<PAGE> 1
As filed with the Securities and Exchange Commission on August 14, 1997
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MEDICIS PHARMACEUTICAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 52-1574808
(State of Incorporation) (I.R.S. Employer
Identification No.)
4343 East Camelback Road
Suite 250
Phoenix, Arizona 85018
(Address of Principal Executive Offices)
Medicis Pharmaceutical Corporation
1996 Stock Option Plan
(Full Title of Plan)
----------------------------------
Jonah Shacknai
Chairman and Chief Executive Officer
Medicis Pharmaceutical Corporation
4343 East Camelback Road
Suite 250
Phoenix, Arizona 85018
(Name and Address of Agent for Service)
(602) 808-8800
(Telephone Number, Including Area Code of Agent for Service)
Copy to:
Frank M. Placenti, Esq.
Bryan Cave LLP
2800 North Central Avenue
Phoenix, Arizona 85004
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Securities to Amount to be Proposed Maximum Proposed Maximum Amount of
be Registered Registered (1) Offering Price Per Aggregate Offering Registration Fee
Share (2) Price (2)
<S> <C> <C> <C> <C>
Common Stock, $.014 1,950,000 shares and $ 42.5 $82,875,000 $25,113.64
par value and rights
Preferred Stock
Purchase Rights (3)
</TABLE>
(1) Plus such additional indeterminate number of shares as may be issuable
pursuant to the anti-dilution provisions of the Plan.
(2) Estimated solely for the purpose of calculating the registration fee.
Pursuant to Rule 457(c) and Rule 457(h) under the Securities Act of
1933, as amended, the proposed maximum offering price per share and the
proposed maximum aggregate offering price have been determined on the
basis of the average of the high and low prices of the Class A Common
Stock on the Nasdaq National Market on June 16, 1997.
(3) The Preferred Stock Purchase Rights initially trade with the Class A
Common Stock and are not currently exercisable.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
This Registration Statement relates to 1,950,000 shares of Common
Stock, par value $.014, of Medicis Pharmaceutical Corporation ("Registrant" or
"Company") being registered for use under the Registrant's 1996 Stock Option
Plan (the "Plan").
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents which have been filed by the Company
with the Securities and Exchange Commission (the "Commission") pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated by reference herein and shall be deemed to be a part hereof:
(a) The Annual Report on Form 10-K, as amended, for the fiscal
year ended June 30, 1996;
(b) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1996;
(c) Quarterly Report on Form 10-Q, as amended, for the fiscal
quarter ended December 31, 1996;
(d) Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1997;
(e) Current Report on Form 8-K, dated August 2, 1996;
(f) Current Report on Form 8-K, dated January 22, 1997;
(g) Current Report on Form 8-K, dated March 28, 1997;
(h) Proxy Statement for 1996 Annual Meeting of Shareholders;
(j) The description of the Company's Class A Common Stock
contained in the Company's Registration Statement on Form S-3 (Registration No.
333-10247), filed with the Commission on August 15, 1996, and any amendment
thereto updating such description; and
(k) The description of the Company's Preference Stock Purchase
Rights contained in the Company's Registration Statement on Form S-3
(Registration No. 333-10247), filed with the Commission on August 15, 1996, and
any amendment thereto updating such description.
All other documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act subsequent
to the date of this Registration Statement and prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the
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<PAGE> 3
date of filing of such documents (such documents, and the documents enumerated
above, being hereinafter referred to collectively as the "Incorporated
Documents").
Any statement contained in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any other subsequently
filed Incorporated Document modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTEREST OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article VI of the Company's Certificate of Incorporation and
Article VI of the Company's By-Laws provide for the indemnification of its
directors and officers under certain circumstances and are incorporated herein
by reference.
Section 145 of the General Corporation Law of the State of
Delaware empowers a Delaware corporation to indemnify any person who is, or is
threatened to be made, a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation) by reason of the
fact that such person is or was an officer or director of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement and reasonably incurred by such person in connection with such
action, suit or proceeding, provided that he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interest of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable for negligence or misconduct in the performance of his duty to the
corporation. Where an officer or director is successful on the merits or
otherwise in the defense of any action referred to above, the corporation must
indemnify him against the expenses which he actually and reasonably incurred in
connection therewith. The indemnification provided is not deemed to be exclusive
of any other rights to which an officer or director may be entitled under a
corporation's by-laws, by agreement, vote, or otherwise.
In May 1997, the Company purchased insurance in the aggregate
amount of $7,000,000 covering the Company's directors and officers against
claims arising out of their service to the Company and its subsidiaries. The
insurance policy runs for a period of one year at a total cost of approximately
$185,000.
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<PAGE> 4
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4.1b to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, File No. 0-18443,
previously filed with the Commission)
4.2 By-Laws (incorporated by reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1992,
File No. 0-18443, previously filed with the Commission)
4.3 Rights Agreement, dated as of April 17, 1995, by and between the
Company and American Stock Transfer & Trust Company, as Rights Agent
(incorporated by reference to Exhibit 1 to the Company's Registration
Statement on Form 8-A, File No. 0-18443, filed with the Commission on
August 18, 1995)
4.4 Amendment No. 1 to Rights Agreement, dated as of April 15, 1996, by and
between the Company and American Stock Transfer & Trust Company, as
Rights Agreement (incorporated herein by reference to Exhibit 4 to
Amendment No. 1 on Form 8-A/A to the Company's Registration Statement
on Form 8-A, File No. 0-18443, filed with the Commission on April 16,
1996)
4.5 Amendment No. 2 to Rights Agreement, dated as of March 17, 1997,
between the Company and Norwest Bank Minnesota, N.A., as
successor-in-interest to American Stock Transfer & Trust Company, as
Rights Agent (incorporated herein by reference to Exhibit 4.1b to the
Company's Quarterly Report on Form 10-Q, File No. 0-18443, filed with
the Commission on May 9, 1997)
5 Opinion of Bryan Cave LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Bryan Cave LLP (included in Exhibit 5)
24 Power of Attorney (included on signature pages of this Registration
Statement)
99.1 Medicis Pharmaceutical Corporation 1996 Stock Option Plan
99.2 Form of Incentive Stock Option Certificate Agreement relating to
options granted under the Medicis Pharmaceutical Corporation 1996 Stock
Option Plan
99.3 Form of Non-Qualified Employee Stock Option Certificate Agreement
relating to options granted under the Medicis Pharmaceutical
Corporation 1996 Stock Option Plan
II-3
<PAGE> 5
99.4 Form of Non-Qualified Non-Employee Consultant Stock Option Certificate
Agreement relating to options granted under the Medicis Pharmaceutical
Corporation 1996 Stock Option Plan
99.5 Form of Non-Qualified Non-Employee Director Stock Option Certificate
Agreement relating to options granted under the Medicis Pharmaceutical
Corporation 1996 Stock Option Plan
ITEM 9. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement:
provided however, that paragraphs (a)(l)(i) and (a)(l)(ii) of this Section do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement;
(2) that, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; and
II-4
<PAGE> 6
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer of controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
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<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Phoenix, State of Arizona, on the 11th day of
August, 1997.
MEDICIS PHARMACEUTICAL CORPORATION
By: /s/ Jonah Shacknai
-------------------------
Jonah Shacknai
Chairman and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated. Each person whose individual signature
appears below hereby authorizes Jonah Shacknai and Mark A. Prygocki, Sr., or
either one of them, to execute in the name of each such person and to file any
amendment to this Registration Statement and appoints Jonah Shacknai and Mark A.
Prygocki, Sr., or either one of them, as attorney-in-fact to sign on his behalf
individually and in each capacity stated below and to file any amendments to
this Registration Statement, including any and all post-effective amendments.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Arthur G. Altschul, Jr. Director August 5, 1997
- ---------------------------
Arthur G. Altschul, Jr.
/s/ Richard L. Dobson, M.D. Director August 5, 1997
- ---------------------------
Richard L. Dobson, M.D.
/s/ Peter S. Knight Director August 5, 1997
- ---------------------------
Peter S. Knight
/s/ Michael A. Pietrangelo Director August 5, 1997
- ---------------------------
Michael A. Pietrangelo
/s/ Mark A. Prygocki, Sr. Chief Financial Officer, August 5, 1997
- --------------------------- Secretary and Treasurer
Mark A. Prygocki, Sr. (Principal Financial Officer and
Principal Accounting Officer)
/s/ Philip S. Schein, M.D. Director August 5, 1997
- ---------------------------
Philip S. Schein, M.D.
</TABLE>
II-6
<PAGE> 8
<TABLE>
<S> <C> <C>
/s/ Lottie H. Shackelford Director August 5, 1997
- ---------------------------
Lottie H. Shackelford
/s/ Jonah Shacknai Chairman of the Board August 5, 1997
- --------------------------- of Directors and Chief
Jonah Shacknai Executive Officer
</TABLE>
II-7
<PAGE> 9
Exhibit Index
Exhibit
Number Description
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4.1b to the Company's Quarterly Report on Form
10-Q for the quarter ended March 31, 1997, File No. 0-18443,
previously filed with the Commission)
4.2 By-Laws (incorporated by reference to Exhibit 3.2 to the Company's
Quarterly Report on Form 10-Q for the quarter ended December 31, 1992,
File No. 0-18443, previously filed with the Commission)
4.3 Rights Agreement, dated as of April 17, 1995, by and between the
Company and American Stock Transfer & Trust Company, as Rights Agent
(incorporated by reference to Exhibit I to the Company's Registration
Statement on Form 8-A, File No. 0-18443, filed with the Commission on
August 18. 1995)
4.4 Amendment No. 1 to Rights Agreement, dated as of April 15, 1996, by and
between the Company and American Stock Transfer & Trust Company, as
Rights Agent (incorporated herein by reference to Exhibit 4 to
Amendment No. 1 on Form 8-A/A to the Company's Registration Statement
on Form 8-A, File No. 0-18443, filed with the Commission on April 16,
1996)
4.5 Amendment No. 2 to Rights Agreement, dated as of March 17, 1997,
between the Company and Norwest Bank Minnesota, N.A., as
successor-in-interest to American Stock Transfer & Trust Company, as
Rights Agent (incorporated herein by reference to Exhibit 4.1b to the
Company's Quarterly Report on Form 10-Q, File No. 0-18443, filed with
the Commission on May 9, 1997.
5 Opinion of Bryan Cave LLP
23.1 Consent of Ernst & Young LLP
23.2 Consent of Bryan Cave LLP (included in Exhibit 5)
24 Power of Attorney (included on signature pages of this Registration
Statement)
99.1 Medicis Pharmaceutical Corporation 1996 Stock Option Plan
99.2 Form of Incentive Stock Option Certificate Agreement relating to
options granted under the Medicis Pharmaceutical Corporation 1996 Stock
Option Plan
99.3 Form of Non-Qualified Employee Stock Option Certificate Agreement
relating to options granted under the Medicis Pharmaceutical
Corporation 1996 Stock Option Plan
99.4 Form of Non-Qualified Non-Employee Consultant Stock Option Certificate
Agreement relating to options granted under the Medicis Pharmaceutical
Corporation 1996 Stock Option Plan
II-8
<PAGE> 10
99.5 Form of Non-Qualified Non-Employee Director Stock Option Certificate
Agreement relating to options granted under the Medicis Pharmaceutical
Corporation 1996 Stock Option Plan
II-9
<PAGE> 1
EXHIBIT 5
[BRYAN CAVE LLP LETTERHEAD]
August 11, 1997
MEDICIS PHARMACEUTICAL CORPORATION
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to Medicis Pharmaceutical
Corporation, a Delaware corporation (the "Registrant"), in connection with the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of 1,950,000 shares (the "Shares") of the Company's common stock, $.014
par value (the "Common Stock"), which may be issued from time to time upon the
exercise of stock options granted pursuant to the Company's 1996 Stock Option
Plan (the "Plan"). The Shares are being registered pursuant to a registration
statement on Form S-8 (the "Registration Statement") filed with the Securities
and Exchange Commission (the "Commission").
In arriving at the opinion expressed below, we have examined
the Registration Statement and such other documents, including the Articles of
Incorporation and Bylaws of the Company, each as amended to date, as we have
deemed necessary to enable us to express the opinion set forth herein. In
addition, we have examined and relied on the originals or copies, certified or
otherwise identified to our satisfaction as conforming to the originals thereof,
of such other documents and corporate records of the Company and such other
instruments and certificates of public officials and other persons as we have
deemed appropriate. We have assumed the authenticity of all documents submitted
to us as originals, the conformity to the original documents of all documents
submitted to us as copies, and the genuineness of all signatures on all
documents reviewed by us.
Based on the foregoing and subject to the limitations and
qualifications set forth herein, we are of the opinion that:
The Shares of Common Stock to be issued by the Company
pursuant to the Registration Statement have been duly authorized, and upon
issuance and delivery in accordance with the terms of the Plan will be duly and
validly issued and fully paid and nonassessable.
This opinion is limited to the present laws of the State of
Arizona and the present federal laws of the United States and to the facts as
they presently exist. We hereby consent to references to our firm under the
caption "Legal Matters" in the Registration Statement. In giving this consent,
we do not hereby admit that we come within the category of persons whose consent
is required under Section 7 of the Securities Act, or the rules and regulations
of the Commission thereunder.
Very truly yours,
/s/ Bryan Cave LLP
-------------------------
Bryan Cave LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Medicis Pharmaceutical Corporation 1996 Stock Option Plan
of our report dated August 2, 1996 with respect to the consolidated financial
statements and schedule of Medicis Pharmaceutical Corporation included in its
Annual Report (Form 10-K/A) for the fiscal year ended June 30, 1996, filed with
the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Phoenix, Arizona
August 11, 1997
<PAGE> 1
EXHIBIT 99.1
MEDICIS PHARMACEUTICAL CORPORATION
1996 STOCK OPTION PLAN
<PAGE> 2
i
TABLE OF CONTENTS
Page
----
Section 1. PURPOSE ....................................................... 1
Section 2. DEFINITIONS ................................................... 1
Section 3. SHARES SUBJECT TO OPTIONS ..................................... 4
Section 4. EFFECTIVE DATE ................................................ 4
Section 5. COMMITTEE ..................................................... 4
Section 6. ELIGIBILITY ................................................... 4
Section 7. GRANT OF OPTIONS .............................................. 4
Section 8. OPTION PRICE .................................................. 5
Section 9. EXERCISE PERIOD ............................................... 6
Section 10. TRANSFERABILITY ............................................... 6
Section 11. SECURITIES REGISTRATION AND RESTRICTIONS ...................... 6
Section 12. LIFE OF PLAN .................................................. 7
Section 13. ADJUSTMENT .................................................... 7
Section 14. SALE OR MERGER OF THE COMPANY ................................. 7
Section 15. AMENDMENT OR TERMINATION ...................................... 8
Section 16. CHANGE OF CONTROL ............................................. 8
Section 17. MISCELLANEOUS ................................................. 8
<PAGE> 3
MEDICIS PHARMACEUTICAL CORPORATION
1996 STOCK OPTION PLAN
SECTION 1 PURPOSE
The purpose of this Plan is to promote the interests of Medicis
Pharmaceutical Corporation (the "Company") by granting Options to purchase Stock
to Key Employees, Outside Directors and Key Consultants in order to (a) attract
and retain Key Employees and Key Consultants; (b) provide an additional
incentive to each Key Employee and Key Consultant to work to increase the value
of the Stock; and (c) provide each such Key Employee, Outside Director and Key
Consultant with a stake in the future of the Company which corresponds to the
stake of each of the Company's stockholders.
