes on the matters to be considered
at the Annual Meeting, regardless of the size of your holdings. Even if you
plan to attend the Annual Meeting in person, we urge you to complete, sign and
return the enclosed proxy as soon as possible. If you do this, your shares will
be voted as you direct, even if you are unable to attend the meeting. Even if
you send in your proxy, you can still attend the meeting and vote however you
wish in person.
Sincerely yours,
/s/ Donald L. Drakeman
DONALD L. DRAKEMAN
President and Chief Executive
Officer
April 16, 2001
MEDAREX, INC.
707 State Road #206
Princeton, New Jersey 08540
NOTICE OF ANNUAL MEETING
To Be Held at 10:00 a.m. on May 23, 2001
To Our Shareholders:
Our Annual Meeting of Shareholders will be held at the East Brunswick
Hilton, located at 3 Tower Center Boulevard, East Brunswick, New Jersey 08816,
on Wednesday, May 23, 2001 at 10:00 a.m. The purpose of the meeting is to vote
on the following matters:
1. To elect three (3) Class III Directors for terms to expire in 2004;
2. To elect one (1) Class I Director for a term to expire in 2003;
3. To approve our 2001 Stock Option Plan;
4. To ratify the appointment of Ernst & Young LLP as our independent
auditors for the fiscal year ending December 31, 2001; and
5. To transact any other business that may properly come before the meeting
or any adjournments thereof.
Only shareholders of record at the close of business on March 30, 2001 may
vote at the meeting. A list of the shareholders entitled to vote at the meeting
will be available for inspection at the meeting and for a period of ten (10)
days prior to the meeting during regular business hours at our corporate
headquarters at 707 State Road #206, Princeton, New Jersey 08540. A Proxy
Statement explaining the matters to be acted upon at the Annual Meeting follows.
Please read it carefully.
Whether or not you expect to be personally present at the meeting, please
be sure that the enclosed Proxy is properly completed, dated, signed and
returned without delay in the enclosed envelope. Any Proxy may be revoked at
any time before it is exercised by following the instructions set forth on page
two of the accompanying Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ W. Bradford Middlekauff
W. BRADFORD MIDDLEKAUFF
Senior Vice President, General Counsel and Secretary
April 16, 2001
MEDAREX, INC.
PROXY STATEMENT
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why Did You Send Me this Proxy Statement?
We sent you this Proxy Statement and the enclosed proxy card because the
Board of Directors is soliciting your proxy to vote at the Annual Meeting of
Shareholders. The Annual Meeting will be held on Wednesday, May 23, 2001. This
Proxy Statement summarizes the information you need to know regarding the
proposals to be voted upon at the Annual Meeting. However, you do not need to
attend the meeting to vote your shares. Instead, you may simply complete, sign
and return the enclosed proxy card.
On or about April 16, 2001, we will begin sending this Proxy Statement, the
attached Notice of Annual Meeting and the enclosed proxy card to all
shareholders entitled to vote at the Annual Meeting. Shareholders who owned our
Common Stock as of the close of business on March 30, 2001 are entitled to vote
at the Annual Meeting. On the record date, there were 72,677,416 shares of our
Common Stock outstanding. Common Stock is our only class of voting stock.
What Matters Are to Be Voted Upon at the Annual Meeting?
Four proposals are being presented at the Annual Meeting for shareholder
approval.
Proposal 1: Election of Three (3) Class III Directors
The term of our current Class III Directors, Irwin Lerner, Dr. Julius A.
Vida and Dr. W. Leigh Thompson, Jr., will expire at the Annual Meeting. We have
nominated all three (3) for re-election as Class III directors for new three-
year terms ending at the 2004 annual meeting.
Proposal 2: Election of One (1) Class I Director:
We have nominated Dr. Ronald J. Saldarini for election as a Class I
Director for a two-year term ending at the 2003 annual meeting. Dr. Saldarini
has been nominated to fill the vacancy on the Board created when one of our
former Class I Directors, Robert Iggulden, decided not to stand for re-election
at last year's annual meeting.
Proposal 3: Approval of Our 2001 Stock Option Plan
The third proposal is to approve the 2001 Stock Option Plan. A detailed
description of the 2001 Stock Option Plan, including the federal income tax
consequences of the Plan, begins on page 23 of this Proxy Statement.
1
Proposal 4: Ratification of Appointment of Independent Auditors
We have selected Ernst & Young LLP as our independent auditors for the
current fiscal year. Although shareholder approval of this selection is not
legally required, we are asking our shareholders to ratify the appointment of
Ernst & Young LLP.
As of the date of this Proxy Statement, these four proposals are the only
matters which we intend to present at the Annual Meeting. We do not know of any
other business to be presented at the Annual Meeting. If other business is
brought before the Annual Meeting, the persons named on the enclosed proxy card
will vote according to their best judgment.
How Many Votes Do I Have?
Each share of Common Stock that you own entitles you to one vote on each
matter voted upon at the Annual Meeting.
How Do I Vote by Proxy?
Whether you plan to attend the Annual Meeting or not, we urge you to
complete, sign and date the enclosed proxy card and to return it promptly in the
envelope provided. Returning the proxy card will not affect your right to
attend the Annual Meeting and vote in person.
If you properly fill in your proxy card and send it to us in time to vote,
your "proxy" (one of the individuals named on your proxy card) will vote your
shares as you have directed. If you sign the proxy card but do not make a
specific choice, your proxy will vote your shares as recommended by the Board.
How Do I Revoke My Proxy?
If you send in a signed proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in any one of three ways:
. You may send in another proxy with a later date.
. You may notify our corporate Secretary in writing before the Annual
Meeting that you have revoked your proxy.
. You may vote in person at the Annual Meeting.
How Do I Vote in Person?
If you plan to attend the Annual Meeting and vote in person, we will give
you a ballot when you arrive. However, if your shares are held in the name of
your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you were the beneficial owner of the
shares on March 30, 2001, the record date for voting.
2
What Vote is Required to Approve Each Proposal?
Quorum: The presence, in person or by proxy, of the holders of a majority
of the outstanding shares entitled to vote, i.e., 36,338,709
shares, will constitute a quorum for the Annual Meeting. If less
than this number are present at the Annual Meeting, no business
can be conducted other than the adjournment of the meeting. If
you submit a properly executed proxy card, even if you abstain
from voting, then you will be considered part of the quorum.
Approval of
the Proposals: Other than the election of directors, which requires a plurality
of the votes cast, each matter to be submitted to the
shareholders requires the affirmative vote of a majority of the
votes cast at the meeting for approval.
The Effect of Broker
Non-Votes and
Abstentions: For the purposes of determining the number of votes cast at the
meeting, only those cast "For" or "Against"are included.
Abstentions and broker non-votes are counted only for purposes of
determining whether a quorum is present at the meeting. Under the
rules of the National Association of Securities Dealers, Inc.
(the "NASD"), member brokers generally may not vote shares held
by them in street name for customers unless they are permitted to
do so under the rules of any national securities exchange of
which they are a member. Under the rules of the New York Stock
Exchange, Inc. ("NYSE"), member brokers who hold shares in street
name for customers have the authority to vote on certain items in
the event that they have not received instructions from
beneficial owners. NYSE member brokers who do not receive
instructions from their customers are entitled to vote on all
proposals presented in this Proxy Statement.
How Does the Board Recommend I Vote on the Proposals?
The Board recommends that you vote as follows:
. "FOR" the election of Mr. Lerner, Dr. Vida and Dr. Thompson as Class III
directors each to serve as a director until the 2004 Annual Meeting of
Shareholders;
. "FOR" the election of Dr. Saldarini as a Class I Director to serve as a
director until the 2003 Annual Meeting of Shareholders;
. "FOR" the 2001 Stock Option Plan; and
. "FOR" the ratification of Ernst & Young LLP as our independent auditors
for the current fiscal year.
3
PROPOSAL 1 - ELECTION OF THREE CLASS III DIRECTORS
Our Board of Directors is divided into three classes - Class I, Class II
and Class III - in a manner providing for staggered three-year terms of classes.
That is, one class is elected at each annual meeting of shareholders to serve
for a three-year term. The Board is currently comprised of eight (8) members.
At the 2001 Annual Meeting of Shareholders, the terms of our three (3)
current Class III Directors, Irwin Lerner, Dr. Julius A. Vida and Dr. W. Leigh
Thompson, Jr., are expiring. We have nominated all three (3) each to serve as a
director for a new three-year term ending at the 2004 Annual Meeting of
Shareholders.
PROPOSAL 2 - ELECTION OF ONE CLASS I DIRECTOR
We have nominated Dr. Ronald J. Saldarini for election as a Class I
Director for a two-year term ending at the 2003 annual meeting. Dr. Saldarini
has been nominated to fill the vacancy on the Board created when one of our
former Class I Directors, Robert Iggulden, decided not to stand for re-election
at last year's annual meeting.
Unless you properly mark the proxy card accompanying this Proxy Statement
to withhold authority to vote for a nominee, your votes will be cast FOR the
election of each of the nominees, or FOR one or more substitute nominees
recommended by the Board of Directors in the event that one or more of our
nominees should become unavailable for election.
The following is a brief biography of each nominee for election as a
director, the five (5) directors whose terms of office extend beyond the Annual
Meeting and our executive officers.
Nominees for Election as Class III Directors - Terms Expiring in 2004.
Irwin Lerner (age 70), Mr. Lerner has been a Director since September 8,
------------
1995. On May 19, 1997, Mr. Lerner became Chairman of the Board of Directors.
Mr. Lerner served as Chairman of the Board of Directors and of the Executive
Committee of Hoffmann-La Roche, Inc., a pharmaceutical and health care company,
from January 1993 until his retirement in September 1993, and also served as
President and Chief Executive Officer from 1980 through December 1992. Mr.
Lerner served for 12 years on the Board of the Pharmaceutical Manufacturers'
Association, where he chaired the Association's FDA Issues Committee. Mr.
Lerner received a B.S. and an M.B.A. from Rutgers University. He is currently a
Distinguished Executive-in-Residence at Rutgers University Graduate School of
Management. Mr. Lerner is also a director of Humana Inc., a publicly traded
health care company; Covance, Inc., a publicly traded drug development
organization; Axys Pharmaceuticals, Inc., a publicly traded biopharmaceutical
company; and V.I. Technologies, Inc., Inhale Therapeutic Systems, Inc. and
Genmab A/S, publicly traded biotechnology companies.
Julius A. Vida, Ph.D. (age 72), Dr. Vida has been a Director since February
---------------------
9, 1994. Since 1993, Dr. Vida has been a self-employed pharmaceutical
consultant with VIDA International Pharmaceutical Consultants, Inc. From 1975
until his retirement in 1993, Dr. Vida held various positions at Bristol-Myers
Squibb Co. and its predecessors. From 1991 to 1993, Dr. Vida was Vice
President, Business Development, Licensing and Strategic Planning, and from 1985
to 1991, he was Vice President, Licensing. Dr. Vida graduated from Pazmany
Peter University, Budapest, Hungary, holds an M.S. and a Ph.D. in Organic
4
Chemistry from Carnegie Institute of Technology, was a Postdoctoral Fellow at
Harvard University, and holds an M.B.A. from Columbia University. Dr. Vida is
also a director of Orphan Medical, Inc., a publicly traded biotechnology
company.
W. Leigh Thompson, Jr., M.D., Ph.D. (age 62), Dr. Thompson has been a
----------------------------------
Director since April 12, 1996. Dr. Thompson is currently the President and
Chief Executive Officer of Profound Quality Resources Ltd., consultants to the
health care industry. During 1994, Dr. Thompson served as the Chief Scientific
Officer of Eli Lilly and Company. From 1982 until 1994, Dr. Thompson held
various management positions with Lilly Research Laboratories, a subsidiary of
Eli Lilly and Company, including Executive Director, Clinical Investigation and
Regulatory Affairs from 1982 until 1986, Vice President from 1986 until 1988,
Group Vice President from 1988 until 1993 and Executive Vice President from 1993
until 1994 in charge of all of that company's pharmaceutical and animal health
research except process chemistry. Dr. Thompson was also a Professor of
Medicine at Indiana University from 1984 to 1995. Dr. Thompson received a B.S.
degree from the College of Charleston, M.S. and Ph.D. degrees in Pharmacology
from the Medical University of South Carolina and an M.D. degree from The Johns
Hopkins University. Dr. Thompson is a director of BAS, Inc., DepoMed, Inc.,
Inspire Pharmaceuticals, Inc., and Orphan Medical, Inc., publicly traded
biotechnology companies.
