Valeant Pharmaceuticals International 2006 Equity Incentive Plan Executive Stock Option Agreement (Incentive Stock Option or Nonstatutory Stock Option)
Exhibit 99.1
Valeant Pharmaceuticals International
2006 Equity Incentive Plan
2006 Equity Incentive Plan
Executive Stock Option Agreement
(Incentive Stock Option or Nonstatutory Stock Option)
(Incentive Stock Option or Nonstatutory Stock Option)
Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option
Agreement, Valeant Pharmaceuticals International (the “Company”) has granted you an option under
its 2006 Equity Incentive Plan (the “Plan”) to purchase the number of shares of the Company’s
Common Stock indicated in your Grant Notice at the exercise price indicated in your Grant Notice.
Defined terms not explicitly defined in this Stock Option Agreement but defined in the Plan shall
have the same definitions as in the Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein, your option will
vest as provided in your Grant Notice, provided that vesting will cease upon the termination of
your Continuous Service.
2. Number of Shares and Exercise Price. The number of shares of Common
Stock subject to your option and your exercise price per share referenced in your Grant Notice may
be adjusted from time to time for Capitalization Adjustments.
3. Sales Restriction for Executive Employees. Following the exercise of
your Option, you may not sell, dispose of, transfer, or enter into any similar transaction with the
same economic effect as a sale of, fifty percent (50%) of the “net shares” of Common Stock
purchased upon the exercise of such Option until the earlier of (i) your death; (ii) your
Disability; (iii) the termination of your Continuous Service; or (iv) the second anniversary of the
date on which you purchased such shares (or such longer or shorter period of time as determined by
the Board and communicated to you in writing). You may be required to execute and deliver such
other agreements as may be reasonably requested by the Company that are consistent with the
foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing,
the Company may impose stop-transfer instructions with respect to such shares of Common Stock until
the end of such period, or place legends on stock certificates issued pursuant to the Plan
restricting the transfer of such shares until the end of such period. For purposes of this Section
3 only, the term “net shares” shall mean the number of shares being exercised minus the minimum
number of whole shares necessary to pay the purchase price of the option and pay for applicable
withholding taxes.
4. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the exercise price in
cash or by check or in any other manner permitted by your Grant Notice, which may include one or
more of the following:
(a) Bank draft or money order payable to the Company.
(b) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.
(c) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned
shares of Common Stock either that you have held for the period required to avoid a charge to the
Company’s reported earnings (generally six (6) months) or that you did not acquire, directly or
indirectly from the Company, that are owned free and clear of any liens, claims, encumbrances or
security interests, and that are valued at Fair Market Value on the date of exercise. “Delivery”
for these purposes, in the sole discretion of the Company at the time you exercise your option,
shall include delivery to the Company of your attestation of ownership of such shares of Common
Stock in a form approved by the Company. Notwithstanding the foregoing, you may not exercise your
option by tender to the Company of Common Stock to the extent such tender would violate the
provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.
(d) By a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
issued; provided further, however, that shares of Common Stock will no longer be outstanding under
your option and will not be exercisable thereafter to the extent that (1) shares are used to pay
the exercise price pursuant to the “net exercise,” (2) shares are delivered to you as a result of
such exercise, and (3) shares are withheld to satisfy tax withholding obligations.
5. Whole Shares. You may exercise your option only for whole shares of
Common Stock.
6. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the shares of Common Stock issuable upon
such exercise are then registered under the Securities Act or, if such shares of Common Stock are
not then so registered, the Company has determined that such exercise and issuance would be exempt
from the registration requirements of the Securities Act. The exercise of your option also must
comply with other applicable laws and regulations governing your option, and you may not exercise
your option if the Company determines that such exercise would not be in material compliance with
such laws and regulations.
7. Term. You may not exercise your option before the commencement or after
the expiration of its term. The term of your option commences on the Date of Grant and, except as
provided otherwise in Section 9(c) of the Plan, expires upon the earliest of the following:
(a) immediately upon the termination of your Continuous Service for Cause;
(b) three (3) months after the termination of your Continuous Service for any reason other
than for Cause or upon your Disability or death, provided, however, that (i) if during any part of
such three (3) month period your option is not exercisable solely because of the condition set
forth in Section 6, your option shall not expire until the earlier of the Expiration Date or until
it shall have been exercisable for an aggregate period of three (3) months after the termination of
your Continuous Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your
Continuous Service within six (6) months after the Date of Grant specified in your Grant Notice,
and (z) you have vested in a portion of your option at the time of your termination of Continuous
Service, your option shall not expire until the earlier of (A) the later of the date that is seven
(7) months after the Date of Grant specified in your Grant Notice or the date that is three (3)
months after the termination of your Continuous Service or (B) the Expiration Date;
(c) twelve (12) months after the termination of your Continuous Service due to your
Disability;
(d) twelve (12) months after the termination of your Continuous Service due to your death;
(e) the Expiration Date indicated in your Grant Notice; or
(f) the day before the tenth (10th) anniversary of the Date of Xxxxx.
If your option is an Incentive Stock Option, note that to obtain the federal income tax
advantages associated with an Incentive Stock Option, the Code requires that at all times beginning
on the date of grant of your option and ending on the day three (3) months before the date of your
option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of
your death or your permanent and total disability, as defined in Section 22(e) of the Code. The
Company has provided for extended exercisability of your option under certain circumstances for
your benefit but cannot guarantee that your option will necessarily be treated as an Incentive
Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or
Director after your employment terminates or if you otherwise exercise your option more than three
(3) months after the date your employment with the Company or an Affiliate terminates.