SECTION 2 DEFINITIONS
Each term set forth in this Section 2 shall have the meaning set forth
opposite such term for purposes of this Plan and for any Option granted under
this Plan. For purposes of such definitions, the singular shall include the
plural and the plural shall include the singular. Unless otherwise expressly
indicated, all Section references herein shall be construed to mean references
to a particular Section of this Plan.
2.1 BOARD means the Board of Directors of the Company.
2.2 CHANGE OF CONTROL means any of the following:
(i) the acquisition, other than from the Company, by any individual,
entity or group (within the meaning of Section 13(d) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended from time to time) (the
"Exchange Act"), of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 15% or more of either (A) the then
outstanding shares of Stock (the "Outstanding Company Common Stock") or
(B) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the
"Company Voting Securities"), provided, however, that any acquisition by
(x) the Company or any of its subsidiaries, or any employee benefit plan
(or related trust) sponsored or maintained by the Company or any of its
subsidiaries or (y) any corporation with respect to which, following such
acquisition, more than 60% of, respectively, the then outstanding shares
of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Company Voting Securities immediately prior to
such acquisition in substantially the same portion as their ownership,
immediately prior to such acquisition of the Outstanding Company Common
Stock and Company Voting Securities, as the case may be, shall not
constitute a change in control of the Company; or
(ii) individuals who, as of March 31, 1996, constitute the Board of
Directors of the Company (the "incumbent Board") cease for any reason to
constitute at least a majority of the Board, provided that any individual
becoming a director subsequent to March 31, 1996, whose election or
nomination for election by the Company's shareholders was approved by a
vote of at least a majority of the directors then comprising the incumbent
Board shall be considered as though such individual whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the Directors of the Company
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act); or
<PAGE> 4
2
(iii) approval by the shareholders of the Company of a
reorganization, merger or consolidation (a "Business Combination"), in
each case, with respect to which all or substantially all of the
individuals and entities who were the respective beneficial owners of the
Outstanding Company Common Stock and Company Voting Securities immediately
prior to such Business Combination do not, following such Business
Combination, beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the
corporation resulting from such Business Combination in substantially the
same proportion as their ownership immediately prior to such Business
Combination or the Outstanding Company Common Stock and Company Voting
Securities, as the case may be; or
(iv) (A) a complete liquidation or dissolution of the Company or a
(B) sale or other disposition of all or substantially all of the assets of
the Company other than to a corporation with respect to which, following
such sale or disposition, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of directors is then owned beneficially, directly or indirectly,
by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Company Voting Securities immediately prior to such sale or
disposition in substantially the same proportion as their ownership of the
Outstanding Company Common Stock and Company Voting Securities, as the
case may be, immediately prior to such sale or disposition.
2.3 CODE means the Internal Revenue Code of 1986, as amended.
2.4 COMMITTEE means the committee of Non-Employee Directors appointed by
the Board to administer this Plan as contemplated by Section 5.
2.5 COMPANY means Medicis Pharmaceutical Corporation, a Delaware
corporation, and any successor to such corporation.
2.6 EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.
2.7 DESIGNATED COMMITTEE means a committee appointed by the Committee in
accordance with Section 5.
2.8 FAIR MARKET VALUE means the average of the highest and lowest quoted
selling prices for Stock on the relevant date, or (if there were no sales on
such date) the weighted average of the means between the highest and lowest
quoted selling prices on the nearest day before and the nearest day after the
relevant date, as reported in the Wall Street Journal or a similar publication
selected by the Committee.
2.9 INSIDER shall mean an employee who is, at the time of an award made
under this Plan, an insider pursuant to Section 16 of the Exchange Act.
2.10 ISO means any option granted under this Plan to purchase Stock which
satisfies the requirements of Section 422 of the Code.
2.11 KEY CONSULTANT means any consultant or independent contractor of the
Company or a Subsidiary (other than a Non-Employee Director) or any such
consultant or contractor who is a Non-Employee Director and who serves as such a
consultant or contractor pursuant to a written agreement with the Company which
has been approved by the Board, in either case who, in the judgment of the
Committee acting in its absolute discretion, is a key to the success of the
Company or a Subsidiary.
<PAGE> 5
3
2.12 KEY EMPLOYEE means any employee of the Company or a Subsidiary, who,
in the judgment of the Committee acting in its absolute discretion, is a key to
the success of the Company or a Subsidiary.
2.13 NON-EMPLOYEE DIRECTOR means any member of the Board of Directors of
the Company qualified as such under SEC Rule 16b-3(b)(3)(i) under the Exchange
Act, or any successor rule.
2.14 NON-ISO means any option granted under this Plan to purchase stock
which fails to satisfy the requirements of Section 422 of the Code or has been
specifically denominated as a non-ISO by the Committee as of the time the option
is granted.
2.15 OPTION means an ISO or a Non-ISO.
2.16 OPTION CERTIFICATE means the written agreement or instrument which
sets forth the terms of an Option granted to a Key Employee, Key Consultant or
Outside Director under this Plan.
2.17 OPTION PRICE means the price which shall be paid to purchase one
share of stock upon the exercise of an Option granted under this Plan.
2.18 OUTSIDE DIRECTOR means any member of the Board of Directors of the
Company who is not employed by the Company, regardless of whether such person
qualifies as a Non-Employee Director.
2.19 PARENT CORPORATION means any corporation which is a parent
corporation of the Company within the meaning of Section 424(e) of the Code.
2.20 PLAN means this Medicis Pharmaceutical Corporation 1996 Stock Option
Plan, as amended from time to time.
2.21 PRINCIPAL OFFICER means the Chairman of the Board (if the Chairman of
the Board is a payroll employee), the Chief Executive Officer, the President,
any Executive Vice President, any Senior Vice President, any Vice President and
the Treasurer of the Company and any other person who is an "officer" of the
Company as that term is defined in SEC Rule 16a-1(f) under the Exchange Act or
any successor rule thereunder.
2.22 SECURITIES ACT means the Securities Act of 1933, as amended.
2.23 SEC means the Securities Exchange Commission.
2.24 STOCK means the Class A Common Stock, $.001 par value per share, of
the Company.
2.25 SUBSIDIARY means any corporation which is a subsidiary corporation of
the Company within the meaning of Section 424(f) of the Code.
2.26 TEN PERCENT SHAREHOLDER means a person who owns after taking into
account the attribution rules of Section 424(d) of the Code more than ten
percent (10%) of the total combined voting power of all classes of stock of
either the Company, a Subsidiary or a Parent Corporation.
<PAGE> 6
4
SECTION 3. SHARES SUBJECT TO OPTIONS
There shall be 1,300,000 shares of Stock reserved for issuance in
connection with ISOs and Non-ISOs granted under this Plan. Such shares of Stock
shall be reserved to the extent that the Company deems appropriate from
authorized but unissued shares of Stock and from shares of Stock which have been
reacquired by the Company. Any shares of Stock subject to an Option which remain
after the cancellation, expiration or exchange of such Option for another Option
thereafter shall again become available for use under this Plan.
SECTION 4. EFFECTIVE DATE
The effective date of this Plan shall be October 1, 1996, subject to
approval by the stockholders of the Company acting at a duly called meeting of
such stockholders or acting by unanimous written consent in lieu of a meeting,
provided such stockholder approval occurs within twelve (12) months after the
date the Board approves and adopts this Plan.
SECTION 5. COMMITTEE
This Plan shall be administered by a Committee consisting solely of not
less than two (2) Non-Employee Directors. The Committee acting in its absolute
discretion shall exercise such powers and take such action as expressly called
for under this Plan. Furthermore, the Committee shall have the power to
interpret this Plan and to take such other action in the administration and
operation of this Plan as the Committee deems equitable under the circumstances,
which action shall be binding on the Company, on each affected Key Employee, Key
Consultant or Outside Director and on each other person directly or indirectly
affected by such action. The Committee may appoint a separate committee
comprised of two or more persons, at least one of which is a member of the Board
(and who may also be a Key Employee or a Key Consultant) and the other of whom,
if not a member of the Board, is a Principal Officer of the Company (the
"Designated Committee"), to administer this Plan with respect to Key Employees
who are not Principal Officers and to Key Consultants, subject to such
conditions, restrictions and limitations as may be imposed by the Committee:
including (i) Options to purchase not more than 50,000 shares of Common Stock
may be granted by the Designated Committee in any one calendar year to all
employees of the Company in the aggregate; and (ii) the Committee shall
establish a maximum number of shares that may be subject to Options granted
under the Plan in any one calendar year to any single Key Employee or Key
Consultant by the Designated Committee. Unless and until the Committee shall
take further action, the maximum number of shares that may be subject to Options
granted under the Plan in any one calendar year by the Designated Committee to
any single Key Employee or Key Consultant shall be 5,250. Any actions duly taken
by the Designated Committee with respect to the grant of Options to Key
Employees who are not Principal Officers and to Key Consultants shall be deemed
to have been taken by the Committee for purposes of the Plan.
SECTION 6. ELIGIBILITY
Only Key Employees, Key Consultants and Non-Employee Directors shall be
eligible for the grant of Options under this Plan.
SECTION 7. GRANT OF OPTIONS
7.1 COMMITTEE ACTION. The Committee acting in its absolute discretion
shall grant Options to Key Employees and Key Consultants under this Plan from
time to time to purchase shares of Stock and, further, shall have the right to
grant new Options in exchange for outstanding Options. Options shall be granted
to Non-Employee Directors as provided in Section 7.3 of this Plan. Each grant of
an Option shall be evidenced by an Option Certificate, and each Option
Certificate shall:
<PAGE> 7
5
(a) specify whether the Option is an ISO or Non-ISO; and
(b) incorporate such other terms and conditions as the Committee
acting in its absolute discretion deems consistent with the terms of this
Plan, including, without limitation, a limitation on the number of shares
subject to the Option which first became exercisable or subject to
surrender during any particular period.
If the Committee grants an ISO and a Non-ISO to a Key Employee on the same date,
the right of the Key Employee to exercise or surrender one such Option shall not
be conditioned on his or her failure to exercise or surrender the other such
Option. In connection with the termination for any reason of employment by or
service to the Company or any Subsidiary of any particular holder of any Option,
the Committee may, in its discretion, determine to modify the number of shares
of Stock as to which such Option first becomes exercisable during any particular
period as provided in the related Option Certificate; provided, however, that
the Committee may not extend any such period with respect to any shares of Stock
subject to such Option.
7.2 $100,000 LIMIT. To the extent that the aggregate Fair Market Value of
the stock with respect to which ISOs and other incentive stock options
satisfying the requirements of Section 422 of the Code granted to a Key Employee
under this Plan and under any other stock option plan adopted by the Company, a
Subsidiary or a Parent Corporation first become exercisable in any calendar year
exceeds $100,000 (based upon the Fair Market Value on the date of the grant),
such Options shall be treated as Non-ISOs.
7.3 GRANTS OF NON-ISOS TO OUTSIDE DIRECTORS. (a) On the last business day
of each September during the term of this Plan each then Outside Director shall
be granted, without any further action on the part of the Committee, a Non-ISO
hereunder to purchase 3,000 shares of Stock at the Fair Market Value of such
Stock on the date of grant. Each such Option shall be exercisable in whole or in
part one year after the date of grant, provided that such Outside Director has
continued as an Outside Director for one year (or until his or her date of
death, if earlier), and shall remain exercisable until the tenth anniversary of
the date such Option is granted. The aforementioned grants of options to Outside
Directors shall be in lieu of any and all further grants of options to Outside
Directors after the last business day of September 1996 pursuant to the Medicis
Pharmaceutical Corporation 1988 Stock Option Plan, the Medicis Pharmaceutical
Corporation 1990 Stock Option Plan and the Medicis Pharmaceutical Corporation
1992 Stock Option Plan or the Medicis Pharmaceutical Corporation 1995 Stock
Option Plan. In all respects, a Non-ISO grant to an Outside Director hereunder
shall conform to the terms and conditions of a Non-ISO under this Plan and,
except as otherwise permitted with respect to Outside Directors who are Key
Consultants or as otherwise provided in Section 7.4(b), Outside Directors shall
only be eligible to receive options under this Plan as provided in this Section
7.3(a).
SECTION 8. OPTION PRICE
The Option Price for each share of Stock subject to an Option shall not be
less than the Fair Market Value of a share of Stock on the date the Option is
granted or, if the Option is an ISO and the Key Employee is a Ten Percent
Shareholder, the Option Price for each share of Stock subject to such Option
shall not be less than 110% of the Fair Market Value of a share of Stock on the
date the Option is granted. The Option Price shall be payable in full upon the
exercise of any Option, and an Option Certificate at the discretion of the
Committee (except for an Option granted to a Non-Employee Director) may provide
for the payment of the Option Price either in cash or in Stock acceptable to the
Committee or in any combination of cash and Stock acceptable to the Committee.
Any payment made in Stock shall be treated as equal to the Fair Market Value of
such Stock on the date the properly endorsed certificate for such Stock is
delivered to the Committee.
<PAGE> 8
6
SECTION 9. EXERCISE PERIOD
(a) Each Option granted under this Plan shall be exercisable in whole or
in part at such time or times as set forth in the related Option Certificate,
but no Option Certificate shall provide that:
(1) an Option is exercisable before the date such Option is granted,
or
(2) an Option is exercisable after the date which is the tenth
anniversary of the date such Option is granted.
If an option that is an ISO is granted to a key employee who is a Ten Percent
Shareholder, the Option Certificate shall provide that the Option is not
exercisable after the expiration of five years from the date the Option is
granted. An Option Certificate may provide for the exercise of an Option after
the employment of a Key Employee or service by a Key Consultant has terminated
for any reason whatsoever, including death or disability. In connection with the
termination for any reason of employment by or service to the Company or any
Subsidiary of any particular holder of any Option, the Committee may, in its
discretion, determine to extend the period during which such Option may be
exercised as provided in the related Option Certificate; provided, however, that
no such extension shall permit an Option to be exercised beyond the date
specified in paragraph (b) of this Section or the date applicable to Options
granted to a Ten Percent Shareholder, as the case may be.