Nominee for Election as Class I Director-Term Expiring in 2003.
Ronald J. Saldarini, Ph.D. (age 61), Dr. Saldarini was the President of
--------------------------
Wyeth Lederle Vaccines and Pediatrics, a division of American Home Products
Corporation from January 1995 to his retirement in June 1999. Dr. Saldarini is
currently an associate with Naimark and Associates, a consulting firm which
provides services to the healthcare industry. Dr. Saldarini also serves on two
committees (Military Vaccines and Immunization Finance) at the National Academy
of Sciences Institute of Medicine and is a consultant to the Malaria Vaccine
Initiative. He was a member of the National Vaccine Advisory Committee and the
National Advisory Commission on Childhood and Physiology Vaccines. Dr.
Saldarini is a graduate of Drew University and received a Ph.D. degree in
Biochemistry from the University of Kansas. Dr. Saldarini is also a director
of Cellegy Pharmaceuticals, Inc., a publicity traded biopharmaceutical company.
Incumbent Class II Directors - Terms Expiring in 2002.
Michael W. Fanger, Ph.D. (age 60), Dr. Fanger has been a Director and
------------------------
Chairman of our Scientific Advisory Board since our inception in 1987 and was
our Secretary from May 18, 1990 to April 3, 1991. Dr. Fanger has been Chairman
of the Department of Microbiology at Dartmouth Medical School since July 1992
and a Professor of Microbiology and Medicine since 1981. Dr. Fanger is a
graduate of Wabash College and received a Ph.D. degree in Biochemistry from Yale
University.
Michael A. Appelbaum (age 55), Mr. Appelbaum has been a Director since
--------------------
April 3, 1991. From July 29, 1991 until October 13, 2000, Mr. Appelbaum was our
Executive Vice President - Finance and Administration, Treasurer and Chief
Financial Officer. Mr. Appelbaum is currently our Executive Vice President and
is also the President and Chief Operating Officer of our wholly-owned subsidiary
GenPharm International, Inc. Mr. Appelbaum, who has been employed as a
certified public accountant with Ernst & Young LLP, is also an attorney. He is
a graduate of Fairleigh Dickinson University and received a J.D. degree from
Suffolk University School of Law.
5
Frederick B. Craves, Ph.D. (age 55), Dr. Craves has been a Director since
--------------------------
August 4, 1998. In June 1997, Dr. Craves founded Bay City Capital Management
LLC, a merchant bank providing advisory services and investing in life science
companies, and has served as chairman and managing director since that company's
inception. In November 1996, Dr. Craves founded the Craves Group LLC; and in
January 1994, Dr. Craves co-founded Burrill & Craves. Dr. Craves is Chairman
of the Board of Epoch Pharmaceuticals, Chairman of the Board of NeoRx
Corporation and is a director of Incyte Pharmaceuticals, Inc., publicly traded
biotechnology companies. Dr. Craves holds a Ph.D. degree in Pharmacology and
Experimental Toxicology from the University of California at San Francisco
Medical Center.
Incumbent Class I Directors - Terms Expiring in 2003.
Charles R. Schaller (age 65), Mr. Schaller has been a Director since our
-------------------
inception in 1987, and was Chairman of our Board of Directors until May 18,
1997. Since 1989, Mr. Schaller has been a chemical industry management
consultant and is currently a director of Astro Power, Inc., a publicly traded
company engaged in the commercialization of silicon film solar cells. Mr.
Schaller is a graduate of Yale University and is a graduate of the program in
management development at Harvard Business School.
Donald L. Drakeman, Ph.D. (age 47), Dr. Drakeman has been our President,
-------------------------
Chief Executive Officer and a Director since our inception in 1987. Dr.
Drakeman also serves as Chairman of the Board and Chief Executive Officer of our
wholly-owned subsidiary GenPharm International, Inc. Dr. Drakeman is a graduate
of Dartmouth College and received a J.D. degree from Columbia University, where
he was a Harlan Fiske Stone scholar, and a Ph.D. in the humanities from
Princeton University, where he has served as a member of the faculty. Dr.
Drakeman is also a director of Oxford GlycoSciences plc, a publicly traded
biotechnology company.
Board Committees.
The Board of Directors has established three (3) permanent committees: the
Audit Committee, the Stock Option Committee and the Compensation Committee.
None of the directors who serve on any of these three (3) committees are
employees of our company or our subsidiaries. The Audit Committee is currently
comprised of Mr. Lerner, Dr. Fanger and Mr. Schaller. The Stock Option
Committee is currently comprised of Mr. Lerner and Dr. Fanger. The Compensation
Committee is currently comprised of Mr. Lerner, Mr. Schaller and Dr. Vida.
The functions of our Audit Committee include recommending the engagement
and discharge of the independent auditors, directing and supervising special
investigations, reviewing with the independent auditors the plan and results of
our procedures for internal auditing, reviewing the independence of the
independent auditors, considering the range of audit fees and reviewing the
adequacy of our system of internal accounting controls. The Audit Committee
operates under a charter adopted by the Board, a copy of which is attached
hereto as Appendix A. The Audit Committee held three meetings in 2000 and has
held two meetings to date in 2001.
The functions of our Stock Option Committee are to administer our stock
option plans (the "Plans") and to review and determine the officers, directors
(excluding committee members), employees and consultants to whom stock options
should be granted, the number of options and the option price to be paid. Our
Stock Option Committee acted 77 times in 2000 and has acted 15 times to date in
2001.
6
The functions of our Compensation Committee are to review and determine
salaries for officers and key employees as well as review and determine bonuses
and other special awards of employee compensation and benefits. The
Compensation Committee held two meetings in 2000 and has held one meeting to
date in 2001.
We currently have no executive committee or standing nominating committee.
There are no arrangements or understandings with any director pursuant to which
he has been elected a director.
Our Board of Directors held 10 meetings in 2000. Each of the directors
attended at least 80% of the total of the Board and their committee meetings
held during 2000.
Compensation of Directors.
Our non-employee directors receive $1,000 per meeting, as compensation for
their attendance at regular and special meetings of the Board. In addition, all
directors are reimbursed for their reasonable out-of-pocket expenses incurred in
connection with their duties to us. In July 2000, Mr. Lerner received a stock
option award of 50,000 shares at an exercise price of $44.07 per share. In
addition, in November 2000, each member of our Board of Directors, other than
Mr. Lerner, received a stock option award of 20,000 shares plus 2,000 shares for
each year of service on the Board resulting in awards ranging from 24,000 to
46,000 shares at an exercise price of $45.20 per share. During 2000, no
director received any other compensation for services rendered to us as a
director.
Other Compensation Paid to Our Directors During 2000.
During 2000, Mr. Schaller was paid for services rendered to us as a
management consultant and Dr. Fanger was paid for services rendered to us as a
scientific and technical consultant. In addition, Dr. Vida, Dr. Thompson, and
Mr. Lerner were paid for services rendered to us as business development
consultants. These fees did not exceed $54,000 individually or $139,000 in the
aggregate.
Executive Officers.
Our executive officers are Dr. Donald L. Drakeman - President and Chief
Executive Officer, Michael A. Appelbaum - Executive Vice President, Christian S.
Schade - Senior Vice President, Treasurer and Chief Financial Officer, Dr.
Yashwant M. Deo - Senior Vice President, Operations, Research and Development
and Regulatory Compliance, Dr. Nils Lonberg - Senior Vice President, Scientific
Director and W. Bradford Middlekauff - Senior Vice President, General Counsel
and Secretary.
Set forth below is certain information concerning Mr. Schade, Dr. Deo, Dr.
Lonberg and Mr. Middlekauff.
Christian S. Schade (age 40), Mr. Schade is our Senior Vice President,
-------------------
Treasurer and Chief Financial Officer. Mr. Schade joined us on October 13,
2000. Prior to joining us, Mr. Schade was a Managing Director of Merrill Lynch
& Co. Mr. Schade was employed by Merrill Lynch from March 1992 until October
2000, and was involved in Merrill Lynch's international capital markets and
corporate funding groups. Mr. Schade is a graduate of Princeton University and
received an M.B.A. degree from the Wharton School of the University of
Pennsylvania.
7
Yashwant M. Deo, Ph.D. (age 46), Dr. Deo is our Senior Vice President,
----------------------
Operations, Research and Development and Regulatory Compliance. Dr. Deo joined
us on July 15, 1993. Dr. Deo served as Vice President of Process Development at
Centocor Inc. from June 1992 until July 1993 and as Director of Cell Culture R&D
at Centocor from July 1988 until June 1992. Dr. Deo is a graduate of the
University of Poona (India), and received a Master of Science degree from G.B.
Pant University (India) and a Ph.D. degree in Fermentation Technology from the
University of Calgary (Canada), where he was an I.W. Killam Scholar.
Nils Lonberg, Ph.D. (age 45), Dr. Lonberg is our Senior Vice President ,
-------------------
Scientific Director. Dr. Lonberg joined GenPharm in 1990 as a Senior Scientist
and was promoted to Director, Molecular Biology in 1994. Prior to joining
GenPharm, Dr. Lonberg was a Post-Doctoral Fellow at Memorial Sloan-Kettering
Cancer Center in New York, New York. He received a Ph.D. in Biochemistry and
Molecular Biology from Harvard University.
W. Bradford Middlekauff (age 39), Mr. Middlekauff is our Senior Vice
-----------------------
President, General Counsel and Secretary. Mr. Middlekauff joined us on March 2,
2000. Prior to joining us, Mr. Middlekauff was Vice President, Business
Development and General Counsel at Algos Pharmaceutical Corporation from August
1998 until February 2000. From September 1993 until July 1998, Mr. Middlekauff
was an associate with the law firm of Cooley Godward LLP, where he advised life
science companies on business and legal aspects of research and development,
corporate partnering and licensing, product commercialization and corporate
financing. Mr. Middlekauff is a graduate of Brown University and received a
J.D. degree from Yale Law School.
There are no family relationships among any of our directors or executive
officers.
Compensation of Executive Officers.
Report of the Compensation and Stock Option Committees on Executive
Compensation.
Compensation Philosophy and Policies. Our fundamental executive
compensation philosophy is to enable us to attract and retain key executive
personnel and to motivate those executives to achieve our objectives. We are
still in the research and development phase and have not yet achieved
profitability; therefore, some of the traditional methods of evaluating
executive performance, such as profit levels and return on equity, would be
inappropriate. Accordingly, assessment of each executive's performance is based
on attainment of his or her specific personal objectives in light of our overall
annual strategic goals. Among other things, we examine three (3) specific areas
in formulating the compensation packages of our executive officers. These
areas, followed by specific inquiries made by the Committees within such areas,
are as follows:
8
Our Company's Performance:
--------------------------
. The extent to which our key research, clinical, product manufacturing and
financial objectives have been met during the preceding fiscal year.
. The development, acquisition and licensing of key technology.
. Our achievement of certain milestones, whether specified in agreements
with third party collaborators or determined internally.
Executive Performance:
----------------------
. An executive's involvement in and responsibility for the development and
implementation of strategic plans and the attainment of our strategic and
operating objectives, along with achievement of agreed upon personal
objectives.
. The participation by an executive in the relationship between us and the
investment community.
. The involvement of an executive in personnel recruitment, retention and
morale.
. The responsibility of the executive in working within operating budgets,
controlling costs and other aspects of expense management.
Other Factors:
--------------
. The necessity of being competitive with companies in the biotechnology
industry, taking into account relative company size, stage of
development, performance and geographic location as well as individual
responsibilities and performance.
Each executive officer's compensation package is reviewed annually and is
comprised of up to three (3) components: base salary, cash bonuses and stock
options. In addition to these components, executive officers are eligible to
participate in all employee benefit programs generally available to all of our
other employees.