8. Exercise.
(a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Company’s
Stock Plan Administrator, or to such other person as the Company may designate, during regular
business hours, together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.
(c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within ten (10) days after the date of any disposition of any of
the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years
after the date of your option grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.
9. Transferability.
(a) Restrictions on Transfer. Your option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Board may, in its sole discretion, permit you to transfer your option
in a manner consistent with applicable tax and securities laws upon your request.
(b) Domestic Relations Orders. Notwithstanding the foregoing, your option may be transferred
pursuant to a domestic relations order; provided, however, that if your option is an Incentive
Stock Option, your option shall be deemed to be a Nonstatutory Stock Option as a result of such
transfer.
(c) Beneficiary Designation. Notwithstanding the foregoing, you may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of your death, shall thereafter be entitled to exercise your option.
10. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any way whatsoever any
obligation on your part to continue in the employ of the Company or an Affiliate, or of the Company
or an Affiliate to continue your employment. In addition, nothing in your option shall obligate
the Company or an Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or Consultant for the
Company or an Affiliate.
11. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if
any, which arise in connection with the exercise of your option.
(b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b)
of the Code, covering the aggregate number of shares of Common Stock acquired upon such
exercise with respect to which such determination is otherwise deferred, to accelerate the
determination of such tax withholding obligation to the date of exercise of your option.
Notwithstanding the filing of such election, shares of Common Stock shall be withheld solely from
fully vested shares of Common Stock determined as of the date of exercise of your option that are
otherwise issuable to you upon such exercise. Any adverse consequences to you arising in
connection with such share withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.
12. Notices. Any notices provided for in your option or the Plan shall be
given in written or electronic form and shall be deemed effectively given upon your receipt of such
written or electronic notice or, in the case of notices delivered by mail by the Company to you,
five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the
last address you provided to the Company.
13. Headings. The headings of the Sections in this Stock Option Agreement
are inserted for convenience only and shall not be deemed to constitute a part of this Stock Option
Agreement or to affect the meaning of this Stock Option Agreement.
14. Amendment. Nothing in this Stock Option Agreement shall restrict the
Company’s ability to exercise its discretionary authority pursuant to Section 2 of the Plan;
provided, however, that no such action may, without your consent, adversely affect your rights
under your option.
15. Miscellaneous.
(a) The rights and obligations of the Company under your option shall be transferable to any
one or more persons or entities, and all covenants and agreements hereunder shall inure to the
benefit of, and be enforceable by the Company’s successors and assigns.
(b) You agree upon request to execute any further documents or instruments necessary or
desirable in the sole determination of the Company to carry out the purposes or intent of your
option.
(c) You acknowledge and agree that you have reviewed your option in its entirety, have had an
opportunity to obtain the advice of counsel prior to executing and accepting your option and fully
understand all provisions of your option.
16. Governing Plan Document. Your option is subject to all the provisions
of the Plan, the provisions of which are hereby made a part of your option, and is further subject
to all interpretations, amendments, rules and regulations, which may from time to time be
promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions
of your option and those of the Plan, the provisions of the Plan shall control.
17. Choice of Law. The interpretation, performance and enforcement of this
Stock Option Agreement shall be governed by the law of the state of California without regard to
such state’s conflicts of laws rules.
18. Resolution of Disputes. To ensure rapid and economical resolution of
any disputes that may arise under the Plan and this Stock Option Agreement with respect to your
option, you and the Company agree that any and all disputes, claims, or controversies of any nature
whatsoever arising from or regarding the interpretation, performance, enforcement or breach of the
Plan and this Stock Option Agreement with respect to your option shall be resolved, to the fullest
extent allowed by law, by confidential, final and binding arbitration conducted by Judicial
Arbitration and Mediation Services, Inc. (“JAMS”) in the city closest to the office at which you
perform the greatest percentage of your services during the six (6) month period immediately prior
to the date of your termination (or, if the dispute does not relate to the termination of your
services, at the time the incident giving rise to such dispute occurred) under the then-existing
JAMS rules, using a single arbitrator. The arbitration shall be completed within six (6) months
from the date the demand for arbitration is filed with JAMS, provided that the arbitrator may
extend such date for good reason as determined in his sole discretion. The arbitrator shall: (a)
have the authority to compel adequate discovery for the resolution of the dispute and to award such
relief as would otherwise be permitted by law; and (b) issue a written arbitration decision
including the arbitrator’s essential findings and conclusions and a statement of the award.
Nothing in this Stock Option Agreement is intended to prevent either you or the Company from
obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such
arbitration. The arbitrator, and not a court, shall be authorized to determine whether the
provisions of this Section 18 apply to a dispute, controversy or claim sought to be resolved in
accordance with these arbitration procedures. Notwithstanding the foregoing, neither party shall
be permitted to initiate a demand for arbitration until it has participated in a non-binding
mediation conducted by JAMS, after providing notice to the other party. Both parties shall
participate in such a mediation within forty-five (45) days of delivery of such notice. If the
parties cannot mutually agree upon a mediator within ten (10) days of such notice, then a mediator
shall be designated by JAMS.
IN WITNESS WHEREOF, the parties hereto have executed this agreement the date indicated
below.
| Grantee: | Valeant Pharmaceuticals International | |||||||
Signed:
|
By: | |||||||
Name:
|
Title: | |||||||
Date:
|
Date: | |||||||
