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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
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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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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 XXXXXXX
XXXXXXX 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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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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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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