Base Salary. In setting the base levels for each executive officer, the
Compensation Committee reviews surveys and other available information on the
base salaries of executive officers in comparable positions at other
biotechnology companies. Factors considered include, but are not limited to,
company size, stage of development of a company's products and geographic
location. The Compensation Committee also considers the individual experience
level and actual performance of each executive officer in light of our needs and
objectives.
Bonus Awards. We do not have formal incentive or bonus plans for
executives. As part of the review and setting of annual compensation, annual
cash bonuses tied to the achievement of certain specific personal and corporate
objectives and milestones have, to date, been awarded to all of our executive
officers. Awards have been, and are expected to continue to be, based on our
attainment of annual milestones and accomplishments identified by the Board of
Directors and are granted at the discretion of
the Compensation Committee.
9
Stock Option Plans. Subject to the terms of the Plans, the Stock Option
Committee has the authority to determine all terms and provisions under which
options are granted under the Plans, including the individuals to whom such
options may be granted. The Plans may be amended by our shareholders. They may
also be amended by the Board of Directors without approval by the shareholders
except to the extent that shareholders' approval is required to ensure favorable
tax treatment for incentive stock options or to ensure qualification of the
Plans under federal securities laws. Options generally vest at various times in
excess of six months from their date of grant, and are intended as incentive and
motivation for our executive officers, as well as to align the interest of those
officers more closely with those of our shareholders in advancing corporate
objectives. All executive officers have been awarded stock options under the
Plans.
In addition to incentive stock options granted under the Plans, the Stock
Option Committee also has the authority to grant, at its discretion, non-
qualified options as well as other stock based awards to certain individuals,
including executive officers. To date, non-qualified options have been granted
to all executive officers. Awards of restricted stock have also been granted
under the Plans. All options granted under the Plans were granted with exercise
prices equal to or greater than the fair market value of our Common Stock on the
date of grant.
Compensation of the Chief Executive Officer. During 2000, Dr. Donald L.
Drakeman's annual base salary was $410,000, an increase of approximately 10 %
from 1999. This amount included a payment of $18,500 paid in January 2001
representing a retroactive salary increase effective as of July 1, 2000. The
increase in Dr. Drakeman's base salary was determined in accordance with the
criteria outlined above, the Compensation Committee's evaluation of our overall
performance as well as Dr. Drakeman's individual performance. Also, in February
2001, Dr. Drakeman was awarded a cash bonus of $250,000 based upon the
evaluation by the Compensation Committee of the achievement of product
development and other specific strategic milestones set by the Compensation
Committee in connection with the review of Dr. Drakeman's compensation for 2000.
In addition to the above cash compensation, Dr. Drakeman received a stock option
award of 46,000 shares. This award was made to Dr. Drakeman and appropriate
awards were made to other key employees to ensure the retention of our Company's
management.
Based on its evaluation of Dr. Drakeman's performance, the Compensation and
Stock Option Committees believe that Dr. Drakeman's compensation level is
appropriate and in line with his peers in the industry.
Compensation and Stock Option Committees of the Board of Directors.
Stock Option Committee Compensation Committee
---------------------- ----------------------
Irwin Lerner Irwin Lerner
Dr. Michael W. Fanger Charles R. Schaller
Dr. Julius A. Vida
The report of the Compensation and Stock Option Committees does not
constitute soliciting material and should not be deemed filed or incorporated by
reference into any of our other filings under the Securities Act of 1933 (the
"Securities Act") or under the Securities Exchange Act of 1934 (the "Exchange
Act"), except to the extent that we specifically incorporate this report by
reference therein.
10
Compensation Committee and Stock Option Committee Interlocks and Insider
Participation.
The Stock Option Committee is comprised of Irwin Lerner and Dr. Michael W.
Fanger. The Compensation Committee is comprised of Irwin Lerner, Charles R.
Schaller and Dr. Julius A. Vida. None of these directors has been an officer
or employee of the company during the past three (3) years. No Compensation
Committee and Stock Option Committee interlocks exist between us and another
entity.
Report of the Audit Committee
During fiscal 2000, the Audit Committee of the Board of Directors developed
and adopted a charter for the Committee, which was approved by the full Board on
May 18, 2000. Each of the members of the Audit Committee qualifies as an
"independent" director under the current listing standards of the National
Association of Securities Dealers ("NASD"). The complete text of the new
charter, which reflects standards set forth in new SEC regulations and NASD
rules, is reproduced in Appendix A to this proxy statement.
As set forth in more detail in the charter, the Audit Committee's primary
responsibilities fall into three broad categories:
. first, the Committee is charged with monitoring the preparation of
quarterly and annual financial reports by our management, including
discussions with management and our outside auditors about draft annual
financial statements and key accounting and reporting matters;
. second, the Committee is responsible for matters concerning the
relationship with our outside auditors, including recommending their
appointment or removal; reviewing the scope of their audit services and
related fees, as well as any other services being provided; and determining
whether the outside auditors are independent based in part on the annual
letter provided us pursuant to Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees); and
. third, the Committee oversees management's implementation of systems of
internal controls, including review of policies relating to legal and
regulatory compliance, ethics and conflicts of interests; and review of the
activities and recommendations of our internal auditing program.
The Committee has implemented procedures to ensure that during the course
of each fiscal year it devotes the attention that it deems necessary or
appropriate to each of the matters assigned to it under the Committee's charter.
In overseeing the preparation of our financial statements, the Committee
met with both management and our outside auditors to review and discuss all
financial statements prior to their issuance and to discuss significant
accounting issues. Management advised the Committee that all financial
statements were prepared in accordance with generally accepted accounting
principles, and the Committee discussed the statements, with both management and
the outside auditors. The Committee's review included discussion with our
outside auditors of matters required to be discussed pursuant to Statement on
Auditing Standards No. 61 (Communication With Audit Committees).
11
With respect to our outside auditors, the Committee, among other things,
discussed with Ernst & Young LLP matters relating to its independence, including
the disclosures made to the Committee as required by the Independence Standards
Board Standard No. 1 (Independence Discussions With Audit Committees).
Finally, the Committee continued to monitor the scope and adequacy of our
internal auditing program, including proposals for adequate staffing and to
strengthen internal procedures and controls where appropriate.
On the basis of these reviews and discussions, the Committee recommended to
the Board of Directors that the Board approve the inclusion of the audited
financial statements in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2000, for filing with the SEC.
Members of the Audit Committee
Irwin Lerner
Charles R. Schaller
Dr. Michael W. Fanger
The report of the Audit Committee does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any of our
other filings under the Securities Act or the Exchange Act, except to the extent
that we specifically incorporate this report by reference therein.
Principal Accounting Firm Fees
Audit Fees. The aggregate fees billed by our principal accounting firm, Ernst &
----------
Young LLP, for professional services rendered for the audit of our annual
financial statements for the year ending December 31, 2000 and the review of the
financial statements included in our Quarterly Reports on Form 10-Q for that
year were $114,825.
Financial Information Systems Design and Implementation Fees. During the year
------------------------------------------------------------
ended December 31, 2000, Ernst & Young LLP billed our company $0 for
professional services with regard to financial information systems design and
implementation.
All Other Fees. The aggregate fees billed for services rendered by Ernst &
--------------
Young LLP for the year ended December 31, 2000, other than the services
described above, was $701,975. These services primarily related to tax advice
($401,570), services rendered in connection with our follow-on public offering
completed in March 2000 ($218,000), and services rendered in connection with our
corporate alliances ($82,405).
12
EXECUTIVE COMPENSATION TABLES
Summary Compensation Table. The following Summary Compensation Table
provides the annual and long-term compensation paid to our chief executive
officer, Dr. Donald L. Drakeman, and our six (6) most highly paid executive
officers other than Dr. Donald L. Drakeman for the years ended December 31,
1998, 1999 and 2000.
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Restricted Long Term
Stock Stock Incentive All Other
Name and Principal Position Year Salary Bonus/1/ Awards/2/ Option/SARs/3/ Payouts Compensation/4/
-------------------------- ------ --------------- ------------- ------------ ------------- --------- -------------
Donald L. Drakeman 2000 $ 391,500/5/ $250,000 $ - 46,000 $ - $ 3,400
President and Chief 1999 373,000 200,000 $ 568,750 224,000 - 3,200/6/
Executive Officer 1998 359,000 100,000 - 60,000 - 3,200
Michael A. Appelbaum 2000 295,000 150,000 - 46,000 - 3,400
Executive Vice President, 1999 295,000 125,000 568,750 224,000 - 3,200/7/
President and Chief 1998 282,500 80,000 - 40,000 - 114,756/8/
Operating Officer,
GenPharm International,
Inc.
Christian S. Schade 2000 300,000/9/ 25,000 - 300,000 - -
Senior Vice President -
Finance and
Administration, Treasurer
and Chief Financial
Officer
Yashwant M. Deo 2000 325,000/10/ 115,000 - - - 699,100/11/
Senior Vice President - 1999 305,000 90,000 - 100,000 - 3,200
Operations, Research and 1998 294,000 80,000 - 30,000 - 39,296/12/
Development and
Regulatory Compliance
Nils Lonberg 2000 215,000/13/ 120,000 - - - 3,400
Senior Vice President - 1999 167,250 80,000 568,750 224,000 - 3,200
Scientific Director 1998 160,161 102,792 - - - 247,975/14/
Randall T. Curnow 2000 267,308/15/ - - - - 49,651/16/
Senior Vice President - 1999 278,000 - - 50,000 - 86,234/17/
Chief Medical Officer 1998 270,500 - - 20,000 - 77,877/18/
W. Bradford Middlekauff 2000 200,000/19/ 50,000 - 100,000 - 2,000
Senior Vice President,
General Counsel
and Secretary
___________________________
(1) A portion of each of the named executive officer's cash compensation for
each year shown was paid in the first quarter of the year following the
year shown and is reported in this table as bonus.
(2) On November 1, 1999, certain executive officers were granted restricted
stock awards under our Plans of 25,000 shares each. On December 17, 1999,
each of these executive officers received 25,000 shares of common stock
with an aggregate value of $568,750, based on the fair market value price
of $22.75 on December 17, 1999, the date the restrictions lapsed. On
October 13, 2000, Mr. Schade was granted a restricted stock award under
our Plans of 9,000 shares with an aggregate value of $366,750, based on
the fair market value price of $40.75 per share on December 29, 2000. The
restrictions on these shares lapse in equal annual installments of 3,000
shares commencing October 13, 2001.
(3) We have not granted any stock appreciation rights (SARs) or made any long
term incentive payouts. Adjusted to reflect our 2-for-1 stock split
effective as of September 27, 2000.
(4) Unless otherwise specified, represents matching funds under our 401(k)
Plan.
13
(5) Includes $18,500 of a retroactive salary increase effective as of July 1,
2000, and paid in January 2001.
(6) Excludes $1,967,070 of deferred compensation.
(7) Excludes $103,530 of deferred compensation.
(8) Includes $3,200 of matching funds under our 401(k) Plan and reimbursement
in the amount of $111,556 for certain relocation expenses.
(9) Represents Mr. Schade's 2000 stated annual salary. Mr. Schade began his
employment with us on October 13, 2000, and actually received $51,923
during the year ended December 31, 2000.
(10) Includes $20,000 of a retroactive salary increase effective as of July 1,
2000, and paid in January 2001.
(11) Includes $3,400 of matching funds under our 401(k) Plan and reimbursement
of $65,700 for certain living expenses.
(12) Includes $3,200 of matching funds under our 401(k) Plan and reimbursement
in the amount of $36,096 for certain living expenses.
(13) Includes $40,000 of a retroactive salary increase effective July 1, 2000,
and paid in January 2001.
(14) Includes $3,012 of matching funds under our 401(k) Plan and $244,963 in the
form of a GenPharm stock bonus payable in connection with our acquisition
of GenPharm.
(15) Represents amounts actually paid to Dr. Curnow prior to his retirement in
November 2000.
(16) Includes $3,400 of matching funds under our 401(k) Plan and reimbursement
in the amount of $46,251 for certain living expenses.
(17) Includes $3,200 of matching funds under our 401(k) Plan and reimbursement
of $83,034 for certain living expenses.
(18) Includes $3,200 of matching funds under our 401(k) Plan and reimbursement
of $70,677 for certain living expenses.