(b) Notwithstanding any other provision of this Section, upon a Change of
Control each Option granted under this Plan prior to such Change of Control
(whether prior to or after the amendment of the Plan to include this provision)
shall immediately become exercisable to the full extent of the original grant
and, in the case an Option held by a Key Employee shall remain exercisable for
three months (or such longer period as specified in the particular Option with
regard to all or any shares of Stock covered by such Option) after any
termination of employment of such Key Employee.
SECTION 10. TRANSFERABILITY
The Committee shall impose such restrictions on the transfer of options
granted under the Plan as it may deem advisable, including, without limitation,
restrictions deemed necessary or advisable under applicable federal securities
laws, under the requirements of any stock exchange or market upon which Stock is
then listed in or traded, and under any Blue Sky or state securities laws
applicable to such Stock. Upon request of any person receiving an award of an
Option under the Plan, the Committee may, in its sole and absolute discretion,
determine to remove any such transfer restriction originally imposed and may, in
connection with the removal of such transfer restriction, impose such conditions
(including restrictions on further transfers of the Option or upon transfers of
the Shares upon exercise of the Option) as the Committee, in its discretion, may
deem advisable, including, without limitation, restrictions deemed by the
Committee to be necessary or advisable in order to comply with applicable
federal and state securities laws or the requirements of any stock exchange or
market upon which the Stock is then listed or traded. Subject to its authority
to impose such conditions on further transfers, the Committee shall authorize
the transfer of Options for bona fide estate planning purposes or for
contributions to qualified charities or charitable trusts.
SECTION 11. SECURITIES REGISTRATION AND RESTRICTIONS
Each Option Certificate shall provide that, upon the receipt of shares of
Stock as a result of the exercise or surrender of an Option, the Key Employee,
Key Consultant or Outside Director shall, if so requested by the Company, hold
such shares of Stock for investment and not with a view toward resale or
distribution to the public and, if so requested by the Company, shall deliver to
the Company a written statement to that effect satisfactory to the Company. Each
Option Certificate shall also provide that, if so requested by the Company, the
Key Employee, Key Consultant or Outside Director shall represent in writing to
the Company that he or she will not sell or offer to
<PAGE> 9
7
sell any such shares of Stock unless a registration statement shall be in effect
with respect to such Stock under the Securities Act and any applicable state
securities law or unless he or she shall have furnished to the Company an
opinion, in form and substance satisfactory to the Company, of legal counsel
acceptable to the Company, that such registration is not required. Certificates
representing the Stock transferred upon the exercise or surrender of an Option
granted under this Plan may at the discretion of the Company bear a legend to
the effect that such Stock has not been registered under the Securities Act or
any applicable state securities law and that such Stock may not be sold or
offered for sale in the absence of (i) an effective registration statement as to
such Stock under the Securities Act and any applicable state securities law or
(ii) an opinion, in form and substance satisfactory to the Company, of legal
counsel acceptable to the Company, that such registration is not required.
Furthermore, the Company shall have the right to require a Key Employee, Key
Consultant or Outside Director to enter into such stockholder or other related
agreements as the Company deems necessary or appropriate under the circumstances
as a condition to the issuance of any Stock under this Plan to a Key Employee,
Key Consultant or Outside Director.
SECTION 12. LIFE OF PLAN
No Option shall be granted under this Plan on or after the earlier of
(a) the tenth anniversary of the original effective date of this
Plan as determined under Section 4; provided, however, that after such
anniversary date this Plan otherwise shall continue in effect until all
outstanding Options have been exercised in full or no longer are
exercisable, or
(b) the date on which all of the Stock reserved under Section 3 of
this Plan has, as a result of the exercise of Options granted under this
Plan, been issued or no longer is available for use under this Plan, in
which event this Plan also shall terminate on such date.
SECTION 13. ADJUSTMENT
The number of shares of Stock reserved under Section 3 of this Plan, the
number of shares of Stock to be granted from time to time pursuant to Section
7.3 of this Plan (if permitted by the exemption in Rule 16b-3 under the Exchange
Act or any successor rule), the number of shares of Stock that may be granted
pursuant to Section 5 of this Plan by the Designated Committee to any single Key
Employee or Key Consultant, and the number of shares of Stock subject to Options
granted under this Plan and the Option Price of such Options shall be adjusted
by the Board in an equitable manner to reflect any change in the capitalization
of the Company, including, but not limited to, such changes as stock dividends
or stock splits. Furthermore, the Board shall have the right to adjust in a
manner which satisfies the requirements of Section 424(a) of the Code the number
of shares of Stock reserved under Section 3 of this Plan and the number of
shares subject to Options granted under this Plan and the Option Price of such
Options in the event of any corporate transaction described in Section 424(a) of
the Code that provides for the substitution or assumption of such Options. If
any adjustment under this Section 13 would create a fractional share of Stock or
a right to acquire a fractional share of Stock, such fractional share shall be
disregarded and the number of shares of Stock reserved under this Plan and the
number subject to any Options granted under this Plan shall be the next lower
number of shares of Stock, rounding all fractions downward. An adjustment made
under this Section 13 by the Board shall be conclusive and binding on all
affected persons and, further, shall not constitute an increase in "the number
of shares reserved under Section 3" within the meaning of Section 15(a) of this
Plan.
SECTION 14. SALE OR MERGER OF THE COMPANY
If the Company agrees to sell all or substantially all of its assets for
cash or property or for a combination of cash and property or agrees to any
merger, consolidation, reorganization, division or other corporate transaction
in which Stock is converted into another security or into the right to receive
securities or property and such agreement does not provide for the assumption or
substitution of the Options granted under this Plan, each then outstanding
Option at the direction and discretion of the Board may be canceled unilaterally
by the Company as of
<PAGE> 10
8
the effective date of such transaction in exchange for a payment in cash or
Stock, or in a combination of cash and Stock, equal in amount to the excess of
the Fair Market Value on such date of the shares represented by the canceled
Options over the Option Price for such shares.
SECTION 15. AMENDMENT OR TERMINATION
This Plan may be amended by the Board from time to time to the extent that
the Board deems necessary or appropriate; provided, however, that no such
amendment shall be made absent the approval of the stockholders of the Company
(a) to increase the aggregate number of shares reserved under Section 3, (b) to
change the class of persons eligible for Options under Section 6 or (c) to
materially modify the requirements as to eligibility for participation in this
Plan, (d) to otherwise materially increase the benefits accruing under this Plan
to Plan participants if such approval would be required in order for the Company
to comply with applicable law or the rules or regulations of any stock exchange
or market on which the Stock is traded or listed. The Board also may suspend the
granting of Options under this Plan at any time and may terminate this Plan at
any time; provided, however, that the Company shall not have the right to
unilaterally cancel or, in a manner which would materially adversely affect the
holder, amend or modify any Option granted before such suspension or termination
unless (i) the Key Employee, Key Consultant or Outside Director consents in
writing to such modification, amendment or cancellation or (ii) there is a
dissolution or liquidation of the Company or a transaction described in Section
13 or Section 14 of this Plan.
It is the intention of the Company that the Plan shall comply with the
conditions of Rule 16b-3 of the Exchange Act, as such Rule may from time to time
be amended. The Board shall have the authority, without the approval of the
stockholders, to amend the Plan from time to time to include any conditions,
terms or other provisions which may be required to be set forth in a plan in
order for transactions by directors or officers to be exempt under Rule 16b-3 of
the Exchange Act or any successor exemption.
SECTION 16. CHANGE OF CONTROL
Notwithstanding any other provision of this Section, upon a Change of
Control each Option granted under this Plan prior to such Change of Control
(whether prior to or after the amendment of the Plan to include this provision)
shall immediately become exercisable to the full extent of the original grant
and shall remain exercisable for three months (or such longer period as
specified in the particular Option with regard to all or any shares of Stock
covered by such Option) after (i) any termination of employment of any Key
Employee; or (ii) resignation or removal of any Outside Director from the
Company's Board of Directors.
SECTION 17. MISCELLANEOUS
17.1 NO STOCKHOLDER RIGHTS. No Key Employee, Key Consultant or Outside
Director shall have any rights as a stockholder of the Company as a result of
the grant of an Option to him or to her under this Plan or his or her exercise
or surrender of such Option pending the actual delivery of Stock subject to such
Option to such Key Employee, Key Consultant or Non-Employee Director.
17.2 NO CONTRACT OF EMPLOYMENT. The grant of an Option to a Key Employee,
Key Consultant or Outside Director under this Plan shall not constitute a
contract of employment or consulting or right to continue to serve on the
Company's Board of Directors and shall not confer on a Key Employee, Key
Consultant or Outside Director any rights upon his or her termination of
employment or service in addition to those rights, if any, expressly set forth
in the Option Certificate which evidences his or her Option.
17.3 WITHHOLDING. The exercise or surrender of any Option granted under
this Plan shall constitute a Key Employee's full and complete consent to
whatever action the Committee elects to satisfy the federal and state
<PAGE> 11
9
tax withholding requirements, if any, which the Committee in its discretion
deems applicable to such exercise or surrender.
17.4 CONSTRUCTION. This Plan and the Option Certificates shall be
construed under the laws of the State of Arizona.
<PAGE> 1
EXHIBIT 99.2
INCENTIVE STOCK OPTION CERTIFICATE AGREEMENT
THIS AGREEMENT is made as of the Date of Grant shown on Exhibit A
hereto, and between MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation
(the "Corporation"), and the individual named on Exhibit A hereto (the
"Optionee").
WHEREAS, the Optionee is a valuable and trusted employee of the
Corporation and the Corporation considers it desirable and in its best interests
that the Optionee be given an added incentive to advance the interests of the
Corporation by possessing an option to purchase shares of the Corporation, in
accordance with the Corporation's stock option plan identified on Exhibit A
hereto (the "Plan"); and
WHEREAS, Section 7.1 of the Plan states that options granted under the
Plan shall be evidenced by certificates incorporating such terms and conditions
as the Committee (as such term is defined in the Plan) in its absolute
discretion deems consistent with the terms of the Plan; and
WHEREAS, the Committee took action on the Date of Grant shown on
Exhibit A to authorize the issuance of a stock option to the Optionee;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Corporation hereby grants to the Optionee the right, privilege and
option to purchase the number of shares of its Class A Common Stock (the "Common
Stock") shown on Exhibit A hereto. The Option is intended to be an Incentive
Stock Options within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended.
2. PURCHASE PRICE. The purchase price per share under the option
granted to Optionee under Paragraph 1 above shall be as shown on Exhibit A
hereto, subject to adjustment as provided herein and in the Plan.
3. TIME OF EXERCISE OF OPTION. Subject to the terms and conditions set
forth herein, this option may be exercised by the Optionee according to the
schedule noted on Exhibit A. Subject to the foregoing limitation, Optionee may
exercise the option to purchase all the shares granted by this option at one
time or the Optionee may exercise the option to purchase the shares granted by
this option from time to time, until the termination thereof as provided in
Paragraph 5 below.
4. METHOD OF EXERCISE. The option shall be exercised by written notice
directed to the Board of Directors of the Corporation, at the Corporation's
principal place of business, accompanied by a check in payment of the option
price for the number of shares specified and paid for. The Committee may approve
or disapprove in its absolute discretion a request for
<PAGE> 2
payment to be made in whole or in part in stock of the Corporation. The
Corporation shall make immediate delivery of the shares purchased under the
Option, provided that if any law or regulation requires the Corporation to take
any such action with respect to the shares specified in such notice before the
issuance thereof, then the date of delivery of such shares shall be extended for
the period necessary to take such action.
5. TERMINATION OF OPTION. Except as otherwise stated in Section 12 or
elsewhere herein, any unvested option shall terminate upon termination of
employment, and any vested option, to the extent not theretofore exercised,
shall terminate upon the first to occur of the following dates:
(a) upon the date which is three (3) months subsequent to
the date on which the Optionee's employment by the
Corporation is terminated (except if such termination
be by reason of death or permanent and total
disability);
(b) the expiration of twelve (12) months after the date
on which the Optionee's employment by the Corporation
is terminated, if such termination be by reason of
Optionee's permanent and total disability (as
determined in the absolute discretion of the
Committee);
(c) the expiration of one hundred eighty (180) days from
the death of the Optionee while in the employ of the
Corporation, in which event the transferee of said
option (or any unexercised portion thereof) pursuant
to Optionee's Will or by laws of intestacy must
exercise said option within one hundred eighty (180)
days following the date of the Optionee's death; or
(d) the date which is ten (10) years from the date of
grant of the option.
6. RECLASSIFICATION, CONSOLIDATION OR MERGER. If and to the extent that
the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to option and the option price per share shall be proportionately
adjusted. If the Corporation is reorganized or consolidated or merged with
another corporation, the Optionee shall be entitled to receive options covering
shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. For
purposes of the preceding sentence, the excess of the aggregate fair market
value of the shares subject to the option immediately after the reorganization,
consolidation or merger over the aggregate option price of such shares shall not
be more than the excess of the aggregate fair market value of all shares subject
to the option immediately before such reorganization, consolidation, or merger
over the aggregate option price of such shares, and the issuance of a new option
or assumption of the old option shall not give the Optionee additional benefits
which the Optionee did not have under the old option, or deprive the Optionee of
benefits which the Optionee had under the old option (except with respect to
fractional shares).
2
<PAGE> 3
7. RIGHTS PRIOR TO EXERCISE OF OPTION. The option is not transferable
by the Optionee, except in the event of death as provided in Paragraph 5(c)
above, and during the Optionee's lifetime is exercisable only by the Optionee.
The Optionee shall have no rights as a stockholder with respect to the option
shares until payment of the option price and delivery to the Optionee of
certificates for such shares as herein provided.
8. SECURITIES, REGISTRATION AND RESTRICTIONS. Upon receipt of the
shares of the Corporation as a result of the exercise in whole or in part of
this option, the Optionee, if so requested by the Corporation, shall represent
and warrant to the Corporation that the Optionee is acquiring the shares of
Common Stock for investment and not with a view toward resale or distribution to
the public and, if so requested by the Corporation, shall deliver to the
Corporation a written statement to that effect satisfactory to the Corporation.
