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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.
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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
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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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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 XXXXXXX
XXXXXXX 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-
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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)
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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)
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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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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
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