(19) Represents Mr. Middlekauff's 2000 stated annual salary. Mr. Middlekauff
began employment with us on March 2, 2000, and actually received $163,077
during the year ended December 31, 2000.
Stock Option Table. The following table sets forth information concerning
stock options granted during the year ended December 31, 2000 to each of the
executive officers named in the Summary Compensation Table. In addition, in
accordance with the rules of the SEC, the table shows the hypothetical gains for
such options based on assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the options were granted over the full option term.
Potential Realizable
Value at Assumed
Annual Rates of Stock
Option Grants in Last Fiscal Year Price Appreciation for
Individual Grants Option Term/1/
-------------------------------- ---------------------
% of Total
Options/SARs
Options/SARs Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)/2/ Fiscal Year ($/Share)/3/ Date 5%($) 10% ($)
---- ------------ ------------- ------------ ----------- --------- ----------
Donald L. Drakeman 46,000 3% $45.20 10/13/10 $1,307,598 $ 3,313,709
Michael A. Appelbaum 46,000 3% 45.20 10/13/10 1,307,598 3,313,709
Christian S. Schade 300,000 17% 45.20 10/13/10 8,857,811 21,611,148
Yashwant M. Deo - - - - - -
Randall T. Curnow - - - - - -
Nils Lonberg - - - - - -
W. Bradford Middlekauff 100,000 6% 26.00 4/5/10 1,635,126 4,143,730
__________________
(1) The "potential realizable value" shown will be achieved only if the options
have been held for the full ten years and the stock price has appreciated
at the assumed rate. For the named executive officers, the value is
calculated from the option price per share of options granted in fiscal
year 2000. Potential realizable value is listed for illustration purposes
only. The values disclosed are not intended to be and should not be
interpreted as representations or projections of future value of our stock
or of the stock price.
(2) All options may be exercised at any time before the expiration date so long
as employment with us continues; provided, however, that the options may be
exercised within twelve months after the death of the optionee or three
months after the termination of the optionee's employment as the result of
disability. We have granted no SARs under the Plans.
(3) All grants were made at 100% of fair market value as of the date of grant.
14
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values. The following table presents the number and value of
unexercised options held by each of the executive officers named in the Summary
Compensation Table at December 31, 2000, distinguishing between options that are
exercisable and those that are not exercisable.
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year End Option/SAR Values/1/
Number of Unexercised Value of Unexercised In-
Shares Options/SARs at the-Money Options/SARs
Acquired Fiscal Year End at Fiscal Year End ($)/3/
on ----------------------- ------------------------
Exercise Value Realized/2/
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----- --------- ---------------- ----------- ------------- ----------- -------------
Donald L. Drakeman 202,000 $ 7,935,913 464,000 46,000 $17,567,130 -
Michael A. Appelbaum 730,100 15,854,125 6,846 46,000 255,493 -
Christian S. Schade - - - 300,000 - -
Randall T. Curnow 265,000 5,427,580 25,000 - 933,000 -
Yashwant M. Deo 220,000 3,678,746 384,800 - 14,546,970 -
Nils Lonberg 20,000 1,044,040 254,000 - 9,500,580 -
W. Bradford Middlekauff 20,000 582,563 76,154 3,846 1,123,272 56,729
______________________________
(1) All options were granted at 100% of fair market value on the date of grant.
Optionees may satisfy the exercise price by submitting currently owned
shares and/or cash. Income tax withholding obligations may be satisfied by
electing to have us withhold shares otherwise issuable under the option with
a fair market value equal to such obligations.
(2) Fair market value of underlying securities at exercise minus the exercise
price.
(3) Based upon the last reported sale price of our common stock on the Nasdaq
National Market of $40.75 on December 29, 2000.
We have not deferred payment of any cash compensation payable to executive
officers for services rendered during the last fiscal year. No executive
officer received compensation not reported in the Summary Compensation Table,
other than pursuant to the Plans, in excess of $50,000 or 10% of the
compensation reported in the Summary Compensation Table.
15
EMPLOYMENT AND CONSULTING AGREEMENTS
Dr. Donald L. Drakeman. We have entered into an employment agreement with
Dr. Donald L. Drakeman pursuant to which he is employed as our President and
Chief Executive Officer. Dr. Drakeman's current annual salary is $410,000,
which may be periodically increased by the Board of Directors. The agreement
expires on October 1, 2001, and is automatically renewed for successive one year
terms unless we or Dr. Drakeman elect not to renew. If the agreement is not
renewed by us, Dr. Drakeman is entitled to one (1) year's severance pay, subject
to reduction if Dr. Drakeman finds alternative employment during that period.
The agreement contains prohibitions against disclosure of any confidential
information concerning our business, accounts, or finances. It also contains
covenants not to compete which are subject to differing qualifications upon
termination with cause, without cause, non-renewal and upon a change of control.
If we terminate Dr. Drakeman's employment without cause, Dr. Drakeman is
entitled to two (2) full years' severance pay. In the event of a change in
control of Medarex, Dr. Drakeman has the right to terminate the agreement on 90
days' written notice to us. In such event, we will pay Dr. Drakeman an amount
equal to one (1) full year's salary. Dr. Drakeman has the right to resign
voluntarily upon giving us 90 days' prior notice, in which case he will be
subject to a noncompetition covenant for a period of one (1) year from the date
of termination. If Dr. Drakeman elects not to renew his employment for the 2002
calendar year, he will be subject to noncompetition covenant for a period of one
(1) year from the date of termination. If Dr. Drakeman elects not to renew his
employment beyond the 2002 calendar year, Dr. Drakeman will not be subject to a
noncompetition covenant.
Mr. Michael A. Appelbaum. We have entered into an employment agreement
with Michael A. Appelbaum pursuant to which he is employed as our Executive Vice
President. Mr. Appelbaum's current annual salary is $295,000, which may be
periodically increased by the Board of Directors. The agreement expires on
October 1, 2001 and is automatically renewed for successive one (1) year terms
unless the Company or Mr. Appelbaum elects not to renew. If the agreement is
not renewed by us, Mr. Appelbaum is entitled to one (1) year's severance pay
subject to reduction if Mr. Appelbaum finds alternative employment during that
period. The agreement contains prohibitions against disclosure of any
confidential information concerning our business, accounts, or finances. It
also contains covenants not to compete which are subject to differing
qualifications upon termination with cause, without cause, non-renewal, and upon
a change of control. If we terminate Mr. Appelbaum's employment without cause,
Mr. Appelbaum is entitled to two (2) full years' severance pay. In the event of
a change in control of Medarex, Mr. Appelbaum has the right to terminate the
agreement on 90 days' written notice to us. In such event, we will pay Mr.
Appelbaum an amount equal to one (1) full year's salary. Mr. Appelbaum has the
right to resign voluntarily upon giving us 90 days' prior notice, in which case
he will be subject to a noncompetition covenant for a period of one (1) year
from the date of termination. If Mr. Appelbaum elects not to renew his
employment for the 2002 calendar year, Mr. Appelbaum will be subject to a non-
competition covenant for a period of one (1) year from the date of termination.
If Mr. Appelbaum elects not to renew his employment beyond the 2002 calendar
year, Mr. Appelbaum will not be subject to a noncompetition covenant.
Christian S. Schade. We have entered into an employment agreement with
Christian S. Schade pursuant to which he is employed as our Senior Vice
President, Treasurer and Chief Financial Officer. Mr. Schade's current annual
salary is $330,000 and may be periodically increased by the Board of Directors.
The agreement expires on October 13, 2003 and is automatically renewed for
successive one (1) year terms unless we or Mr. Schade elect not to renew. If the
agreement is not renewed by us, Mr. Schade is entitled to one (1) year's
severance pay. The agreement contains prohibitions against the disclosure of any
confidential information concerning our business, accounts or finances. It also
contains covenants not to compete which are subject to differing qualifications,
upon termination with cause, without cause, non-
16
renewal, and upon a change of control. If we terminate Mr. Schade's employment
without cause, Mr. Schade is entitled to two (2) full years' severance pay. In
the event of a change of control of Medarex, Mr. Schade has the right to
terminate the agreement on 90 days' prior written notice. In such event, we will
pay Mr. Schade an amount equal to one (1) full year's salary. Mr. Schade has the
right to resign voluntarily upon giving us 90 days' prior written notice, in
which case he will be subject to a noncompetition covenant for a period of one
(1) year from the date of termination. If Mr. Schade elects not to renew his
employment beyond October 13, 2003, or 2004, Mr. Schade will be subject to a
noncompetition covenant for a period of one (1) year following the date of
termination. If Mr. Schade elects not to renew his employment beyond October 13,
2005 or if we elect not to renew his employment beyond October 13, 2003, Mr.
Schade will not subject to a noncompetition covenant.
Dr. Yashwant M. Deo. We have entered into an employment agreement with Dr.
Yashwant M. Deo pursuant to which he is employed as our Senior Vice President -
Operations, Research and Development and Regulatory Compliance. Dr. Deo's
current salary is $345,000 and may be periodically increased by the Board of
Directors. The agreement expires on October 1, 2001 and is automatically
renewed for successive one (1) year terms unless we or Dr. Deo elect not to
renew. If the agreement is not renewed by us, Dr. Deo is entitled to one (1)
year's severance pay, subject to reduction if Dr. Deo finds alternative
employment during that period. The agreement contains prohibitions against
disclosure of any confidential information concerning our business, accounts or
finances. It also contains covenants not to compete which are subject to
differing qualifications, upon termination with cause, without cause, non-
renewal, and upon a change of control. If we terminate Dr. Deo's employment
without cause, Dr. Deo is entitled to one (1) full year's severance pay. In
the event of a change in control of Medarex, Dr. Deo has the right to terminate
the agreement on 90 days' written notice to us. In such event, we will pay Dr.
Deo an amount equal to one (1) full year's salary. Dr. Deo has the right to
resign voluntarily upon giving us 90 days' prior notice, in which case he will
be subject to a noncompetition covenant for a period of one (1) year from the
date of termination. If we or Dr. Deo elect not to renew his employment beyond
October 1, 2001, Dr. Deo will not be subject to a noncompetition covenant.
W. Bradford Middlekauff. We have entered into an employment agreement with
W. Bradford Middlekauff pursuant to which he is employed as our Senior Vice
President, General Counsel and Secretary. Mr. Middlekauff's current annual
salary is $230,000 and may be periodically increased by the Board of Directors.
The agreement expires on October 1, 2002 and is automatically renewed for
successive one (1) year terms unless we or Mr. Middlekauff elect not to renew.
If the agreement is not renewed by us, Mr. Middlekauff is entitled to one (1)
year's severance pay. The agreement contains prohibitions against the disclosure
of any confidential information concerning our business, accounts or finances.
It also contains covenants not to compete which are subject to differing
qualifications, upon termination with cause, without cause, non-renewal, and
upon a change of control. If we terminate Mr. Middlekauff's employment without
cause, Mr. Middlekauff is entitled to two (2) full years' severance pay. In the
event of a change of control of Medarex, Mr. Middlekauff has the right to
terminate the agreement on 90 days' prior written notice. In such event, we will
pay Mr. Middlekauff an amount equal to one (1) full year's salary. Mr.
Middlekauff has the right to resign voluntarily upon giving us 90 days' prior
written notice, in which case he will be subject to a noncompetition covenant
for a period of one (1) year from the date of termination. If Mr. Middlekauff
elects not to renew his employment beyond October 1, 2002, or 2003, Mr.
Middlekauff will be subject to a noncompetition covenant for a period of one (1)
year from the date of termination. If Mr. Middlekauff elects not to renew his
employment beyond October 1, 2004, or if we elect not to renew his employment
beyond October 1, 2002, Mr. Middlekauff will not be subject to a non-
competition covenant.
17
Dr. Michael W. Fanger. We have entered into a consulting agreement with
Dr. Michael W. Fanger, one of our scientific founders, pursuant to which Dr.
Fanger has agreed to perform certain consulting services for us. Under the
terms of this agreement, Dr. Fanger will receive $3,333 per month during the
term of the agreement. The term of this agreement expires in July of each
calendar year, and is automatically extended indefinitely for additional one (1)
year terms unless notice is given by either party of its election not to so
extend the agreement.
Dr. Julius A. Vida. We maintain a consulting agreement with Dr. Julius A.