Additionally, if so requested by the Corporation, that the Optionee will execute
and deliver to the Corporation a written agreement that the Optionee will not
sell or offer to sell any such shares of Common Stock unless a registration
statement shall be in effect with respect to such shares of Common Stock under
the Securities Act (as defined in the Plan) and any applicable state securities
law or unless the Optionee shall have furnished to the Corporation an opinion,
in form and substance satisfactory to the Corporation, of legal counsel
acceptable to the Corporation, that such registration is not required.
Certificates representing the shares transferred upon the exercise or surrender
of the option may, at the discretion of the Corporation, bear a legend to the
effect that such shares have not been registered under the Securities Act or any
applicable state securities law and that such shares may not be sold or offered
for sale in the absence of (i) an effective registration statement as to such
shares under the Securities Act and any applicable state securities law, or (ii)
an opinion, in form and substance satisfactory to the Corporation, of legal
counsel acceptable to the Corporation, that such registration is not required.
Furthermore, the Corporation shall have the right to require the Optionee to
enter into such stockholder or other related agreements as the Corporation deems
necessary or appropriate under the circumstances as a condition to the issuance
of any shares under this option.
9. PAYMENT OF WITHHOLDING TAX. In the event the Corporation determines
that it is required to withhold state or Federal income tax as a result of the
exercise of an option, as a condition to the exercise thereof, the Optionee may
be required to make arrangements satisfactory to the Corporation to enable it to
satisfy such withholding requirements. Payment of such withholding requirements
may be made, in the discretion of the Plan Committee, (i) in cash, (ii) by
delivery of shares of Common Stock registered in the name of the Optionee, or by
the Corporation not issuing such number of shares of Common Stock subject to the
option, having a fair market value at the time of exercise equal to the amount
to be withheld, or (iii) any combination of (i) and (ii) above.
10. MISCELLANEOUS. The Optionee shall not have any right as a
stockholder of the Corporation solely as a result of the grant of this opinion.
The grant of this option does not constitute a contract of employment. This
option shall be subject in all respects to the terms of the Plan. The exercise
of this option shall constitute the Optionee's sole and complete consent to
3
<PAGE> 4
whatever action the Committee elects to satisfy the Federal and State tax
withholding requirements, if any, which the Committee in its sole discretion
deems applicable to such exercise. This option shall be governed by the laws of
the state applicable to the Plan.
11. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
12. FORFEITURE FOR FRAUD, DISHONESTY, UNLAWFUL COMPETITION AND OTHER
ACTS.
A. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 5 OR IN
ANY EXHIBIT TO THIS AGREEMENT, ALL OPTION AND OTHER RIGHTS WITH RESPECT TO ALL
OPTIONS GRANTED TO OPTIONEE HEREUNDER BUT NOT YET EXERCISED SHALL IMMEDIATELY
TERMINATE AND BE NULL AND VOID IF: (i) OPTIONEE'S EMPLOYMENT BY THE CORPORATION
IS TERMINATED FOR CAUSE; (ii) THE COMMITTEE OF THE CORPORATION'S BOARD OF
DIRECTORS THEN ADMINISTERING THE CORPORATION'S STOCK OPTION PLANS (THE
"COMMITTEE") DETERMINES THAT THE OPTIONEE ENGAGED IN ILLEGAL ACTS, FRAUD,
DISHONESTY, WILLFUL MISCONDUCT, INCLUDING VIOLATION OF THE CORPORATION'S INSIDER
TRADING POLICY, OR OTHER UNAUTHORIZED CONDUCT DETRIMENTAL TO THE CORPORATION;
(iii) OPTIONEE HAS AT ANY TIME DISCLOSED TO ANY PERSON, FIRM, CORPORATION OR
OTHER ENTITY ANY OF THE CORPORATION'S "PROPRIETARY INFORMATION" (AS DEFINED
BELOW) IN A MANNER WHICH COULD PLACE THE CORPORATION AT A COMPETITIVE
DISADVANTAGE OR CREATE EXPOSURE TO LIABILITY, WITHOUT THE EXPRESS WRITTEN
CONSENT OF THE BOARD OF DIRECTORS, OR EXCEPT AS SUCH DISCLOSURE MAY HAVE BEEN
REQUIRED IN CONNECTION WITH THE OPTIONEE'S SERVICE AS AN EMPLOYEE OF THE
CORPORATION OR BY LAW; (iv) OPTIONEE SOLICITS OR OTHERWISE INDUCES ANY EMPLOYEE
OF THE CORPORATION TO TERMINATE HIS OR HER EMPLOYMENT; (v) OPTIONEE SOLICITS
BUSINESS FROM ANY OF THE CORPORATION'S CUSTOMERS FOR AND ON BEHALF OF ANY OF THE
CORPORATION'S COMPETITORS FOR PRODUCTS IN THE SAME CLASS OF TRADE DURING THE
OPTIONEE'S PERIOD OF EMPLOYMENT WITH THE CORPORATION AND FOR A PERIOD OF ONE
YEAR FOLLOWING THE OPTIONEE'S SEPARATION FROM THE COMPANY, UNLESS PRIOR WRITTEN
CONSENT IS GIVEN BY THE COMMITTEE; (vi) OPTIONEE DISPARAGES THE CORPORATION OR
COMMITS ANY OTHER ACT OF DISLOYALTY; (vii) OPTIONEE ENGAGES IN ANY CONDUCT IN
VIOLATION OF OPTIONEE'S CONTRACTUAL OBLIGATIONS TO THE CORPORATION, INCLUDING
BUT NOT LIMITED TO A VIOLATION OF ANY VALID NON-COMPETITION, NON-DISCLOSURE,
NON-SOLICITATION OR OTHER WRITTEN AGREEMENT; (viii) OPTIONEE FAILS TO ASSIGN TO
THE CORPORATION ANY PATENT, COPYRIGHT, TRADEMARK OR
4
<PAGE> 5
OTHER INTELLECTUAL PROPERTY RIGHT IN VIOLATION OF ANY OF THE CORPORATION'S
POLICIES OR ANY AGREEMENT BETWEEN THE CORPORATION AND OPTIONEE; OR (ix) OPTIONEE
REFUSES TO BE AVAILABLE FOR REASONABLE CONSULTATION WITH RESPECT TO THE SUBJECT
MATTER OF OPTIONEE'S EMPLOYMENT FOR A PERIOD OF THREE MONTHS FOLLOWING
TERMINATION OF SUCH EMPLOYMENT. THE ACTS OR CIRCUMSTANCES DESCRIBED IN THE
PRECEDING SENTENCE SHALL BE REFERRED TO AS "EVENTS OF FORFEITURE."
B. FOR PURPOSES OF THIS SECTION, THE TERM "PROPRIETARY
INFORMATION" SHALL MEAN ALL CONFIDENTIAL OR SECRET CUSTOMER LISTS, PROSPECTIVE
CUSTOMER LISTS, TRADE SECRETS, PROCESSES, PRODUCT FORMULATIONS, INVENTIONS,
IMPROVEMENTS, MANUFACTURING FORMULATION OR SYSTEMS TECHNIQUES, PRODUCT FORMULAS,
DEVELOPMENT OR EXPERIMENTAL WORK, WORKS IN PROCESS, BUSINESS, MARKETING AND
COMPETITIVE STRATEGIES, INFORMATION RELATING TO ANY PATENT, TRADEMARK OR OTHER
INTELLECTUAL PROPERTY RIGHT OF THE CORPORATION, AND ANY OTHER SECRET OR
CONFIDENTIAL PROPRIETARY MATTER RELATING TO OR PERTAINING TO THE CORPORATION OR
ITS PRODUCTS, SERVICES, SALES OR BUSINESS.
C. IN ADDITION TO THE FOREGOING RIGHTS AND ANY AND ALL OTHER
RIGHTS WHICH THE CORPORATION (OR ANY OF ITS SUBSIDIARIES OR AFFILIATES) MAY HAVE
AGAINST THE OPTIONEE AT LAW OR IN EQUITY, OPTIONEE FURTHER AGREES THAT UPON
OCCURRENCE OF ANY OF THE EVENTS OF FORFEITURE DESCRIBED IN SUBSECTION A,
OPTIONEE SHALL OWE THE CORPORATION THE EXCESS OF THE FAIR MARKET VALUE OVER THE
OPTION PRICE (MEASURED AS OF THE DATE OF ACQUISITION) OF ALL SHARES ACQUIRED
THROUGH EXERCISE OF ANY OPTION WITHIN THE THREE (3) YEARS PRECEDING THE
COMMITTEE'S DETERMINATION THAT AN EVENT OF FORFEITURE HAS OCCURRED. OPTIONEE
SHALL PAY SUCH AMOUNT AS CALCULATED OR DETERMINED BY THE COMMITTEE TO THE
CORPORATION WITHIN THIRTY (30) DAYS OF THE COMMITTEE'S WRITTEN DETERMINATION
THAT AN EVENT OF FORFEITURE HAS OCCURRED, WHICH DETERMINATION MAY BE MADE BY
NOTICE TO THE OPTIONEE WITHIN ANY TIME UP TO TWO (2) YEARS FOLLOWING THE
OPTIONEE'S TERMINATION OF EMPLOYMENT.
D. BY ACCEPTING THIS AGREEMENT, OPTIONEE CONSENTS TO DEDUCTION
FROM ANY AMOUNTS THE CORPORATION MAY OWE TO OPTIONEE FROM TIME TO TIME
(INCLUDING AMOUNTS OWED TO OPTIONEE AS WAGES OR OTHER COMPENSATION, FRINGE
BENEFITS, VACATION PAY OR COMMISSIONS) TO THE EXTENT OF ANY AMOUNT WHICH
OPTIONEE OWES THE CORPORATION PURSUANT TO THE PROVISIONS OF SUBSECTION C.
WHETHER OR NOT THE CORPORATION ELECTS TO MAKE ANY SET-OFF IN WHOLE OR IN PART,
IF THE
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<PAGE> 6
CORPORATION DOES NOT RECOVER BY MEANS OF THE SET-OFF THE FULL AMOUNT OWED TO IT
BY THE OPTIONEE, THEN OPTIONEE AGREES TO PAY IMMEDIATELY THE UNPAID BALANCE TO
THE CORPORATION.
E. THE OPTIONEE MAY BE RELEASED FROM OPTIONEE'S OBLIGATIONS
UNDER THIS SECTION 12 ONLY IF THE COMMITTEE DETERMINES, IN ITS SOLE DISCRETION,
THAT SUCH A RELEASE IS IN THE BEST INTERESTS OF THE CORPORATION. SO LONG AS THEY
ARE MADE IN GOOD FAITH, ALL DETERMINATIONS BY THE COMMITTEE MADE PURSUANT TO
THIS SECTION 12 SHALL BE FINAL, BINDING AND NONAPPEALABLE.
13. AGREEMENT REGARDING PRIOR OPTION GRANTS. OPTIONEE EXPRESSLY AGREES
THAT, IN CONSIDERATION FOR THE GRANT OF THE OPTIONS PROVIDED FOR IN THIS
AGREEMENT, THE PROVISIONS OF SECTIONS 12, 13 AND 14 OF THIS AGREEMENT SHALL BE
DEEMED INCORPORATED INTO ALL PRIOR OPTION AGREEMENTS, IF ANY, ENTERED INTO
BETWEEN THE CORPORATION AND THE OPTIONEE AND THAT THE FORFEITURE PROVISIONS SET
FORTH IN THIS AGREEMENT SHALL APPLY TO ALL OPTIONS PREVIOUSLY GRANTED TO
OPTIONEE.
OPTIONEE ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS IMPORTANT PROVISIONS
AFFECTING OPTIONEE'S ECONOMIC INTEREST AND THAT OPTIONEE HAS CAREFULLY READ AND
CONSIDERED AND AGREES TO BE BOUND BY THIS AGREEMENT.
ACKNOWLEDGED AND AGREED TO____________________________
(Optionee's Signature)
6
<PAGE> 7
14. ARBITRATION.
A. Any controversy, claim or dispute arising out of or
relating to this Agreement or the option, including but not limited to the
provisions of Sections 5, 12 and 13 hereof, or any act or occurrence relating to
the foregoing, or any decision of the Committee relating to an option or its
forfeiture ("A Dispute") shall be determined and resolved by binding arbitration
in accordance with Title IX of The United States Code and The commercial
Arbitration Rules of the American Arbitration Association ("AAA") in effect on
the date the arbitration is commenced in accordance herewith. In the event of
any inconsistency between such Rules of the AAA and the terms of this Agreement,
this Agreement shall supersede the Rules of the AAA. Judgment upon any award
rendered in the arbitration may be entered in any court having jurisdiction and
shall be final, binding, non-appealable and conclusive. The provisions of this
Agreement shall govern the rights of all parties hereto, including but not
limited to any party claiming for or on behalf of Optionee, including Optionee's
heirs, successors, assigns, personal representatives and bankruptcy trustees.
B. Any party may commence arbitration by serving upon all
other parties a written demand for arbitration sent by Certified Mail, Return
Receipt Requested to the Corporation at its principal place of business or to
the Optionee at his/her residence address as reflected in the records of the
Corporation, by Certified Mail, Return Receipt Requested to the AAA Office in
Phoenix, Arizona, or in the absence of such an office, to the AAA Region in
which Arizona is located.
C. The AAA shall administer the arbitration. The AAA shall
appoint a single arbitrator to conduct the arbitration within 30 days of the
AAA's receipt of a demand for arbitration in accordance with this Section. The
arbitrator shall, by virtue of background, similar experience, be knowledgeable
in matters pertaining to stock option agreements and employment relationships.
There shall be no right of discovery in connection with the arbitration except
in accordance with the AAA's Commercial Arbitration Rules. Not earlier than
thirty (30) nor more than forty-five (45) days after appointment, the arbitrator
shall conduct a preliminary hearing in accordance with the AAA "Guidelines for
Expediting Large, Complex Commercial Arbitrations." Not less than five (5) days
prior to the preliminary hearing, all parties to the arbitration shall serve
upon all other parties to the arbitration a written list of witnesses and
exhibits to be used in the arbitration hearing Except for good cause shown, no
witness or exhibit may be utilized at the arbitration hearing other than those
set forth on such list.
D. The arbitrator shall receive evidence in a single hearing
which shall be conducted in Phoenix, Arizona, unless the arbitrator determines
by written application of a party that such location would represent an
unreasonable hardship and that the hearing should be conducted in another
location. The hearing shall be commenced not more than sixty (60) days after the
appointment of the arbitrator.