Vida pursuant to which Dr. Vida has agreed to perform certain consulting
services relating to the development of corporate partnerships and licensing
programs. Under the terms of this agreement, Dr. Vida will receive $1,600 per
month plus $1,600 per day for each day of service in excess of 12 days per
calendar year. Dr. Vida will also be reimbursed for all reasonable out-of-
pocket expenses incurred in connection with services provided at our request.
The agreement will be automatically renewed for so long as Dr. Vida remains a
member of our Board of Directors.
Irwin Lerner. We maintain a consulting agreement with Irwin Lerner,
pursuant to which Mr. Lerner has agreed to perform certain consulting services
relating to strategic planning and the development of corporate partnerships.
Under the terms of this agreement, Mr. Lerner will receive $4,167 per month
during the term of the agreement. Mr. Lerner will also be reimbursed for all
reasonable out-of-pocket expenses incurred in connection with services provided
at our request. The agreement will be automatically renewed for so long as Mr.
Lerner remains a member of our Board of Directors.
Dr. W. Leigh Thompson, Jr. We maintain a consulting agreement with Dr. W.
Leigh Thompson, Jr., pursuant to which Dr. Thompson has agreed to perform
certain consulting services relating to strategic planning and the development
of corporate partnerships. Under the terms of this agreement, Dr. Thompson will
receive $1,200 per month during the term of the agreement. Dr. Thompson will
also be reimbursed for all reasonable out-of-pocket expenses incurred in
connection with services provided at our request. The agreement will be
automatically renewed for so long as Dr. Thompson remains a member of our Board
of Directors.
Mr. Charles R. Schaller. We maintain an arrangement with Charles R.
Schaller pursuant to which Mr. Schaller provides business and strategic planning
services. It is not anticipated that he will receive more than $2,000 per month
in connection with this arrangement. Mr. Schaller will also be reimbursed for
all reasonable out-of-pocket expenses incurred in connection with services
provided at our request.
We require our employees to execute confidentiality and nondisclosure
agreements upon the commencement of employment with us. The agreements provide
that all inventions or discoveries by the employee related to our business and
all confidential information developed or made known to the employee during the
term of employment shall be our exclusive property and shall not be disclosed to
third parties without our prior approval. As indicated above, however, public
policy limitations and the difficulty of obtaining injunctive relief may impair
our ability to enforce the non-competition and nondisclosure covenants made by
our employees.
18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We own approximately 33% of the outstanding share capital of Genmab A/S, a
Danish biotechnology company, which we acquired in exchange for certain rights
to our human antibody technology; rights to partner this technology for European
genomics alliances; access to our clinical trial manufacturing facilities; and a
cash investment of $18,000,000.
Until August 1, 2000, Genmab's President and Chief Executive Officer, Dr.
Lisa N. Drakeman, was our Senior Vice President - Head of Business Development.
Dr. Lisa N. Drakeman currently has a consulting agreement with us. Under the
terms of such consulting agreement, Dr. Lisa N. Drakeman will provide us with up
to two days per month of consulting services. As compensation for her services
under this consulting agreement, Dr. Lisa N. Drakeman was granted a stock option
to purchase 10,000 shares of our common stock at an exercise price equal to the
market price of our common stock as of the date of grant. Dr. Lisa N. Drakeman
owns 30,000 shares of our common stock and is custodian, on behalf of one of her
children, of a further 15,536 shares of our common stock. Additionally, one of
Dr. Lisa M. Drakeman's adult children living in the same household owns 15,536
shares of our common stock. In addition, Dr. Lisa N. Drakeman has fully vested
options to purchase an additional 278,000 shares of our common stock at an
average weighted exercise price of $6.55 per share. Dr. Lisa N. Drakeman
beneficially owns approximately 1.3% of Genmab's outstanding share capital. Dr.
Lisa N. Drakeman is married to our President and Chief Executive Officer, Dr.
Donald L. Drakeman.
We maintain a wholly owned subsidiary, Medarex Europe B.V., that is located
at Utrecht University, The Netherlands. Medarex Europe is principally engaged
in research and development activities relating to our human antibody technology
and/or bispecific antibodies and monoclonal antibody technologies. Medarex
Europe's personnel currently share some facilities and equipment with Genmab.
Medarex Europe has provided and may continue to provide certain research and
development services to Genmab on a contract basis. During the year ended
December 31, 2000, we received $61,940 as payment from Genmab for these
services.
In addition, during the year ended December 31, 2000, we received payments
from Genmab for manufacturing services and reimbursement of administrative
expenses of $1,210,360.
Mr. Irwin Lerner, the Chairman of our board of directors, and a director of
Medarex Europe, is also a director of Genmab. In connection with his position
on the board of directors of Genmab, Mr. Lerner has been awarded options to
purchase 50,000 shares of Genmab's capital stock at an exercise price of 59.7
Danish Kroner (DKK).
Mr. Ernst Schweizer, President of Medarex Europe, is also a director of
Genmab. In connection with his position on the board of directors of Genmab,
Mr. Schweizer has been awarded options to purchase 55,000 shares of Genmab's
capital stock at an average weighted exercise price of DKK 56.75.
We have entered into a collaboration with Eos Biotechnology, Inc., to
develop and commercialize genomics-derived, antibody-based therapeutic products.
We also have an agreement with Eos to generate fully human monoclonal antibodies
to several target antigens. Pursuant to the genomics collaboration, in May
2000, we paid Eos $5 million and deposited an additional $20 million in a third
party escrow account
19
to be released over time to Eos upon its achievement of certain milestones. Eos
will also receive up to $75 million in value as credits against certain license
fees, milestone payments and royalties that they may otherwise have owed to us
under our human antibody agreement. In addition, in September 2000, we
purchased shares of preferred stock of Eos for an aggregate purchase price of
$2.5 million as part of a $27.5 million private offering. Dr. Frederick B.
Craves, a member of our board of directors, is also a member of the board of
directors of Eos. BCC Acquisition I LLC beneficially owns approximately 7 % of
our common stock and is an affiliate of The Bay City Capital Fund I, L.P, which,
along with related entities, own approximately 15% of the capital stock of Eos
on a fully diluted basis. Dr. Craves is a principal of Bay City Capital LLC, an
affiliate of The Bay City Capital Fund I, L.P., which is one of the members of
BCC Acquisition I, LLC.
In July 2000, we entered into a Unit Purchase Agreement and an Amended and
Restated Technology Access Agreement with IDM, S.A., a French biotechnology
company, whereby we licensed to IDM certain of our technologies in exchange for
equity units in IDM. As a result of this transaction, we recorded a gain from
the transfer of the technology of approximately $40.5 million (based on an
independent valuation). In October 2000, we made an additional equity investment
in IDM of approximately $5.2 million which was part of a $41.5 million private
placement which brought our equity position in IDM to approximately 6%. In the
event that we exercise certain warrants held by us to purchase convertible or
redeemable bonds of IDM and such bonds are converted or redeemed, our equity
position in IDM would be approximately 29%. These warrants are exercisable
between September 2002 and September 2010, and such bonds may be converted or
redeemed within six months of such exercise. As part of this transaction, we
waived our existing rights to acquire the commercialization rights in North
America to certain of IDM's technology in targeted immunotherapy. We have also
entered into a separate collaboration with IDM involving the use of our human
antibody technology for the generation of fully human antibodies. Under the
terms of this collaboration, we could receive research payments, license fees,
milestone payments and royalties. During 2000, we received contract and license
revenues of approximately $5.90 million from IDM. Dr. Donald L. Drakeman, our
President and Chief Executive Officer and a member of our board of directors, is
also a member of the board of directors of IDM.
In September 2000, we entered into a binding memorandum of understanding
with Oxford GlycoSciences plc to develop novel therapeutics produced through the
joint application of our fully human monoclonal antibody technology and Oxford
GlycoSciences proprietary proteomics technology for high-throughput protein
analysis and target validation. As part of this agreement, we made a $5 million
equity investment in Oxford GlycoSciences and immediately sold one-half of this
equity interest to Genmab for $2.5 million. Dr. Donald L. Drakeman, our
President and Chief Executive Officer and a member of our board of directors, is
also a member of the board of directors of Oxford GlycoSciences.
20
STOCK PRICE PERFORMANCE GRAPH
The graph and table below compare the cumulative total stockholder return
(stock price appreciation plus reinvested dividends, if any) on an annual basis
for our Common Stock against the cumulative total returns on the Nasdaq Stock
Market Index (U.S.) and a peer group we selected for the period from December
31, 1995 through December 31, 2000. The peer group consists of the following
biotechnology companies: Abgenix, Inc.; Imclone Systems, Inc.; Protein Design
Labs, Inc.; Xoma Corporation; Cytogen Corporation; Idec Pharmaceuticals
Corporation; Immunogen, Inc.; Cantab Pharmaceuticals plc; NeoRx Corporation; and
Immunomedics, Inc. The relevant information with respect to the peer group was
furnished by Research Data Group.
[STOCK PRICE PERFORMANCE GRAPH APPEARS HERE]
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Medarex, Inc. $ 100 $ 98.25 $ 73.68 $ 42.54 $ 522.81 $1,143.86
Peer Group $ 100 $ 122.31 $ 120.20 $ 108.14 $ 423.42 $ 858.55
Nasdaq Stock Market Index (U.S.) $ 100 $ 123.04 $ 150.69 $ 212.51 $ 394.94 $ 237.68
The above graph and table assume $100 invested on December 31, 1995, with
all dividends reinvested, in each of our Common Stock, the peer group and the
Nasdaq Stock Market Index (U.S.).
21
MEDAREX STOCK OWNED BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of March 30, 2001, the number of shares
and percentage of our Common Stock held by (i) each person who owns of record or
who is known by us to "beneficially own" more than 5% of our Common Stock, (ii)
each of our executive officers, directors and nominees and (iii) all of our
officers and directors as a group. As of March 30, 2001, we had 72,677,416
shares of Common Stock outstanding.
"Beneficial ownership" is broadly defined by the SEC to mean more than
ownership in the usual sense. So, for example, a person "beneficially" owns our
Common Stock not only if he or she holds it directly, but also if he or she
indirectly (through a relationship, a position as a director or trustee, or a
contract or understanding), has (or shares) the power to vote the stock, or to
sell it, or if he or she has the right to acquire it within 60 days.
Amount and Nature of Beneficial
Officers, Directors and Principal Stockholders Ownership/(1)/ Percent Owned
----------------------------------------------- ------------------------------ -------------
Janus Capital Corporation 8,218,575 11.3%
100 Fillmore Street
Denver, CO 80206
FMR Corp. 7,322,520 10.0%
82 Devonshire Street
Boston, MA
BCC Acquisition I LLC 5,253,346 7.2%
c/o Bay City Capital
750 Battery Street, Suite 600
San Francisco, CA 94111
Dr. Donald L. Drakeman /(2)/ 1,790,256 2.4%
Dr. Michael W. Fanger /(3)/ 941,232 1.3%
Christian S. Schade /(4)/ 339,000 *
Michael A. Appelbaum /(5)/ 123,164 *
Charles R. Schaller /(6)/ 306,272 *
Dr. Yashwant M. Deo /(7)/ 459,800 *
Dr. Frederick B. Craves /(8)/ 201,598 *
Dr. Nils Lonberg /(9)/ 361,106 *
Irwin Lerner /(10)/ 334,000 *
Dr. Julius A. Vida /(11)/ 153,020 *
Dr. Ronald J. Saldarini - *
Dr. W. Leigh Thompson, Jr. /(12)/ 134,000 *
W. Bradford Middlekauff /(13)/ 130,000 *
All officers and directors as a group (13 persons)/(14)/ 5,273,448 7.0%
_______________________
(1) The persons named in the table above have sole voting and investment power
with respect to all shares of our Common Stock shown as beneficially owned
by them subject to community property laws where applicable and the
information contained in this table and these notes.
(2) Includes 30,000 held by Dr. Donald L. Drakeman's wife, Dr. Lisa N. Drakeman,
278,000 shares issuable pursuant to immediately exercisable options held by
Dr. Lisa N. Drakeman, 15,536 shares held by Cynthia Drakeman, Dr. Donald L.
Drakeman's adult daughter living in the same household, and 15,536 shares
held in trust for the benefit of Amy Drakeman, Dr. Drakeman's minor
daughter. Dr. Lisa N. Drakeman is the trustee of such trust. Also includes
630,000 shares issuable pursuant to immediately exercisable options and
782,134 phantom stock units.
22
(3) Includes 106,000 shares issuable pursuant to immediately exercisable options
and 161,000 shares held by Dr. Fanger's wife. Also includes 205,824 phantom
stock units.
(4) Includes 9,000 shares of restricted stock and 330,000 shares issuable
pursuant to immediately exercisable options.
(5) Includes 52,846 shares issuable pursuant to immediately exercisable options
and 41,164 phantom stock units.
(6) Includes 246,000 shares issuable pursuant to immediately exercisable options
and 28,422 phantom stock units.
(7) Represents 459,800 shares issuable pursuant to immediately exercisable
options.
(8) Includes 77,598 shares held by BCC Acquisition I LLC. Dr. Craves disclaims
beneficial ownership of such shares. Includes 124,000 shares issuable
pursuant to immediately exercisable options.
(9) Includes 304,000 shares issuable pursuant to immediately exercisable
options.
(10) Includes 304,000 shares issuable pursuant to immediately exercisable
options.
(11) Includes 37,000 shares issuable pursuant to immediately exercisable
options. Also includes 2,330 shares held by Dr. Vida's wife.
(12) Represents 134,000 shares issuable pursuant to immediately exercisable
options.
(13) Represents 130,000 shares issuable pursuant to immediately exercisable
options.
(14) Includes 2,815,646 shares issuable pursuant to immediately exercisable
options and warrants and 1,057,544 phantom stock units.
* Less than 1%.
SECTION 16(a) REPORTING
Under the securities laws of the United States, our directors, our
executive officers (and certain other officers), and any persons holding ten
percent (10%) or more of our Common Stock are required to report their ownership
of our Common Stock and any changes in that ownership to the SEC. Specific due
dates for these reports have been established and we are required to report in
this Proxy Statement any failure to file by these dates during 2000. All of
these filing requirements were satisfied by our directors and executive officers
during 2000.
PROPOSAL 3 - APPROVAL OF THE 2001 STOCK OPTION PLAN
The Board has unanimously approved the 2001 Stock Option Plan and has
directed that it be submitted for the approval of the shareholders at the Annual
Meeting. The 2001 Stock Option Plan will become effective on the date of
shareholder approval (the "Effective Date").
The following description of the 2001 Stock Option Plan is only a summary
of the important provisions of the 2001 Stock Option Plan and does not contain
all of the terms and conditions of the 2001 Stock Option Plan. You can obtain a
copy of the full text of the 2001 Stock Option Plan, without charge, upon
request to our corporate Secretary.
What Is the Purpose of the 2001 Stock Option Plan?
The purpose of the 2001 Stock Option Plan is to help us hire and keep
directors, consultants, officers and other employees of outstanding ability and
to motivate employees to exert their best efforts on our behalf. In addition,
we expect to benefit from the added interest which the optionees will have in
our welfare as a result of their ownership or increased ownership of our Common
Stock.
23
What Types of Options and Awards Can be Granted Under the 2001 Stock Option
Plan?
Options and other awards authorized under the 2001 Stock Option Plan
include:
. incentive stock options ("ISOs") which are intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code");
. stock options which are "non-qualified" for federal income tax purposes
("NQOs"), to which the provisions of the Code pertaining to ISOs do not
apply;
. restricted stock awards, which are awards of stock that are subject to
forfeiture in the event of premature termination of employment, our failure
to meet certain performance objectives, or other conditions;
. stock appreciation rights ("SARs"), which enable a recipient to profit
immediately from the difference between the exercise price of an option and
the fair market value of the stock;
. deferred stock awards, which are awards of stock that are not distributed
to the participant until after a specified deferral period;
. and other stock-based awards permitted under the 2001 Stock Option Plan
(including, but not limited to, performance shares and convertible
debentures).
Each award described above is sometimes referred to in this Proxy Statement
as an "Award", and all such awards are sometime collectively referred to in this
Proxy Statement as "Awards".
The 2001 Stock Option Plan is not subject to any provisions of the Employee
Retirement Income Security Act of 1974, as amended.
How Will the 2001 Stock Option Plan Be Administered?
. The 2001 Stock Option Plan will be administered by the Stock Option
Committee, which shall consist of at least two (2) directors, appointed by
the Board, who are "Non-Employee Directors" as defined by the SEC under
Rule 16b-3.
. The term of office of the Stock Option Committee members will be as fixed
from time to time by the Board of Directors. The Board may from time to
time remove members from the Stock Option Committee, with or without cause,
or add members to the Stock Option Committee. Vacancies in the Stock
Option Committee, however caused, will be filled by the Board.
. Subject to the express terms and conditions of the 2001 Stock Option
Plan, the Stock Option Committee will have full power to make Awards, to
construe or interpret the 2001 Stock Option Plan, to prescribe, amend and
rescind rules and regulations relating to it and to make all other
determinations necessary or advisable for its administration. Except as
otherwise provided in the 2001 Stock Option Plan, the Stock Option
Committee may also determine which persons shall be granted Awards, the
nature of the Awards granted, the number of shares subject to Awards and
the time at which Awards shall be made. Such determinations will be final
and binding.
24
How Much Stock Will Be Available Under the 2001 Stock Option Plan?
. The only class of stock subject to an Award is Common Stock. The maximum
number of shares of Common Stock with respect to which Awards may be
granted is 3,500,000 shares, however, this number is subject to adjustment
in the event of a recapitalization, reorganization or similar event.
. The maximum number of shares of Common Stock with respect to which Awards
may be granted to any participant in any year under the 2001 Stock Option
Plan is 400,000 shares.
. Shares may consist, in whole or in part, of authorized and unissued shares
or treasury shares, except that treasury shares must be used in the case of
Awards of restricted stock. Any shares represented by Awards which are
cancelled, forfeited, terminated or expire unexercised will again be
available for grants and issuance under the 2001 Stock Option Plan.
Who Is Eligible to Participate in the 2001 Stock Option Plan?
. Persons eligible for Awards under the 2001 Stock Option Plan will be
limited to directors, consultants, officers and other employees of Medarex
and our subsidiaries who are responsible for the management, growth,
profitability and protection of the business of Medarex and our
subsidiaries ("Eligible Persons").
. The Stock Option Committee will select who will receive Awards and the
amount and nature of such Awards.
What Happens If the Number of Outstanding Shares Changes Because of a Merger,
Consolidation, Recapitalization or Reorganization?
. In the event that our outstanding shares of Common Stock are increased,
decreased or changed or converted into other securities by reason of
merger, reorganization, consolidation, recapitalization, stock dividend,
extraordinary cash dividend or other change in our corporate structure
affecting the stock, the number of shares that may be delivered under the
2001 Stock Option Plan and the number and/or the option price of shares
subject to outstanding options and any other Awards under the 2001 Stock
Option Plan may be adjusted in the sole discretion of the Stock Option
Committee to the extent that the Stock Option Committee determines to be
appropriate, provided, however, that the number of shares subject to any
Awards will always be a whole number, and provided further that, in the
case of ISOs, no such adjustment will be authorized to the extent that it
would constitute a "modification" as defined in Section 424(h)(3) of the
Code or would cause the 2001 Stock Option Plan to violate Section 422(b)(1)
of the Code or any successor provision thereto.
. The adjusted option price will also be used to determine the amount payable
to us upon the exercise of any SAR associated with any option.
25
When Will the 2001 Stock Option Plan Terminate?
The 2001 Stock Option Plan will expire on May 23, 2011, but the Board of
Directors may terminate the 2001 Stock Option Plan at any time prior to that
date and Awards granted prior to such termination may extend beyond such date.
Termination of the 2001 Stock Option Plan will not alter or impair, without the
consent of the optionee or grantee, any of the rights or obligations of any
Award made under the 2001 Stock Option Plan.
What Changes Can the Board Make to the 2001 Stock Option Plan?
The Board may from time to time alter, amend, suspend or discontinue the
2001 Stock Option Plan; however, no such action of the Board may alter the
provisions of the 2001 Stock Option Plan so as to alter any outstanding Awards
to the detriment of the optionee or participant without such participant's
consent, and no amendment to the 2001 Stock Option Plan may be made without
stockholder approval if such amendment would materially increase the benefits
to participants in the 2001 Stock Option Plan, materially increase the number of
shares issuable under the 2001 Stock Option Plan, reduce below 100% (110% in the
case of a 10% Owner) of the fair market value on the date of grant the price per
share of which any option may be granted, extend the terms of the 2001 Stock
Option Plan or the period during which options may be granted or exercised or
materially modify requirements as to eligibility to participate in the 2001
Stock Option Plan.
What Are the Important Provisions of the Plan With Respect to Each Type of
Award?
A. Options
-------
Option Price. The Stock Option Committee shall determine the option price
of all NQOs and all ISOs; provided however, that the option price shall not be
less than 100% of the fair market value of the Common Stock on the date the
option is granted and, provided further, that in the case of a participant who
owns more than 10% of our issued and outstanding stock on the date of grant, the
option price of an ISO shall be at least 110% of the fair market value of the
Common Stock on the date the option is granted. The aggregate fair market value
of the Common Stock with respect to which an ISO is exercisable for the first
time by an optionee during any calendar year shall not exceed $100,000.
Option Term. The Stock Option Committee shall determine the expiration
date of each Option; provided, however, that no ISO shall be exercisable after
the expiration of ten (10) years and (1) one day from the date the option was
granted, and, provided further, that ISOs granted to employees who are 10%
owners on the date of grant shall expire no later than five (5) years from the
date of grant. Options may terminate earlier as provided elsewhere herein.
Exercisability of Options. The Stock Option Committee shall determine when
Options are exercisable, in whole or in part, provided however, that, except as
provided in the 2001 Stock Option Plan, or unless otherwise determined by the
Stock Option Committee at or subsequent to the date of grant, Options will not
be exercisable until the first anniversary date of the granting of the Option.
Options granted under the 2001 Stock Option Plan are subject to provisions
regarding acceleration of exercise in the event of a Change of Control (as
defined in the 2001 Stock Option Plan), including exercise by officers,
directors and 10% Owners, and termination of employment due to retirement,
death, disability, termination without cause and voluntary termination with our
consent.
26
Method of Exercise. Options may be exercised, in whole or in part, by
giving us written notice of exercise specifying the optionee's election to
purchase shares subject to the options. Upon exercise of Options and payment of
the exercise price, we will issue shares out of the amount so authorized under
the 2001 Stock Option Plan. The exercise price of an Option shall be paid for
in full (i) with cash (either by certified or bank check), or (ii) at the sole
discretion of the Stock Option Committee, in the equivalent fair market value of
shares of unrestricted Common Stock already owned by the optionee, properly
endorsed, or (iii) in the case of NQOs and at the sole discretion of the Stock
Option Committee, in the equivalent fair market value of restricted Common Stock
already owned by the optionee, or deferred stock subject to an Award under our
Plans. The Stock Option Committee may require any person entitled to receive
payment in respect of an Award to remit to us, prior to such payment, an amount
sufficient to satisfy any federal, state or local tax withholding requirements.
Unless the Stock Option Committee determines otherwise at the time of
grant, during the 60-day period after a Change of Control, and only with respect
to Options that are unaccompanied by an SAR, each optionee (other than (i) a
member of the Stock Option Committee or (ii) an optionee who initiated a Change
of Control in a capacity other than as one of our officers or directors) shall
have the right to elect, by giving us written notice, to surrender all or part
of the Option to us and to receive in cash (in lieu of exercising the Option) an
amount equal to the amount by which the fair market value per share of the
Common Stock on the date of exercise exceeds the exercise price per share under
the Option multiplied by the number of shares of Common Stock granted under the
Option as to which such right is exercised.
However, any officer, director or 10% Owner of our capital stock
(collectively, an "Insider") may only settle such right pursuant to an
irrevocable election to settle the right no earlier than six (6) months after
the date of such election, provided that the change of control transaction was
approved by our shareholders (excluding Insider shareholders).