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<PAGE> 8
E. The arbitrator shall award reasonable attorneys fees and
costs in favor of the prevailing party. The arbitrator shall issue a final award
not more than twenty (20) days following the conclusion of the hearing. The
arbitrator shall have the power to hear and decide, by documents only or with
the hearing (at the arbitrator's sole discretion) any pre-hearing motions which
are in the nature of pre-trial motions to dismiss or for summary judgment. The
arbitrator shall be entitled to receive reasonable compensation at an hourly
rate to be established by agreement between the arbitrator and the AAA.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
MEDICIS PHARMACEUTICAL CORPORATION
By:_________________________________________
Chairman and Chief Executive Officer
______________________________________(SEAL)
Corporate Secretary
Accepted and Agreed to: ____________________________________________
Optionee
8
<PAGE> 1
EXHIBIT 99.3
NON-QUALIFIED EMPLOYEE
STOCK OPTION CERTIFICATE AGREEMENT
THIS AGREEMENT is made as of the Date of Grant shown on Exhibit A
hereto, and between MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation
(the "Corporation"), and the individual named on Exhibit A hereto (the
"Optionee").
WHEREAS, the Optionee is a valuable and trusted employee of the
Corporation and the Company considers it desirable and in its best interests
that the Optionee be given an added incentive to advance the interests of the
Corporation by possessing an option to purchase shares of the Corporation, in
accordance with the Corporation's stock option plan identified on exhibit A
hereto (the "Plan"); and
WHEREAS, Section 7.1 of the Plan states that options granted under the
Plan shall be evidenced by certificates incorporating such terms and conditions
as the Plan Committee (as such term is defined in the Plan) in its absolute
discretion deems consistent with the terms of the Plan; and
WHEREAS, the Plan Committee took action on the Date of Grant shown on
Exhibit A to authorize the issuance of new options to the Optionee;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Corporation hereby grants to the Optionee the right, privilege and
option to purchase the number of shares of its Class A Common Stock (the "Common
Stock") shown on Exhibit A hereto. These options are not intended to be
Incentive Stock Options within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
2. PURCHASE PRICE. The purchase price per share under the option
granted to Optionee under Paragraph 1 above shall be as shown on Exhibit A
hereto, subject to adjustment as provided herein and in the Plan.
3. TIME OF EXERCISE OF OPTION. Subject to the terms and conditions set
forth herein, the aforesaid option , until the termination thereof as provided
in Paragraph 5 below, may be exercised by the Optionee according to the schedule
noted on Exhibit A. Subject to the foregoing limitation, Optionee may exercise
the option to purchase all the shares granted by this option at one time or the
Optionee may exercise the option to purchase the shares granted by the option
from time to time, until the termination thereof as provided in Paragraph 5
below.
<PAGE> 2
4. METHOD OF EXERCISE. The option shall be exercised by written notice
directed to the Board of Directors of the Corporation, at the Corporation's
principal place of business, accompanied by a check in payment of the option
price for the number of shares specified and paid for. The Committee may approve
or disapprove in its absolute discretion a request for payment to be made in
whole or in part in stock of the Corporation. The Corporation shall make
immediate delivery of the shares purchased under the option, provided that if
any law or regulation requires the Corporation to take any such action with
respect to the shares specified in such notice before the issuance thereof, then
the date of delivery of such shares shall be extended for the period necessary
to take such action.
5. TERMINATION OF OPTION. Except as otherwise stated in Section 12 or
elsewhere herein, any unvested option shall terminate upon termination of
employment, and any vested option, to the extent not theretofore exercised,
shall terminate upon the first to occur of the following dates:
(a) upon the date which is three (3) months subsequent to
the date on which the Optionee's employment by the
Corporation is terminated (except if such termination
be by reason of death or permanent and total
disability or for cause);
(b) the expiration of twelve (12) months after the date
on which the Optionee's employment by the Corporation
is terminated, if such termination be by reason of
Optionee's permanent and total disability (as
determined in the absolute discretion of the
Committee);
(c) the expiration of one hundred eighty (180) days from
the death of the Optionee while in the employ of the
Corporation, in which event the transferee of said
option (or any unexercised portion thereof) pursuant
to Optionee's Will or by laws of intestacy must
exercise said option within one hundred eighty (180)
days following the date of the Optionee's death; or
6. RECLASSIFICATION, CONSOLIDATION OR MERGER. If and to the extent that
the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to option and the option price per share shall be proportionately
adjusted. If the Corporation is reorganized or consolidated or merged with
another company, the Optionee shall be entitled to receive options covering
shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. For
purposes of the preceding sentence, the excess of the aggregate fair market
value of the shares subject to the option immediately after the reorganization,
consolidation or merger over the aggregate option price of such shares shall not
be more than the excess of the aggregate fair market value of all shares subject
to the option
2
<PAGE> 3
immediately before such reorganization, consolidation, or merger over the
aggregate option price of such shares, and the new option price of such shares,
and the new option or assumption of the old option shall not give the Optionee
additional benefits which the Optionee did not have under the old option, or
deprive the Optionee of benefits which the Optionee had under the old option
(except with respect to fractional shares).
7. RIGHTS PRIOR TO EXERCISE OF OPTION. This option is not transferable
by the Optionee, except in the event of death as provided in Paragraph 5 above,
and during the Optionee's lifetime is exercisable only by the Optionee. The
Optionee shall have no rights as a stockholder with respect to the option shares
until payment of the option price and delivery to him of certificates for such
shares as herein provided.
8. SECURITIES, REGISTRATION AND RESTRICTIONS. Upon receipt of the
shares of the Corporation as a result of the exercise in whole or in part of the
Option, the Optionee, if so requested by the Corporation, shall represent and
warrant to the Corporation that the Optionee is acquiring the shares of Common
Stock for investment and not with a view toward resale or distribution to the
public and, if so requested by the Corporation, shall deliver to the Corporation
a written statement to that effect satisfactory to the Corporation.
Additionally, if so requested by the Corporation, that the Optionee will execute
and deliver to the Corporation a written agreement that the Optionee will not
sell or offer to sell any such shares of Common Stock unless a registration
statement shall be in effect with respect to such shares of Common Stock under
the Securities Act (as defined in the Plan) and any applicable state securities
law or unless the Optionee shall have furnished to the Corporation an opinion,
in form and substance satisfactory to the Corporation, of legal counsel
acceptable to the Corporation, that such registration is not required.
Certificates representing the shares transferred upon the exercise or surrender
of the option granted hereby may, at the discretion of the Corporation, bear a
legend to the effect that such shares have not been registered under the
Securities Act or any applicable state securities law and that such shares may
not be sold or offered for sale in the absence of (i) an effective registration
statement as to such shares under the Securities Act and any applicable state
securities law, or (ii) an opinion, in form and substance satisfactory to the
Corporation, of legal counsel acceptable to the Corporation, that such
registration is not required. Furthermore, the Corporation shall have the right
to require the Optionee to enter into such stockholder or other related
agreements as the Corporation deems necessary or appropriate under the
circumstances as a condition to the issuance of any shares under this option.
9. PAYMENT OF WITHHOLDING TAX. In the event the Corporation determines
that it is required to withhold state or Federal income tax as a result of the
exercise of an option, as a condition to the exercise thereof, the Optionee may
be required to make arrangements satisfactory to the Corporation to enable it to
satisfy such withholding requirements. Payment of such withholding requirements
may be made, in the discretion of the Plan Committee, (i) in cash, (ii) by
delivery of shares of Common Stock registered in the name of the Optionee, or by
the Corporation not issuing such number of shares of Common Stock subject to the
option, having a fair market value at the time of exercise equal to the amount
to be withheld, or (iii) any combination of (i) and (ii) above.
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<PAGE> 4
10. MISCELLANEOUS. The Optionee shall not have any right as a
stockholder of the Corporation solely as a result of the grant of this option.
The grant of this option does not constitute a contract of consulting. This
option is subject in all respects to the terms of the Plan. This option shall be
governed by the laws of the state applicable to the Plan.
11. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
12. FORFEITURE FOR FRAUD, DISHONESTY, UNLAWFUL COMPETITION AND OTHER
ACTS.
A. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 5 OR IN
ANY EXHIBIT TO THIS AGREEMENT, ALL OPTION AND OTHER RIGHTS WITH RESPECT TO ALL
OPTIONS GRANTED TO OPTIONEE HEREUNDER BUT NOT YET EXERCISED SHALL IMMEDIATELY
TERMINATE AND BE NULL AND VOID IF: (i) OPTIONEE'S EMPLOYMENT BY THE CORPORATION
IS TERMINATED FOR CAUSE; (ii) THE COMMITTEE OF THE CORPORATION'S BOARD OF
DIRECTORS THEN ADMINISTERING THE CORPORATION'S STOCK OPTION PLANS (THE
"COMMITTEE") DETERMINES THAT THE OPTIONEE ENGAGED IN ILLEGAL ACTS, FRAUD,
DISHONESTY, WILLFUL MISCONDUCT, INCLUDING VIOLATION OF THE CORPORATION'S INSIDER
TRADING POLICY, OR OTHER UNAUTHORIZED CONDUCT DETRIMENTAL TO THE CORPORATION;
(iii) OPTIONEE HAS AT ANY TIME DISCLOSED TO ANY PERSON, FIRM, CORPORATION OR
OTHER ENTITY ANY OF THE CORPORATION'S "PROPRIETARY INFORMATION" (AS DEFINED
BELOW) IN A MANNER WHICH COULD PLACE THE CORPORATION AT A COMPETITIVE
DISADVANTAGE OR CREATE EXPOSURE TO LIABILITY, WITHOUT THE EXPRESS WRITTEN
CONSENT OF THE BOARD OF DIRECTORS, OR EXCEPT AS SUCH DISCLOSURE MAY HAVE BEEN
REQUIRED IN CONNECTION WITH THE OPTIONEE'S SERVICE AS AN EMPLOYEE OF THE
CORPORATION OR BY LAW; (iv) OPTIONEE SOLICITS OR OTHERWISE INDUCES ANY EMPLOYEE
OF THE CORPORATION TO TERMINATE HIS OR HER EMPLOYMENT; (v) OPTIONEE SOLICITS
BUSINESS FROM ANY OF THE CORPORATION'S CUSTOMERS FOR AND ON BEHALF OF ANY OF THE
CORPORATION'S COMPETITORS FOR PRODUCTS IN THE SAME CLASS OF TRADE DURING THE
OPTIONEE'S PERIOD OF EMPLOYMENT WITH THE CORPORATION AND FOR A PERIOD OF ONE
YEAR FOLLOWING THE OPTIONEE'S SEPARATION FROM THE COMPANY, UNLESS PRIOR WRITTEN
CONSENT IS GIVEN BY THE COMMITTEE; (vi) OPTIONEE DISPARAGES THE CORPORATION OR
COMMITS ANY OTHER ACT OF DISLOYALTY; (vii) OPTIONEE ENGAGES IN ANY CONDUCT IN
VIOLATION OF OPTIONEE'S CONTRACTUAL OBLIGATIONS TO THE CORPORATION, INCLUDING
BUT NOT LIMITED TO A VIOLATION OF ANY VALID NON-COMPETITION, NON-DISCLOSURE,
NON-
4
<PAGE> 5
SOLICITATION OR OTHER WRITTEN AGREEMENT; (viii) OPTIONEE FAILS TO ASSIGN TO THE
CORPORATION ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY
RIGHT IN VIOLATION OF ANY OF THE CORPORATION'S POLICIES OR ANY AGREEMENT BETWEEN
THE CORPORATION AND OPTIONEE; OR (ix) OPTIONEE REFUSES TO BE AVAILABLE FOR
REASONABLE CONSULTATION WITH RESPECT TO THE SUBJECT MATTER OF OPTIONEE'S
EMPLOYMENT FOR A PERIOD OF THREE MONTHS FOLLOWING TERMINATION OF SUCH
EMPLOYMENT. THE ACTS OR CIRCUMSTANCES DESCRIBED IN THE PRECEDING SENTENCE SHALL
BE REFERRED TO AS "EVENTS OF FORFEITURE."
B. FOR PURPOSES OF THIS SECTION, THE TERM "PROPRIETARY
INFORMATION" SHALL MEAN ALL CONFIDENTIAL OR SECRET CUSTOMER LISTS, PROSPECTIVE
CUSTOMER LISTS, TRADE SECRETS, PROCESSES, PRODUCT FORMULATIONS, INVENTIONS,
IMPROVEMENTS, MANUFACTURING FORMULATION OR SYSTEMS TECHNIQUES, PRODUCT FORMULAS,
DEVELOPMENT OR EXPERIMENTAL WORK, WORKS IN PROCESS, BUSINESS, MARKETING AND
COMPETITIVE STRATEGIES, INFORMATION RELATING TO ANY PATENT, TRADEMARK OR OTHER
INTELLECTUAL PROPERTY RIGHT OF THE CORPORATION, AND ANY OTHER SECRET OR
CONFIDENTIAL PROPRIETARY MATTER RELATING TO OR PERTAINING TO THE CORPORATION OR
ITS PRODUCTS, SERVICES, SALES OR BUSINESS.
C. IN ADDITION TO THE FOREGOING RIGHTS AND ANY AND ALL OTHER
RIGHTS WHICH THE CORPORATION (OR ANY OF ITS SUBSIDIARIES OR AFFILIATES) MAY HAVE
AGAINST THE OPTIONEE AT LAW OR IN EQUITY, OPTIONEE FURTHER AGREES THAT UPON
OCCURRENCE OF ANY OF THE EVENTS OF FORFEITURE DESCRIBED IN SUBSECTION A,
OPTIONEE SHALL OWE THE CORPORATION THE EXCESS OF THE FAIR MARKET VALUE OVER THE
OPTION PRICE (MEASURED AS OF THE DATE OF ACQUISITION) OF ALL SHARES ACQUIRED
THROUGH EXERCISE OF ANY OPTION WITHIN THE THREE (3) YEARS PRECEDING THE
COMMITTEE'S DETERMINATION THAT AN EVENT OF FORFEITURE HAS OCCURRED. OPTIONEE
SHALL PAY SUCH AMOUNT AS CALCULATED OR DETERMINED BY THE COMMITTEE TO THE
CORPORATION WITHIN THIRTY (30) DAYS OF THE COMMITTEE'S WRITTEN DETERMINATION
THAT AN EVENT OF FORFEITURE HAS OCCURRED, WHICH DETERMINATION MAY BE MADE BY
NOTICE TO THE OPTIONEE WITHIN ANY TIME UP TO TWO (2) YEARS FOLLOWING THE
OPTIONEE'S TERMINATION OF EMPLOYMENT.
D. BY ACCEPTING THIS AGREEMENT, OPTIONEE CONSENTS TO DEDUCTION
FROM ANY AMOUNTS THE CORPORATION MAY OWE TO OPTIONEE FROM TIME TO TIME
(INCLUDING AMOUNTS OWED TO OPTIONEE AS WAGES OR OTHER COMPENSATION, FRINGE
BENEFITS, VACATION PAY OR COMMISSIONS)
5
<PAGE> 6
TO THE EXTENT OF ANY AMOUNT WHICH OPTIONEE OWES THE CORPORATION PURSUANT TO THE
PROVISIONS OF SUBSECTION C. WHETHER OR NOT THE CORPORATION ELECTS TO MAKE ANY
SET-OFF IN WHOLE OR IN PART, IF THE CORPORATION DOES NOT RECOVER BY MEANS OF THE
SET-OFF THE FULL AMOUNT OWED TO IT BY THE OPTIONEE, THEN OPTIONEE AGREES TO PAY
IMMEDIATELY THE UNPAID BALANCE TO THE CORPORATION.
E. THE OPTIONEE MAY BE RELEASED FROM OPTIONEE'S OBLIGATIONS
UNDER THIS SECTION 12 ONLY IF THE COMMITTEE DETERMINES, IN ITS SOLE DISCRETION,
THAT SUCH A RELEASE IS IN THE BEST INTERESTS OF THE CORPORATION. SO LONG AS THEY
ARE MADE IN GOOD FAITH, ALL DETERMINATIONS BY THE COMMITTEE MADE PURSUANT TO
THIS SECTION 12 SHALL BE FINAL, BINDING AND NONAPPEALABLE.
13. AGREEMENT REGARDING PRIOR OPTION GRANTS. OPTIONEE EXPRESSLY AGREES
THAT, IN CONSIDERATION FOR THE GRANT OF THE OPTIONS PROVIDED FOR IN THIS
AGREEMENT, THE PROVISIONS OF SECTIONS 12, 13 AND 14 OF THIS AGREEMENT SHALL BE
DEEMED INCORPORATED INTO ALL PRIOR OPTION AGREEMENTS, IF ANY, ENTERED INTO
BETWEEN THE CORPORATION AND THE OPTIONEE AND THAT THE FORFEITURE PROVISIONS SET
FORTH IN THIS AGREEMENT SHALL APPLY TO ALL OPTIONS PREVIOUSLY GRANTED TO
OPTIONEE.
OPTIONEE ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS IMPORTANT PROVISIONS
AFFECTING OPTIONEE'S ECONOMIC INTEREST AND THAT OPTIONEE HAS CAREFULLY READ AND
CONSIDERED AND AGREES TO BE BOUND BY THIS AGREEMENT.
ACKNOWLEDGED AND AGREED TO____________________________
(Optionee's Signature)
6
<PAGE> 7
14. ARBITRATION.
A. Any controversy, claim or dispute arising out of or
relating to this Agreement or the option, including but not limited to the
provisions of Sections 5, 12 and 13 hereof, or any act or occurrence relating to
the foregoing, or any decision of the Committee relating to an option or its
forfeiture ("A Dispute") shall be determined and resolved by binding arbitration
in accordance with Title IX of The United States Code and The commercial
Arbitration Rules of the American Arbitration Association ("AAA") in effect on
the date the arbitration is commenced in accordance herewith. In the event of
any inconsistency between such Rules of the AAA and the terms of this Agreement,
this Agreement shall supersede the Rules of the AAA. Judgment upon any award
rendered in the arbitration may be entered in any court having jurisdiction and
shall be final, binding, non-appealable and conclusive. The provisions of this
Agreement shall govern the rights of all parties hereto, including but not
limited to any party claiming for or on behalf of Optionee, including Optionee's
heirs, successors, assigns, personal representatives and bankruptcy trustees.
B. Any party may commence arbitration by serving upon all
other parties a written demand for arbitration sent by Certified Mail, Return
Receipt Requested to the Corporation at its principal place of business or to
the Optionee at his/her residence address as reflected in the records of the
Corporation, by Certified Mail, Return Receipt Requested to the AAA Office in
Phoenix, Arizona, or in the absence of such an office, to the AAA Region in
which Arizona is located.
C. The AAA shall administer the arbitration. The AAA shall
appoint a single arbitrator to conduct the arbitration within 30 days of the
AAA's receipt of a demand for arbitration in accordance with this Section. The
arbitrator shall, by virtue of background, similar experience, be knowledgeable
in matters pertaining to stock option agreements and employment relationships.
There shall be no right of discovery in connection with the arbitration except
in accordance with the AAA's Commercial Arbitration Rules. Not earlier than
thirty (30) nor more than forty-five (45) days after appointment, the arbitrator
shall conduct a preliminary hearing in accordance with the AAA "Guidelines for
Expediting Large, Complex Commercial Arbitrations." Not less than five (5) days
prior to the preliminary hearing, all parties to the arbitration shall serve
upon all other parties to the arbitration a written list of witnesses and
exhibits to be used in the arbitration hearing Except for good cause shown, no
witness or exhibit may be utilized at the arbitration hearing other than those
set forth on such list.
D. The arbitrator shall receive evidence in a single hearing
which shall be conducted in Phoenix, Arizona, unless the arbitrator determines
by written application of a party that such location would represent an
unreasonable hardship and that the hearing should be conducted in another
location. The hearing shall be commenced not more than sixty (60) days after the
appointment of the arbitrator.
7
<PAGE> 8
E. The arbitrator shall award reasonable attorneys fees and
costs in favor of the prevailing party. The arbitrator shall issue a final award
not more than twenty (20) days following the conclusion of the hearing. The
arbitrator shall have the power to hear and decide, by documents only or with
the hearing (at the arbitrator's sole discretion) any pre-hearing motions which
are in the nature of pre-trial motions to dismiss or for summary judgment. The
arbitrator shall be entitled to receive reasonable compensation at an hourly
rate to be established by agreement between the arbitrator and the AAA.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
MEDICIS PHARMACEUTICAL CORPORATION
By:_________________________________________
Chairman and Chief Executive Officer
____________________________________________
Employee
8
<PAGE> 1
EXHIBIT 99.4
NON-QUALIFIED NON-EMPLOYEE CONSULTANT
STOCK OPTION CERTIFICATE AGREEMENT
THIS AGREEMENT is made as of the Date of Grant shown on Exhibit A
hereto, and between MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation
(the "Corporation"), and the individual named on Exhibit A hereto (the
"Consultant").
WHEREAS, the Consultant is a valuable and trusted consultant of the
Corporation and the Corporation considers it desirable and in its best interests
that the Consultant be given an added incentive to advance the interests of the
Corporation by possessing an option to purchase shares of the Corporation, in
accordance with the Corporation's stock option plan identified on Exhibit A
hereto (the "Plan"); and
WHEREAS, Section 7.1 of the Plan states that options granted under the
Plan shall be evidenced by certificates incorporating such terms and conditions
as the Plan Committee (as such term is defined in the Plan) in its absolute
discretion deems consistent with the terms of the Plan; and
WHEREAS, the Plan Committee took action on the Date of Grant shown on
Exhibit A to authorize the issuance of an option to the Consultant;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Corporation hereby grants to the Consultant the right, privilege and
option to purchase the number of shares of its Class A Common Stock (the "Common
Stock") shown on Exhibit A hereto. These options are not intended to be an
Incentive Stock Option within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended.
2. PURCHASE PRICE. The purchase price per share under the option
granted to Consultant under Paragraph 1 above shall be as shown on Exhibit A
hereto, subject to adjustment as provided herein and in the Plan.
3. TIME OF EXERCISE OF OPTION. Subject to the terms and conditions set
forth herein, this option may be exercised by the Consultant according to the
schedule noted on Exhibit A. Subject to the foregoing limitation, Consultant may
exercise the option to purchase all the shares granted by this option at one
time or the Consultant may exercise the option to purchase the shares granted by
this option from time to time, until the termination thereof, as provided in
Paragraph 5 below.
<PAGE> 2
4. METHOD OF EXERCISE. The option shall be exercised by written notice
directed to the Board of Directors of the Corporation, at the Corporation's
principal place of business, accompanied by a check in payment of the option
price for the number of shares specified and paid for. The Committee may approve
or disapprove in its absolute discretion a request for payment to be made in
whole or in part in stock of the Corporation. The Corporation shall make
immediate delivery of the shares purchased under the option, provided that if
any law or regulation requires the Corporation to take any such action with
respect to the shares specified in such notice before the issuance thereof, then
the date of delivery of such shares shall be extended for the period necessary
to take such action.
5. TERMINATION OF OPTION. Except as otherwise stated herein, the
option, to the extent not theretofore exercised, shall terminate upon the first
to occur of the following dates:
(a) the expiration of one hundred eighty (180) days from
the death of the Consultant in which event the
transferee of the Option (or any unexercised portion
thereof) pursuant to Consultant's Will or by laws of
intestacy must exercise the Option within one hundred
eighty (180) days following the date of the
Consultant's death; and
(b) Any other circumstance provided in Exhibit A.
(c) In accordance with Section 12 hereof.
6. RECLASSIFICATION, CONSOLIDATION OR MERGER. If and to the extent that
the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to option and the option price per share shall be proportionately
adjusted. If the Corporation is reorganized or consolidated or merged with
another corporation, the Consultant shall be entitled to receive options
covering shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. For
purposes of the preceding sentence, the excess of the aggregate fair market
value of the shares subject to the option immediately after the reorganization,
consolidation or merger over the aggregate fair market value of all shares
subject to the option immediately before such reorganization, consolidation, or
merger over the aggregate option price of such shares, and the new option or
assumption of the old option shall not give the Consultant additional benefits
which the Consultant did not have under the old option, or deprive the
Consultant of benefits which the Consultant had under the old option (except
with respect to fractional shares).
7. RIGHTS PRIOR TO EXERCISE OF OPTION. This option is not transferable
by the Consultant, except in the event of death as provided in Paragraph 5
above, and during the Consultant's lifetime is exercisable only by the
Consultant. The Consultant shall have no rights as a stockholder with respect to
the option shares until payment of the option price and delivery to it of
certificates for such shares as herein provided.
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<PAGE> 3
8. SECURITIES, REGISTRATION AND RESTRICTIONS. Upon receipt of the
shares of the Corporation as a result of the exercise in whole or in part of
this option, the Consultant, if so requested by the Corporation, shall represent
and warrant to the Corporation that the Consultant is acquiring the shares of
Common Stock for investment and not with a view toward resale or distribution to
the public and, if so requested by the Corporation, shall deliver to the
Corporation a written statement to that effect satisfactory to the Corporation.
Additionally, if so requested by the Corporation, that the Consultant will
execute and deliver to the Corporation a written agreement that the Consultant
will not sell or offer to sell any such shares of Common Stock unless a
registration statement shall be in effect with respect to such shares of Common
Stock under the Securities Act (as defined in the Plan) and any applicable state
securities law or unless the Consultant shall have furnished to the Corporation
an opinion, in form and substance satisfactory to the Corporation, of legal
counsel acceptable to the Corporation, that such registration is not required.
Certificates representing the shares transferred upon the exercise or surrender
of the option granted hereby may, at the discretion of the Corporation, bear a
legend to the effect that such shares have not been registered under the
Securities Act or any applicable state securities law and that such shares may
not be sold or offered for sale in the absence of (i) an effective registration
statement as to such shares under the Securities Act and any applicable state
securities law, or (ii) an opinion, in form and substance satisfactory to the
Corporation, of legal counsel acceptable to the Corporation, that such
registration is not required. Furthermore, the Corporation shall have the right
to require such agreements as the Corporation deems necessary or appropriate
under the circumstances as a condition to the issuance of any shares under this
option. This option is subject in all respects to the terms of the Plan.
9. PAYMENT OF WITHHOLDING TAX. In the event the Corporation determines
that it is required to withhold state or Federal income tax as a result of the
exercise of an option, as a condition to the exercise thereof, the Consultant
may be required to make arrangements satisfactory to the Corporation to enable
it to satisfy such withholding requirements. Payment of such withholding
requirements may be made, in the discretion of the Plan Committee, (i) in cash,
(ii) by delivery of shares of Common Stock registered in the name of the
Consultant, or by the Corporation not issuing such number of shares of Common
Stock subject to the Option, having a fair market value at the time of exercise
equal to the amount to be withheld, or (iii) any combination of (i) and (ii)
above.
10. MISCELLANEOUS. The Consultant shall not have any right as a
stockholder of the Corporation solely as a result of the grant of this option.
The grant of this option does not constitute a contract of consulting. This
option is subject in all respects to the terms of the Plan. This option shall be
governed by the laws of the state applicable to the Plan.
11. BINDING EFFECT. This Agreement shall not have any right as a
stockholder of the Corporation solely as a result of the grant of the Option.
The grant of the Option does not constitute a contract of consulting.
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<PAGE> 4
12. FORFEITURE FOR FRAUD, DISHONESTY, UNLAWFUL COMPETITION AND OTHER
ACTS.
A. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 5 OR IN
ANY EXHIBIT TO THIS AGREEMENT, ALL OPTION AND OTHER RIGHTS WITH RESPECT TO ALL
OPTIONS GRANTED TO OPTIONEE HEREUNDER BUT NOT YET EXERCISED SHALL IMMEDIATELY
TERMINATE AND BE NULL AND VOID IF: (i) OPTIONEE'S CONSULTING RELATIONSHIP IS
TERMINATED BY THE CORPORATION FOR CAUSE; (ii) THE COMMITTEE OF THE CORPORATION'S
BOARD OF DIRECTORS THEN ADMINISTERING THE CORPORATION'S STOCK OPTION PLANS (THE
"COMMITTEE") DETERMINES THAT THE OPTIONEE ENGAGED IN ILLEGAL ACTS, FRAUD,
DISHONESTY, WILLFUL MISCONDUCT, INCLUDING VIOLATION OF THE CORPORATION'S INSIDER
TRADING POLICY, OR OTHER UNAUTHORIZED CONDUCT DETRIMENTAL TO THE CORPORATION;
(iii) OPTIONEE HAS AT ANY TIME DISCLOSED TO ANY PERSON, FIRM, CORPORATION OR
OTHER ENTITY ANY OF THE CORPORATION'S "PROPRIETARY INFORMATION" (AS DEFINED
BELOW) IN A MANNER WHICH COULD PLACE THE CORPORATION AT A COMPETITIVE
DISADVANTAGE OR CREATE EXPOSURE TO LIABILITY, WITHOUT THE EXPRESS WRITTEN
CONSENT OF THE BOARD OF DIRECTORS, OR EXCEPT AS SUCH DISCLOSURE MAY HAVE BEEN
REQUIRED IN CONNECTION WITH THE OPTIONEE'S SERVICE AS A CONSULTANT OF THE
CORPORATION OR BY LAW; (iv) OPTIONEE SOLICITS OR OTHERWISE INDUCES ANY EMPLOYEE
OF THE CORPORATION TO TERMINATE HIS OR HER EMPLOYMENT; (v) OPTIONEE SOLICITS
BUSINESS FROM ANY OF THE CORPORATION'S CUSTOMERS FOR AND ON BEHALF OF ANY OF THE
CORPORATION'S COMPETITORS FOR PRODUCTS IN THE SAME CLASS OF TRADE DURING THE
OPTIONEE'S STATUS AS A CONSULTANT OF THE CORPORATION AND FOR A PERIOD OF ONE
YEAR FOLLOWING THE OPTIONEE'S SEPARATION FROM THE COMPANY, UNLESS PRIOR WRITTEN
CONSENT IS GIVEN BY THE COMMITTEE; (vi) OPTIONEE DISPARAGES THE CORPORATION OR
COMMITS ANY OTHER ACT OF DISLOYALTY; (vii) OPTIONEE ENGAGES IN ANY CONDUCT IN
VIOLATION OF OPTIONEE'S CONTRACTUAL OBLIGATIONS TO THE CORPORATION, INCLUDING
BUT NOT LIMITED TO A VIOLATION OF ANY VALID NON-COMPETITION, NON-DISCLOSURE,
NON-SOLICITATION OR OTHER WRITTEN AGREEMENT; (viii) OPTIONEE FAILS TO ASSIGN TO
THE CORPORATION ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL PROPERTY
RIGHT IN VIOLATION OF ANY OF THE CORPORATION'S POLICIES OR ANY AGREEMENT BETWEEN
THE CORPORATION AND OPTIONEE; OR (ix) OPTIONEE REFUSES TO BE AVAILABLE FOR
REASONABLE CONSULTATION WITH RESPECT TO THE SUBJECT MATTER OF OPTIONEE'S
CONSULTING RELATIONSHIP FOR A PERIOD OF THREE MONTHS FOLLOWING TERMINATION OF
SUCH RELATIONSHIP. THE ACTS OR CIRCUMSTANCES DESCRIBED IN THE PRECEDING SENTENCE
SHALL BE REFERRED TO AS "EVENTS OF FORFEITURE."
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<PAGE> 5
B. FOR PURPOSES OF THIS SECTION, THE TERM "PROPRIETARY
INFORMATION" SHALL MEAN ALL CONFIDENTIAL OR SECRET CUSTOMER LISTS, PROSPECTIVE
CUSTOMER LISTS, TRADE SECRETS, PROCESSES, PRODUCT FORMULATIONS, INVENTIONS,
IMPROVEMENTS, MANUFACTURING FORMULATION OR SYSTEMS TECHNIQUES, PRODUCT FORMULAS,
DEVELOPMENT OR EXPERIMENTAL WORK, WORKS IN PROCESS, BUSINESS, MARKETING AND
COMPETITIVE STRATEGIES, INFORMATION RELATING TO ANY PATENT, TRADEMARK OR OTHER
INTELLECTUAL PROPERTY RIGHT OF THE CORPORATION, AND ANY OTHER SECRET OR
CONFIDENTIAL PROPRIETARY MATTER RELATING TO OR PERTAINING TO THE CORPORATION OR
ITS PRODUCTS, SERVICES, SALES OR BUSINESS.
C. IN ADDITION TO THE FOREGOING RIGHTS AND ANY AND ALL OTHER
RIGHTS WHICH THE CORPORATION (OR ANY OF ITS SUBSIDIARIES OR AFFILIATES) MAY HAVE
AGAINST THE OPTIONEE AT LAW OR IN EQUITY, OPTIONEE FURTHER AGREES THAT UPON
OCCURRENCE OF ANY OF THE EVENTS OF FORFEITURE DESCRIBED IN SUBSECTION A,
OPTIONEE SHALL OWE THE CORPORATION THE EXCESS OF THE FAIR MARKET VALUE OVER THE
OPTION PRICE (MEASURED AS OF THE DATE OF ACQUISITION) OF ALL SHARES ACQUIRED
THROUGH EXERCISE OF ANY OPTION WITHIN THE THREE (3) YEARS PRECEDING THE
COMMITTEE'S DETERMINATION THAT AN EVENT OF FORFEITURE HAS OCCURRED. OPTIONEE
SHALL PAY SUCH AMOUNT AS CALCULATED OR DETERMINED BY THE COMMITTEE TO THE
CORPORATION WITHIN THIRTY (30) DAYS OF THE COMMITTEE'S WRITTEN DETERMINATION
THAT AN EVENT OF FORFEITURE HAS OCCURRED, WHICH DETERMINATION MAY BE MADE BY
NOTICE TO THE OPTIONEE WITHIN ANY TIME UP TO TWO (2) YEARS FOLLOWING TERMINATION
OF THE OPTIONEE'S CONSULTING RELATIONSHIP.
D. BY ACCEPTING THIS AGREEMENT, OPTIONEE CONSENTS TO DEDUCTION
FROM ANY AMOUNTS THE CORPORATION MAY OWE TO OPTIONEE FROM TIME TO TIME
(INCLUDING AMOUNTS OWED TO OPTIONEE AS FEES OR OTHER COMPENSATION) TO THE EXTENT
OF ANY AMOUNT WHICH OPTIONEE OWES THE CORPORATION PURSUANT TO THE PROVISIONS OF
SUBSECTION C. WHETHER OR NOT THE CORPORATION ELECTS TO MAKE ANY SET-OFF IN WHOLE
OR IN PART, IF THE CORPORATION DOES NOT RECOVER BY MEANS OF THE SET-OFF THE FULL
AMOUNT OWED TO IT BY THE OPTIONEE, THEN OPTIONEE AGREES TO PAY IMMEDIATELY THE
UNPAID BALANCE TO THE CORPORATION.
E. THE OPTIONEE MAY BE RELEASED FROM OPTIONEE'S OBLIGATIONS
UNDER THIS SECTION 12 ONLY IF THE COMMITTEE DETERMINES, IN ITS SOLE DISCRETION,
THAT SUCH A RELEASE IS IN THE BEST INTERESTS OF
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<PAGE> 6
THE CORPORATION. SO LONG AS THEY ARE MADE IN GOOD FAITH, ALL DETERMINATIONS BY
THE COMMITTEE MADE PURSUANT TO THIS SECTION 12 SHALL BE FINAL, BINDING AND
NONAPPEALABLE.
13. AGREEMENT REGARDING PRIOR OPTION GRANTS. OPTIONEE EXPRESSLY AGREES
THAT, IN CONSIDERATION FOR THE GRANT OF THE OPTIONS PROVIDED FOR IN THIS
AGREEMENT, THE PROVISIONS OF SECTIONS 12, 13 AND 14 OF THIS AGREEMENT SHALL BE
DEEMED INCORPORATED INTO ALL PRIOR OPTION AGREEMENTS, IF ANY, ENTERED INTO
BETWEEN THE CORPORATION AND THE OPTIONEE AND THAT THE FORFEITURE PROVISIONS SET
FORTH IN THIS AGREEMENT SHALL APPLY TO ALL OPTIONS PREVIOUSLY GRANTED TO
OPTIONEE.
OPTIONEE ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS IMPORTANT PROVISIONS
AFFECTING OPTIONEE'S ECONOMIC INTEREST AND THAT OPTIONEE HAS CAREFULLY READ AND
CONSIDERED AND AGREES TO BE BOUND BY THIS AGREEMENT.
ACKNOWLEDGED AND AGREED TO____________________________
(Optionee's Signature)
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<PAGE> 7
14. ARBITRATION.
A. Any controversy, claim or dispute arising out of or
relating to this Agreement or the option, including but not limited to the
provisions of Sections 5, 12 and 13 hereof, or any act or occurrence relating to
the foregoing, or any decision of the Committee relating to an option or its
forfeiture ("A Dispute") shall be determined and resolved by binding arbitration
in accordance with Title IX of The United States Code and The commercial
Arbitration Rules of the American Arbitration Association ("AAA") in effect on
the date the arbitration is commenced in accordance herewith. In the event of
any inconsistency between such Rules of the AAA and the terms of this Agreement,
this Agreement shall supersede the Rules of the AAA. Judgment upon any award
rendered in the arbitration may be entered in any court having jurisdiction and
shall be final, binding, non-appealable and conclusive. The provisions of this
Agreement shall govern the rights of all parties hereto, including but not
limited to any party claiming for or on behalf of Optionee, including Optionee's
heirs, successors, assigns, personal representatives and bankruptcy trustees.
B. Any party may commence arbitration by serving upon all
other parties a written demand for arbitration sent by Certified Mail, Return
Receipt Requested to the Corporation at its principal place of business or to
the Optionee at his/her residence address as reflected in the records of the
Corporation, by Certified Mail, Return Receipt Requested to the AAA Office in
Phoenix, Arizona, or in the absence of such an office, to the AAA Region in
which Arizona is located.
C. The AAA shall administer the arbitration. The AAA shall
appoint a single arbitrator to conduct the arbitration within 30 days of the
AAA's receipt of a demand for arbitration in accordance with this Section. The
arbitrator shall, by virtue of background, similar experience, be knowledgeable
in matters pertaining to stock option agreements and employment relationships.
There shall be no right of discovery in connection with the arbitration except
in accordance with the AAA's Commercial Arbitration Rules. Not earlier than
thirty (30) nor more than forty-five (45) days after appointment, the arbitrator
shall conduct a preliminary hearing in accordance with the AAA "Guidelines for
Expediting Large, Complex Commercial Arbitrations." Not less than five (5) days
prior to the preliminary hearing, all parties to the arbitration shall serve
upon all other parties to the arbitration a written list of witnesses and
exhibits to be used in the arbitration hearing Except for good cause shown, no
witness or exhibit may be utilized at the arbitration hearing other than those
set forth on such list.
D. The arbitrator shall receive evidence in a single hearing
which shall be conducted in Phoenix, Arizona, unless the arbitrator determines
by written application of a party that such location would represent an
unreasonable hardship and that the hearing should be conducted in another
location. The hearing shall be commenced not more than sixty (60) days after the
appointment of the arbitrator.
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<PAGE> 8
E. The arbitrator shall award reasonable attorneys fees and
costs in favor of the prevailing party. The arbitrator shall issue a final award
not more than twenty (20) days following the conclusion of the hearing. The
arbitrator shall have the power to hear and decide, by documents only or with
the hearing (at the arbitrator's sole discretion) any pre-hearing motions which
are in the nature of pre-trial motions to dismiss or for summary judgment. The
arbitrator shall be entitled to receive reasonable compensation at an hourly
rate to be established by agreement between the arbitrator and the AAA.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
MEDICIS PHARMACEUTICAL CORPORATION
By:_________________________________________
Chairman and Chief Executive Officer
____________________________________________
Corporate Secretary
____________________________________________
Consultant
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<PAGE> 1
EXHIBIT 99.5
NON-QUALIFIED NON-EMPLOYEE DIRECTOR
STOCK OPTION CERTIFICATE AGREEMENT
THIS AGREEMENT is made as of the Date of Grant shown on Exhibit A
hereto, and between MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation
(the "Corporation"), and the individual named on Exhibit A hereto (the
"Director").
WHEREAS, the Corporation considers it desirable and in its best
interests that non-employee Directors be given an annual grant of options to
purchase shares in the Corporation pursuant to Section 7.3 of the Corporation's
stock option plan identified on Exhibit A hereto, (the "Plan");
WHEREAS, Section 7.1 of the Plan states that options granted under the
Plan shall be evidenced by Certificates incorporating such terms and conditions
as the Plan Committee (as such term is defined in the Plan) in its absolute
discretion deems consistent with the terms of the Plan;
WHEREAS, as of the date hereof the Plan provides that on the last
business day following approval of an amendment of the Plan and thereafter on
the last business day of September in each year, each then non-employee Director
shall be granted without further action by the Plan Committee, a non-qualified
incentive stock option to purchase the number of shares of its Class A Common
Stock at fair market value on the date of grant as shown on Exhibit A.
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
1. GRANT OF OPTION. Subject to the terms and conditions set forth
herein, the Corporation hereby grants to the Director the right, privilege and
option to purchase the number of shares of its Class A Common Stock (the "Common
Stock"), shown on Exhibit A hereto. These options are not intended as Incentive
Stock Options within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended.
2. PURCHASE PRICE. The purchase price per share under the option
granted to Director under Paragraph 1 above shall be as shown on Exhibit A
hereto, subject to adjustment as provided herein and in the Plan.
3. TIME OF EXERCISE OF OPTION. Subject to the terms and conditions set
forth herein, the aforesaid option, until the termination thereof as provided in
paragraph 5 below, may be exercised by the Director in whole or in part, as
shown on Exhibit A, provided that the Director is still a Director as of that
date.
4. METHOD OF EXERCISE. The option shall be exercised by written notice
directed to the Board of Directors of the Corporation, at the Corporation's
principal place of business, accompanied by a check in payment of the option
price for the number of shares specified and paid for. The Corporation shall
make immediate delivery of the shares purchased
<PAGE> 2
under the option, provided that if any law or regulation requires the
Corporation to take any such action with respect to the shares specified in such
notice before the issuance thereof, then the date of delivery of such shares
shall be extended for the period necessary to take such action.
5. TERMINATION OF OPTION. Except as otherwise stated herein, any
unvested option shall terminate upon termination of the optionee's status as a
Director of the Corporation, and any vested option, to the extent not
theretofore exercised, shall terminate as shown in Exhibit A or in accordance
with Section 11 hereof.
6. RECLASSIFICATION, CONSOLIDATION OR MERGER. If and to the extent that
the number of issued shares of Common Stock of the Corporation shall be
increased or reduced by change in par value, split up, reclassification,
distribution of a dividend payable in stock, or the like, the number of shares
subject to option and the option price per share shall be proportionately
adjusted. If the Corporation is reorganized or consolidated or merged with
another corporation, the Director shall be entitled to receive options covering
shares of such reorganized, consolidated, or merged company in the same
proportion, at an equivalent price, and subject to the same conditions. For
purposes of the preceding sentence, the excess of the aggregate fair market
value of the shares subject to the option immediately after the reorganization,
consolidation or merger over the aggregate option price of such shares shall not
be more than the excess of the aggregate fair market value of all shares subject
to the option immediately before such reorganization, consolidation, or merger
over the aggregate option price of such shares, and the new option or assumption
of the old option shall not give the Director additional benefits which the
Director did not have under the old option, or deprive the Director of benefits
which the Debtor had under the old option (except with respect to fractional
shares).
7. RIGHTS PRIOR TO EXERCISE OF OPTION. This option is not transferable
by the Director, except in the event of death in which case the transferee of
said option (or any unexercised portion thereof) pursuant to the Director's will
or by laws of intestacy, must exercise said option within one hundred eighty
(180) days following the date of the Director's death (or the date specified in
Paragraph 5, if earlier). The Director shall have no rights as a stockholder
with respect to the option shares until payment of the option price and delivery
to him of certificates for such shares as herein provided.
8. SECURITIES, REGISTRATION AND RESTRICTIONS. Upon receipt of the
shares of the Corporation as a result of the exercise in whole or in part of
this option, the Director, if so requested by the Corporation, shall represent
and warrant to the Corporation that the Director is acquiring the shares of
Common Stock for investment and not with a view toward resale or distribution to
the public and, if so requested by the Corporation, shall deliver to the
Corporation a written statement to that effect satisfactory to the Corporation.
Additionally, if so requested by the Corporation that the Director will execute
and deliver to the Corporation a written agreement that the Director will not
sell or offer to sell any such shares of Common Stock unless a registration
statement shall be in effect with respect to such shares of Common Stock under
the Securities Act (as defined in the Plan) and any applicable state securities
law or unless
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<PAGE> 3
the Director shall have furnished to the Corporation an opinion, in form and
substance satisfactory to the Corporation, of legal counsel acceptable to the
Corporation, that such registration is not required. Certificates representing
the shares transferred upon the exercise or surrender of the option granted
hereby may, at the discretion of the Corporation, bear a legend to the effect
that such shares have not been registered under the Securities Act or any
applicable state securities law and that such shares may not be sold or offered
for sale in the absence of (i) an effective registration statement as to such
shares under the Securities Act and any applicable state securities law, or (ii)
an opinion, in form and substance satisfactory to the Corporation, of legal
counsel acceptable to the Corporation, that such registration is not required.
Furthermore, the Corporation shall have the right to require the Director to
enter into such stockholder or other related agreements as the Corporation deems
necessary or appropriate under the circumstances as a condition to the issuance
of any shares under the Option.
9. MISCELLANEOUS. The Director shall not have any right as a
stockholder of the Corporation solely as a result of the grant of this option.
The grant of this option does not constitute a contract of employment. This
option is subject in all respects to the terms of the Plan. This option shall be
governed by the laws of the state applicable to the Plan.
10. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
11. FORFEITURE FOR FRAUD, DISHONESTY, UNLAWFUL COMPETITION AND OTHER
ACTS.
A. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTION 5 OR IN
ANY EXHIBIT TO THIS AGREEMENT, ALL OPTION AND OTHER RIGHTS WITH RESPECT TO ALL
OPTIONS GRANTED TO OPTIONEE HEREUNDER BUT NOT YET EXERCISED SHALL IMMEDIATELY
TERMINATE AND BE NULL AND VOID IF: (i) THE COMMITTEE OF THE CORPORATION'S BOARD
OF DIRECTORS THEN ADMINISTERING THE CORPORATION'S STOCK OPTION PLANS (THE
"COMMITTEE") DETERMINES THAT THE OPTIONEE ENGAGED IN ILLEGAL ACTS, FRAUD,
DISHONESTY, WILLFUL MISCONDUCT, INCLUDING VIOLATION OF THE CORPORATION'S INSIDER
TRADING POLICY, OR OTHER UNAUTHORIZED CONDUCT DETRIMENTAL TO THE CORPORATION;
(ii) OPTIONEE HAS AT ANY TIME DISCLOSED TO ANY PERSON, FIRM, CORPORATION OR
OTHER ENTITY ANY OF THE CORPORATION'S "PROPRIETARY INFORMATION" (AS DEFINED
BELOW) IN A MANNER WHICH COULD PLACE THE CORPORATION AT A COMPETITIVE
DISADVANTAGE OR CREATE EXPOSURE TO LIABILITY, WITHOUT THE EXPRESS WRITTEN
CONSENT OF THE BOARD OF DIRECTORS, OR EXCEPT AS SUCH DISCLOSURE MAY HAVE BEEN
REQUIRED IN CONNECTION WITH THE OPTIONEE'S SERVICE AS A DIRECTOR OF THE
CORPORATION OR BY LAW; (iii) OPTIONEE SOLICITS OR OTHERWISE INDUCES ANY EMPLOYEE
OF THE
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<PAGE> 4
CORPORATION TO TERMINATE HIS OR HER EMPLOYMENT; (iv) OPTIONEE SOLICITS BUSINESS
FROM ANY OF THE CORPORATION'S CUSTOMERS FOR AND ON BEHALF OF ANY OF THE
CORPORATION'S COMPETITORS FOR PRODUCTS IN THE SAME CLASS OF TRADE DURING THE
OPTIONEE'S STATUS AS A DIRECTOR WITH THE CORPORATION AND FOR A PERIOD OF ONE
YEAR FOLLOWING THE OPTIONEE'S SEPARATION FROM THE COMPANY, UNLESS PRIOR WRITTEN
CONSENT IS GIVEN BY THE COMMITTEE; (v) OPTIONEE DISPARAGES THE CORPORATION OR
COMMITS ANY OTHER ACT OF DISLOYALTY; (vi) OPTIONEE ENGAGES IN ANY CONDUCT IN
VIOLATION OF OPTIONEE'S CONTRACTUAL OBLIGATIONS TO THE CORPORATION, INCLUDING
BUT NOT LIMITED TO A VIOLATION OF ANY VALID NON-COMPETITION, NON-DISCLOSURE,
NON-SOLICITATION OR OTHER WRITTEN AGREEMENT; OR (vii) OPTIONEE FAILS TO ASSIGN
TO THE CORPORATION ANY PATENT, COPYRIGHT, TRADEMARK OR OTHER INTELLECTUAL
PROPERTY RIGHT IN VIOLATION OF ANY OF THE CORPORATION'S POLICIES OR ANY
AGREEMENT BETWEEN THE CORPORATION AND OPTIONEE. THE ACTS OR CIRCUMSTANCES
DESCRIBED IN THE PRECEDING SENTENCE SHALL BE REFERRED TO AS "EVENTS OF
FORFEITURE."
B. FOR PURPOSES OF THIS SECTION, THE TERM "PROPRIETARY
INFORMATION" SHALL MEAN ALL CONFIDENTIAL OR SECRET CUSTOMER LISTS, PROSPECTIVE
CUSTOMER LISTS, TRADE SECRETS, PROCESSES, PRODUCT FORMULATIONS, INVENTIONS,
IMPROVEMENTS, MANUFACTURING FORMULATION OR SYSTEMS TECHNIQUES, PRODUCT FORMULAS,
DEVELOPMENT OR EXPERIMENTAL WORK, WORKS IN PROCESS, BUSINESS, MARKETING AND
COMPETITIVE STRATEGIES, INFORMATION RELATING TO ANY PATENT, TRADEMARK OR OTHER
INTELLECTUAL PROPERTY RIGHT OF THE CORPORATION, AND ANY OTHER SECRET OR
CONFIDENTIAL PROPRIETARY MATTER RELATING TO OR PERTAINING TO THE CORPORATION OR
ITS PRODUCTS, SERVICES, SALES OR BUSINESS.
C. IN ADDITION TO THE FOREGOING RIGHTS AND ANY AND ALL OTHER
RIGHTS WHICH THE CORPORATION (OR ANY OF ITS SUBSIDIARIES OR AFFILIATES) MAY HAVE
AGAINST THE OPTIONEE AT LAW OR IN EQUITY, OPTIONEE FURTHER AGREES THAT UPON
OCCURRENCE OF ANY OF THE EVENTS OF FORFEITURE DESCRIBED IN SUBSECTION A,
OPTIONEE SHALL OWE THE CORPORATION THE EXCESS OF THE FAIR MARKET VALUE OVER THE
OPTION PRICE (MEASURED AS OF THE DATE OF ACQUISITION) OF ALL SHARES ACQUIRED
THROUGH EXERCISE OF ANY OPTION WITHIN THE THREE (3) YEARS PRECEDING THE
COMMITTEE'S DETERMINATION THAT AN EVENT OF FORFEITURE HAS OCCURRED. OPTIONEE
SHALL PAY SUCH AMOUNT AS CALCULATED OR DETERMINED BY THE COMMITTEE TO THE
CORPORATION WITHIN THIRTY (30) DAYS OF THE COMMITTEE'S WRITTEN DETERMINATION
THAT AN EVENT OF FORFEITURE HAS OCCURRED, WHICH DETERMINATION MAY BE MADE BY
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<PAGE> 5
NOTICE TO THE OPTIONEE WITHIN ANY TIME UP TO TWO (2) YEARS FOLLOWING TERMINATION
OF THE OPTIONEE'S STATUS AS A DIRECTOR OF THE CORPORATION.
D. BY ACCEPTING THIS AGREEMENT, OPTIONEE CONSENTS TO DEDUCTION
FROM ANY AMOUNTS THE CORPORATION MAY OWE TO OPTIONEE FROM TIME TO TIME
(INCLUDING AMOUNTS OWED TO OPTIONEE AS DIRECTOR'S FEES OR OTHER COMPENSATION) TO
THE EXTENT OF ANY AMOUNT WHICH OPTIONEE OWES THE CORPORATION PURSUANT TO THE
PROVISIONS OF SUBSECTION C. WHETHER OR NOT THE CORPORATION ELECTS TO MAKE ANY
SET-OFF IN WHOLE OR IN PART, IF THE CORPORATION DOES NOT RECOVER BY MEANS OF THE
SET-OFF THE FULL AMOUNT OWED TO IT BY THE OPTIONEE, THEN OPTIONEE AGREES TO PAY
IMMEDIATELY THE UNPAID BALANCE TO THE CORPORATION.
E. THE OPTIONEE MAY BE RELEASED FROM OPTIONEE'S OBLIGATIONS
UNDER THIS SECTION 12 ONLY IF THE COMMITTEE DETERMINES, IN ITS SOLE DISCRETION,
THAT SUCH A RELEASE IS IN THE BEST INTERESTS OF THE CORPORATION. SO LONG AS THEY
ARE MADE IN GOOD FAITH, ALL DETERMINATIONS BY THE COMMITTEE MADE PURSUANT TO
THIS SECTION 12 SHALL BE FINAL, BINDING AND NONAPPEALABLE.
12. AGREEMENT REGARDING PRIOR OPTION GRANTS. OPTIONEE EXPRESSLY AGREES
THAT, IN CONSIDERATION FOR THE GRANT OF THE OPTIONS PROVIDED FOR IN THIS
AGREEMENT, THE PROVISIONS OF SECTIONS 12, 13 AND 14 OF THIS AGREEMENT SHALL BE
DEEMED INCORPORATED INTO ALL PRIOR OPTION AGREEMENTS, IF ANY, ENTERED INTO
BETWEEN THE CORPORATION AND THE OPTIONEE AND THAT THE FORFEITURE PROVISIONS SET
FORTH IN THIS AGREEMENT SHALL APPLY TO ALL OPTIONS PREVIOUSLY GRANTED TO
OPTIONEE.
OPTIONEE ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS IMPORTANT PROVISIONS
AFFECTING OPTIONEE'S ECONOMIC INTEREST AND THAT OPTIONEE HAS CAREFULLY READ AND
CONSIDERED AND AGREES TO BE BOUND BY THIS AGREEMENT.
ACKNOWLEDGED AND AGREED TO____________________________
(Optionee's Signature)
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13. ARBITRATION.
A. Any controversy, claim or dispute arising out of or
relating to this Agreement or the option, including but not limited to the
provisions of Sections 5, 12 and 13 hereof, or any act or occurrence relating to
the foregoing, or any decision of the Committee relating to an option or its
forfeiture ("A Dispute") shall be determined and resolved by binding arbitration
in accordance with Title IX of The United States Code and The commercial
Arbitration Rules of the American Arbitration Association ("AAA") in effect on
the date the arbitration is commenced in accordance herewith. In the event of
any inconsistency between such Rules of the AAA and the terms of this Agreement,
this Agreement shall supersede the Rules of the AAA. Judgment upon any award
rendered in the arbitration may be entered in any court having jurisdiction and
shall be final, binding, non-appealable and conclusive. The provisions of this
Agreement shall govern the rights of all parties hereto, including but not
limited to any party claiming for or on behalf of Optionee, including Optionee's
heirs, successors, assigns, personal representatives and bankruptcy trustees.
B. Any party may commence arbitration by serving upon all
other parties a written demand for arbitration sent by Certified Mail, Return
Receipt Requested to the Corporation at its principal place of business or to
the Optionee at his/her residence address as reflected in the records of the
Corporation, by Certified Mail, Return Receipt Requested to the AAA Office in
Phoenix, Arizona, or in the absence of such an office, to the AAA Region in
which Arizona is located.
C. The AAA shall administer the arbitration. The AAA shall
appoint a single arbitrator to conduct the arbitration within 30 days of the
AAA's receipt of a demand for arbitration in accordance with this Section. The
arbitrator shall, by virtue of background, similar experience, be knowledgeable
in matters pertaining to stock option agreements and employment relationships.
There shall be no right of discovery in connection with the arbitration except
in accordance with the AAA's Commercial Arbitration Rules. Not earlier than
thirty (30) nor more than forty-five (45) days after appointment, the arbitrator
shall conduct a preliminary hearing in accordance with the AAA "Guidelines for
Expediting Large, Complex Commercial Arbitrations." Not less than five (5) days
prior to the preliminary hearing, all parties to the arbitration shall serve
upon all other parties to the arbitration a written list of witnesses and
exhibits to be used in the arbitration hearing Except for good cause shown, no
witness or exhibit may be utilized at the arbitration hearing other than those
set forth on such list.
D. The arbitrator shall receive evidence in a single hearing
which shall be conducted in Phoenix, Arizona, unless the arbitrator determines
by written application of a party that such location would represent an
unreasonable hardship and that the hearing should be conducted in another
location. The hearing shall be commenced not more than sixty (60) days after the
appointment of the arbitrator.
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E. The arbitrator shall award reasonable attorneys fees and
costs in favor of the prevailing party. The arbitrator shall issue a final award
not more than twenty (20) days following the conclusion of the hearing. The
arbitrator shall have the power to hear and decide, by documents only or with
the hearing (at the arbitrator's sole discretion) any pre-hearing motions which
are in the nature of pre-trial motions to dismiss or for summary judgment. The
arbitrator shall be entitled to receive reasonable compensation at an hourly
rate to be established by agreement between the arbitrator and the AAA.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
MEDICIS PHARMACEUTICAL CORPORATION
By:_________________________________________
Chairman and Chief Executive Officer
______________________________________(SEAL)
Corporate Secretary
____________________________________________
Non-Employee Director
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