The fair market value of the Common Stock attributable to any such right
associated with an ISO is calculated on the same basis of determining the fair
market value on the date of exercise of the ISO. The fair market value of the
Common Stock attributable to any such right associated with an NQO is the higher
of (i) the highest reported sale price of our Common Stock on the Nasdaq
National Market for the 60-day period preceding the Change of Control and (ii)
the highest per share price paid in any Change of Control transaction.
Restrictions on Transferability. The Stock Option Committee, in its
absolute discretion, may impose such restrictions on the transferability of the
Options granted under the 2001 Stock Option Plan as it deems appropriate. Any
such restrictions shall be set forth in the Stock Option Agreement with respect
to such Options and may be referred to on the certificates evidencing shares
issued pursuant to an Award. ISOs may not be transferred by an optionee other
than by will or by laws of descent and distribution.
Effect of Termination of Employment, Death, Retirement or Permanent
Disability. Except as hereinafter provided, every Option granted pursuant to the
2001 Stock Option Plan shall terminate on the earlier to occur of (i) the fixed
expiration date set forth in the Option Agreement; and (ii) (a) if an employee
ceases to be employed by us by reason of retirement or permanent disability,
then three (3) years after such cessation of employment, to the extent that the
employee was entitled to exercise it on the date of his cessation of employment,
or (b) if an employee dies while employed by us or within three (3) years of his
termination of employment by reason of retirement or permanent disability, then
by his legal representative at any time within fifteen (15) months after his
death in the event the optionee died while employed by us or within twelve (12)
months of his death in the event the optionee died after retirement or permanent
27
disability. After the date of such termination, such Option exercises may only
be made for the full number of shares subject to the Option.
If an optionee's relationship or employment by us terminates for any reason
other than death, permanent disability or retirement, every Option granted to
the optionee pursuant to the 2001 Stock Option Plan shall thereupon terminate;
provided, however, that if such employment is terminated by our action (other
than for reason of willful violation by the optionee of our rules), or by
voluntary resignation of the optionee, in either case within eighteen (18)
months following a Change of Control, Options held by such optionee may be
exercised in full until the earlier of their expiration in accordance with their
terms and six (6) months and one (1) day from such termination.
If an optionee's employment is terminated for any reason other than the
foregoing, the Option shall thereupon terminate. Transfers of employees among
our affiliates and authorized leaves of absence are not deemed terminations of
employment.
If an optionee holding ISOs does not exercise the Option within three (3)
months after termination of such optionee's employment (one (1) year if such
optionee's employment was terminated due to disability) the Option shall cease
to be an ISO and shall be treated as an NQO for federal income tax purposes. In
the event that an optionee's employment is terminated by reason of such
optionee's death any ISOs shall continue to be treated as ISOs regardless of
when they are exercised.
Option Buyout. The Stock Option Committee may at any time offer to
repurchase an Option, based on such terms and conditions as the Stock Option
Committee shall establish at the time of such offer.
B. Stock Appreciation Rights
-------------------------
Grant and Exercise. SARs enable a recipient to profit immediately from the
disparity between the exercise price of the option and the fair market value of
the stock. SARs may be granted as part of an Award (i) in the case of an NQO,
at the time of the grant or thereafter, and (ii) in the case of an ISO, at the
time of the grant only. SARs generally terminate upon the exercise of the
related option and, unless exercised in connection with the death or permanent
disability of the participant, are subject to the exercise conditions imposed on
Insiders by Section 16 of the Exchange Act. SARs granted in connection with ISOs
may be exercised only when the market price of the stock subject to the ISO
exceeds the option price of the ISO.
Method of Exercise. Upon exercise of the SAR, the optionee shall receive
in cash or stock, as determined by the Stock Option Committee, the difference
between the fair market value of the stock at the time of exercise and the
exercise price of the option, multiplied by the number of shares in respect of
which the SAR has been exercised. However, for sixty (60) days following a
Change of Control, an SAR unaccompanied by an ISO shall be valued at the higher
of (a) the highest reported sales price on the Nasdaq National Market (or on
such other exchange as our stock may then be listed) and (b) the highest price
paid per share of our stock in such Change of Control transaction.
28
C. Restricted Stock, Deferred Stock And Other Stock Based Awards
-------------------------------------------------------------
Grant. The Stock Option Committee may, in its discretion, award to a
recipient either restricted stock, deferred stock or other stock based awards
(collectively the "Stock Awards"). The Stock Awards will be evidenced by an
agreement and provide that the stock subject to the Stock Award is not
transferable for a specified period, or, in the case of an Award of deferred
stock, not issuable for a specified period. In the case of a deferred stock
Award, the Stock Option Committee may require a minimum payment at the end of
the restrictive period or completion of a specified performance period and, in
the event of a Change of Control, Stock Awards will be immediately issued to the
recipient. Each recipient of a Stock Award will be a stockholder and have all
the rights of a stockholder with respect to such shares, including the right to
vote and receive all dividends or other distributions made or paid with respect
to such shares. Subject to the provisions of the 2001 Stock Option Plan and
each agreement, each recipient of the Stock Award will be entitled to receive
currently or on a deferred basis, interest or dividends, or equivalents thereof,
with respect to such Award and the Stock Option Committee may provide that such
amounts shall be deemed to be reinvested in additional stock or otherwise
reinvested. Any stock based Award shall be issued for no cash consideration and
any underlying securities of such Award shall be priced at no less than 50% of
the fair market value of the stock on the date of grant.
If the recipient of a Stock Award ceases to be an employee for any reason,
then the Stock Award is subject to forfeiture, except as provided in the
particular agreement and except as such forfeiture may be waived by the Stock
Option Committee when it, in its discretion, determines that such waiver is in
our best interests.
In the event of a participant's retirement, permanent disability or death,
or in cases of special circumstances, the Stock Option Committee may waive any
or all of the remaining restrictions and limitations imposed under the 2001
Stock Option Plan with respect to any Stock Awards.
Restrictions on Transferability. Shares of restricted stock and deferred
stock Awards may not be sold, exchanged, transferred, pledged, hypothecated, or
otherwise disposed of until such time as the stated restrictions, or deferral
period, as the case may be, lapse. The Stock Option Committee, in its absolute
discretion, may impose such restrictions on the transferability of the Stock
Awards granted this 2001 Stock Option Plan as it deems appropriate. Any such
restrictions shall be set forth in the Stock Option Agreement with respect to
such Stock Awards and may be referred to on the certificates evidencing shares
issued pursuant to any such Stock Award. Shares of restricted stock will be
evidenced by a certificate that bears a restrictive legend.
What are the Federal Income Tax Consequences of the 2001 Stock Option Plan?
The following discussion is a summary of the Federal income tax
consequences to recipients of Awards and to us with respect to Awards granted
under the 2001 Stock Option Plan. The 2001 Stock Option Plan is not qualified
under Section 401(a) of the Code.
Incentive Stock Options (ISOs). No income is generally recognized by an
optionee when an ISO is granted or exercised. If the stock obtained upon
exercise of an ISO is sold more than one (1) year after exercise and two (2)
years after grant, the difference between the option price and the amount
realized on the sale will be treated as long-term capital gain, which presently
is subject to tax at a maximum rate of 20%. We are not entitled to a deduction
as a result of the grant or exercise of an ISO or the sale of the stock acquired
upon exercise thereof if the stock is held by the optionee for the requisite
periods.
29
If, however, the stock acquired upon exercise of an ISO is sold less than
one (1) year after exercise or less than two (2) years after grant, the lesser
of (i) the difference between the fair market value on the date of exercise and
the option price or (ii) the difference between the amount realized on the sale
and the option price will be treated as ordinary income, which presently is
subject to tax at a maximum rate of 39.6%, and we will be entitled to a
corresponding deduction. The excess of the amount realized on the sale over the
fair market value on the date of exercise, if any, will be treated as long-term
or short-term capital gain, depending on the length of time the stock is held.
The excess of the fair market value of the stock over the option price on
the date of exercise of an ISO will constitute an adjustment for alternative
minimum tax purposes which may result in the optionee being subject to the
alternative minimum tax.
Nonqualified Stock Options (NQOs). No income is recognized by an optionee
when an NQO is granted. Except as described below, upon exercise of an NQO an
optionee is treated as having received ordinary income at the time of exercise
in the amount equal to the difference between the option price paid and the then
fair market value of the Common Stock acquired. We will be required to withhold
tax thereon and will be entitled to a deduction at the same time and in an
amount corresponding to such difference. The optionee's basis in the Common
Stock acquired upon exercise of an NQO will be equal to the option price plus
the amount of ordinary income recognized, and any gain or loss thereafter
recognized upon disposition of the Common Stock is generally treated as capital
gain or loss.
$100,000 Exercise Limitation for ISOs. If the aggregate fair market value
of stock (determined at the date of grant) with respect to which ISOs granted
after December 31, 1986 become exercisable, whether by passing of an anniversary
date, acceleration or otherwise, during any one (1) calendar year exceeds
$100,000, the excess will be treated for tax purposes as NQOs, with options
being taken into account therefor in the order of grant.
Payment with Common Stock. The 2001 Stock Option Plan allows an optionee
to deliver Common Stock he already owns in payment of the option price. For any
shares of Common Stock so exchanged, an amount equal to the fair market value
thereof on the date tendered will be credited against the option price. In
general, an optionee will not recognize gain with respect to any shares
delivered to us in exchange for new shares acquired in the exercise of an
Option.
In the event Common Stock is used to pay the option price for an NQO, gain
or loss will not be recognized in connection with such exchange to the extent
that the number of shares of stock received on exercise does not exceed the
number of shares of stock surrendered. The optionee's basis in the new shares
will be equal to the basis of the stock surrendered and the holding period
thereof will include the holding period of the shares exchanged. The fair
market value of any additional shares received upon exercise of an NQO in
exchange for stock (less any cash or other property paid in connection with the
exercise), will constitute compensation to the optionee taxable as ordinary
income. The optionee's basis in these additional shares will be equal to the
amount of compensation included in income plus any cash or value of other
property paid upon exercise, and the holding period therefor will begin on the
date of the exchange.
In the event Common Stock is used to pay the option price for an ISO, gain
or loss normally will not be recognized in connection with such exchange. To
the extent that the number of shares of stock received on exercise does not
exceed the number of shares surrendered, proposed Treasury Regulations provide
that the optionee's basis in these shares will be equal to the basis of the
stock surrendered and, except as provided below, has the same holding period as
the stock surrendered. To the extent the
30
optionee receives a number of shares in excess of the number of shares
surrendered, the optionee's basis in such additional shares will be zero (plus
any gain recognized and any cash paid in connection with the exercise) and the
holding period for such additional shares will begin on the date of such
exchange.
If Common Stock acquired upon the exercise of an ISO is delivered in
payment of the option price upon the exercise of a second ISO before the stock
was held for the requisite holding period, then the stock so delivered will not
be eligible for tax-free treatment in the exchange, but instead the optionee
generally will be required to recognize ordinary income at the time such stock
is delivered as described above under "Incentive Stock Options."
There are special complex rules relating to the allocation of basis and the
holding period of ISO stock acquired by payment with previously held Common
Stock. For example, the disposition of such shares prior to the end of the
required holding period may result in a greater portion of the proceeds of
disposition being treated as ordinary compensation income than might otherwise
be expected.
Stock Appreciation Rights (SARs). No tax is imposed on an optionee
pursuant to a grant of an SAR. Upon exercise of an SAR, the optionee will
recognize ordinary income equal to the amount of cash he receives, and we will
be entitled to a compensation deduction. SAR payments are wages subject to
withholding at the regular withholding rates applicable to the optionee's salary
income. For a salaried optionee, the amount received upon settlement of an SAR
is a "supplemental wage payment" subject to a flat 28% withholding obligation.
Temporary and Proposed Treasury Regulations provide that an alternative
right to receive a taxable cash payment for the cancellation or surrender of an
ISO does not disqualify the Option as an ISO if the exercise of the right has
the same economic and tax consequences as the exercise of the Option followed by
the immediate sale of the underlying shares. Accordingly, the grant of an SAR
linked to an ISO under the 2001 Stock Option Plan will not cause the ISO to lose
its preferential tax treatment because the SAR will result in the same economic
and income tax consequences to the optionee as if the optionee had exercised the
ISO and sold the stock received upon exercising the ISO.
Restricted Stock. Restricted Stock awarded to an employee may be subject
to any number of restrictions (including deferred vesting, limitations on
transfer, and forfeitability) imposed by the Stock Option Committee. In
general, the receipt of Restricted Stock will not result in the recognition of
income by an employee until such time as the shares are either not forfeitable
or are freely transferable. Upon the lapse of such restrictions, the employee
will be required to include as ordinary income the difference between the amount
paid for the Restricted Stock, if any, and the fair market value of such stock
on the date the restrictions lapse, and we will be entitled to a corresponding
deduction. In addition, any dividends paid with respect to the Restricted Stock
prior to the lapse of the restrictions will be treated as compensation income by
the employee and will be deductible by us. Employees receiving Restricted Stock
Awards may elect to include the value of such stock (less any amounts paid for
such stock) as ordinary income at the time the Award is made. Employees making
this election would treat any gain or loss realized on a sale of the Restricted
Stock as capital gain or loss, but would not be entitled to any loss deduction
if they forfeited the Restricted Stock pursuant to the restrictions imposed by
the Stock Option Committee.
31
Deferred Stock. Deferred Stock awarded to an employee will not be
delivered to the employee until after a specified period of time (the "Deferral
Period"). Upon delivery of the shares after the Deferral Period, the employee
may be required to make a minimum payment for the shares and/or the shares may
be subject to restrictions similar to those imposed on Restricted Stock Awards.
In general, an employee will be required to include the Deferred Stock Award as
compensation income (and we will receive a deduction) at the earliest time such
shares have been delivered and are freely transferable or are no longer subject
to a substantial risk of forfeiture. The amount of compensation income (and our
deduction) will be the difference between the amount paid for the Deferred
Stock, if any, and the fair market value of the Deferred Stock at the time such
restrictions lapse. Any dividends paid with respect to the Deferred Stock prior
to the time that the employee has included such stock as compensation income
will be treated as additional compensation income and will be deductible by us.
Employees receiving a Deferred Stock Award may elect to include the value of
such stock (less any amount paid for such stock) as compensation at the time the
Award is made. Employees making this election would treat any gain or loss
realized on a sale of the Deferred Stock as capital gain or loss, but would not
be entitled to any loss deduction if they forfeited the Deferred Stock pursuant
to the restrictions imposed by the Stock Option Committee.
Other Stock Based Awards. The Stock Option Committee may issue other stock
based Awards, including performance shares and convertible debentures. These
Awards may be subject to such restrictions as may be imposed by the Stock Option
Committee. In general, employees receiving such Awards will be required to
include the fair market value of the Award in income as additional compensation
on the date that the Award becomes freely transferable or is no longer subject
to a substantial risk of forfeiture, and we will be entitled to a corresponding
deduction.
In view of the complexity of the tax aspects of transactions involving the
grant and exercise of ISOs, NQOs, and SARs, and the receipt and disposition of
shares of Common Stock in connection with those and other Awards under the 2001
Stock Option Plan, and because the impact of taxes will vary depending on
individual circumstances, each employee receiving an Award under the 2001 Stock
Option Plan should consult their own tax advisor to determine the tax
consequences in such employee's particular circumstances.
Cap on Company Deductions for Certain Compensation. Under Section 162(m)
of the Code, certain compensation payments in excess of $1 million are subject
to a cap on deductibility by us. The limitation on deductibility applies with
respect to that portion of a compensation payment for a taxable year in excess
of $1 million to either the chief executive officer of the corporation or any
one of the other four highest paid executives. Certain performance-based
compensation is not subject to the cap on deductibility. Although certain
stock-based compensation can qualify for this performance-based exception,
Awards granted under the 2001 Stock Option Plan do not qualify.
Registration with the Commission
We intend to file a Registration Statement on Form S-8 covering the 2001
Stock Option Plan if the 2001 Stock Option Plan is approved by the shareholders.
32
PROPOSAL 4 - APPROVAL OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors seeks from the shareholders an indication of their
approval or disapproval of our appointment of Ernst & Young LLP as our
independent auditors for 2001.
The firm of Ernst & Young LLP acted as our independent auditors for the
fiscal year ended December 31, 2000 and has been selected by the Audit Committee
of the Board of Directors to act as our independent auditors for the current
fiscal year. Although the selection and appointment of independent auditors is
not required to be submitted to a vote of shareholders, the directors have
decided to ask the shareholders to ratify the appointment.
If the appointment of Ernst & Young LLP as independent auditors for 2001 is
not approved by the shareholders, the adverse vote will be considered a
direction to the Board of Directors to consider other auditors for next year.
However, because of the difficulty in making any substitution of auditors so
long after the beginning of the current year, the appointment for the year 2001
will stand unless the Board of Directors determines that a change of auditors
would be in the best interests of our Company.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. They will have the opportunity to make a statement if they so
desire and will be available to respond to appropriate questions.
OTHER MATTERS
General
The Board of Directors knows of no other matters to come before the Annual
Meeting, other than that which is set forth herein and in the accompanying
Notice of Annual Meeting. However, if any other matters should properly come
before the Meeting, it is the intention of the persons named in the accompanying
Proxy to vote such Proxies as in their discretion they may deem advisable.
Expenses of Solicitation
The cost of soliciting proxies will be borne by us, including expenses in
connection with the preparation and mailing of this Proxy Statement and all
papers which now accompany or may hereafter supplement it. The solicitation
will be made by mail. We will supply brokers or persons holding shares of
record in their names or in the names of their nominees for other persons, as
beneficial owners, with such additional copies of proxies, proxy materials and
Annual Reports as may reasonably be requested in order for such record holders
to send one (1) copy to each beneficial owner, and will, upon request of such
record holders, reimburse them for their reasonable expenses in mailing such
material. Certain of our directors, officers and employees, not especially
employed for this purpose, may solicit proxies, without additional remuneration
therefor, by mail, telephone, telegraph, facsimile or personal interview.
Shareholders' Proposals for Next Annual Meeting
Shareholders' proposals submitted pursuant to Rule 14a-8 of the Exchange
Act intended to be presented at our 2002 Annual Meeting of Shareholders,
tentatively scheduled for Thursday, May 23, 2002 must be received by us at our
offices shown on the first page of this Proxy Statement by December 1, 2001,
for inclusion in our proxy statement and form of proxy relating to such meeting.
33
ANNUAL REPORT
Our 2000 Annual Report to Shareholders (which includes financial statements
for the fiscal year ended December 31, 2000) accompanies this Proxy Statement
but is not to be deemed part of this Proxy Statement. A copy of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2000 filed with the
SEC is available to shareholders without charge upon written request to our
principal offices to the attention of the Secretary.
By Order of the Board of Directors
/s/ W. Bradford Middlekauff
W. Bradford Middlekauff
Senior Vice President, General Counsel and
Secretary
April 16, 2001
34
APPENDIX A
Medarex, Inc. Board of Directors
Audit Committee Charter
Organization
This charter governs the operations of the Audit Committee (the "Committee") of
Medarex, Inc. (the "Company"). The Committee shall review and reassess the
charter at least annually and obtain the approval of the Board of Directors.
The Committee shall be appointed by the Board of Directors and shall comprise at
least three directors, each of whom are independent of management and the
Company. Members of the Committee shall be considered independent if they have
no relationship that may interfere with the exercise of their independence from
management and the Company. All Committee members shall be financially
literate, or shall become financially literate within a reasonable period of
time after appointment to the Committee, and at least one member shall have
accounting or related financial management expertise.
Statement of Policy
The Committee shall provide assistance to the Board of Directors in fulfilling
their oversight responsibility to the shareholders, potential shareholders, the
investment community, and others relating to the Company's financial statements
and the financial reporting process, the systems of internal accounting and
financial controls, the internal audit function, the annual independent audit of
the Company's financial statements, and the legal compliance and ethics programs
as established by management and the Board of Directors. In so doing, it is the
responsibility of the Committee to maintain free and open communication among
the Committee, independent auditors, the internal auditors and management of the
Company. In discharging its oversight role, the Committee is empowered to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel or other experts for this purpose.
Responsibilities and Processes
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board of Directors and report the
results of their activities to the Board of Directors. Management is
responsible for preparing the Company's financial statements, and the
independent auditors are responsible for auditing those financial statements.
The Committee in carrying out its responsibilities believes its policies and
procedures should remain flexible, in order to best react to changing conditions
and circumstances. The Committee should take the appropriate actions to set the
overall corporate "tone" for quality financial reporting, sound business risk
practices and ethical behavior.
The following shall be the principal recurring processes of the Committee in
carrying out its oversight responsibilities. The processes are set forth as a
guide with the understanding that the Committee may supplement them as
appropriate.
. The Committee shall have a clear understanding with management and the
independent auditors that the independent auditors are ultimately
accountable to the Board of Directors and the
Committee, as representatives of the Company's shareholders. The
Committee shall have the ultimate authority and responsibility to
evaluate and, where appropriate, replace the independent auditors. The
Committee shall discuss with the auditors their independence from
management and the Company and the matters included in the written
disclosures required by the Independence Standards Board. Annually, the
Committee shall review and recommend to the Board of Directors the
selection of the Company's independent auditors, subject to shareholders'
approval.
. The Committee shall discuss with the internal auditors and the
independent auditors the overall scope and plans for their respective
audits, including the adequacy of staffing and compensation. Also, the
Committee shall discuss with management, the internal auditors and the
independent auditors the adequacy and effectiveness of the accounting and
financial controls, including the Company's system to monitor and manage
business risk, and legal and ethical compliance programs. Further, the
Committee shall meet separately with the internal auditors and the
independent auditors, with and without management present, to discuss the
results of the examinations.
. The Committee shall review the interim financial statements with
management and the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. Also, the Committee shall
discuss the results of the quarterly review and any other matters
required to be communicated to the Committee by the independent auditors
under generally accepted auditing standards. The chair of the Committee
may represent the entire Committee for the purpose of this review.
. The Committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report on
Form 10-K (or the annual report to shareholders if distributed prior to
the filing of Form 10-K), including their judgment about the quality, not
just acceptability, of accounting principles, the reasonableness of
significant judgments, and the clarity of the disclosures in the
financial statements. Also, the Committee shall discuss the results of
the annual audit and any other matters required to be communicated to the
Committee by the independent auditors under generally accepted auditing
standards.
MEDAREX, INC.
707 State Road #206
Princeton, New Jersey 08540
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 23, 2001
This proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints DONALD L. DRAKEMAN and CHRISTIAN S. SCHADE
and each of them, attorneys and proxies, with full power of substitution, and
authorizes them to vote all shares of Common Stock of Medarex, Inc. held of
record by the undersigned on March 30, 2001, at the Annual Meeting of
Shareholders to be held on May 23, 2001, and any adjournments thereof, hereby
revoking all previous proxies, with all powers the undersigned would possess if
present, on all matters mentioned in the Notice of Annual Meeting dated April
16, 2001, as follows:
INSTRUCTIONS: MARK ONLY ONE BOX FOR EACH NUMBERED MATTER
The following matters have been proposed by the Company:
(1) The election of three Class III Directors to serve for terms to expire in
2004. Nominees: Mr. Irwin Lerner, Dr. Julius A. Vida and Dr. W. Leigh
Thompson, Jr.
[ ] FOR nominees listed [ ] WITHHOLD AUTHORITY
to vote for nominee
(Instruction: To withhold authority to vote for any individual nominee(s), write
the name(s) on the line below).
(2) The election of one Class I Director to serve for a term to expire in 2003.
Nominee: Dr. Ronald J. Saldarini.
[ ] FOR nominee listed [ ] WITHOUT AUTHORITY TO vote for nominee
(3) The approval of the Company's 2001 Stock Option Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(4) The ratification of the appointment of Ernst & Young LLP as independent
auditors for the current fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(5) In their discretion, to vote upon such other business as may properly come
before the Annual Meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ITEMS 1, 2, 3, AND 4.
I plan to attend the meeting. [ ] YES [ ] NO
Date: , 2001
-----------------------------------
Month Day
----------------------------------------------
Signature
Please sign exactly as name appears hereon, indicating official position or
representative capacity, if any. If shares are held jointly, both owners must
sign.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS