EXHIBIT 10.4
1999 Equity Incentive Plan
IMPAX LABORATORIES, INC.
1999 EQUITY INCENTIVE PLAN
1. Purpose. The purpose of the Plan is to attract, retain and motivate key
personnel by providing a means whereby the Company may grant (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights and/or
(iv) Stock Bonuses to officers, employees, directors and consultants of the
Company and its Affiliates. In addition, Non-Employee Directors shall receive
automatic grants of Nonstatutory Stock Options under the Plan.
2. Administration
2.1. Administration by Board. The Board shall administer the Plan unless and to
the extent that the Board delegates its power and authority to a Committee as
provided in Section 2.3.
2.2. Power of Board. Subject to the provisions of the Plan, the Board, acting in
its sole discretion, shall have the following power and authority:
2.2.1. to determine to which of the eligible individuals, and the times at
which, Awards shall be granted;
2.2.2. to determine the number of shares of Common Stock subject to Awards
granted under the Plan and, where applicable, the price to be paid for the
shares of Common Stock subject to each Award;
2.2.3. to determine the terms and conditions of each Award (which need not be
identical);
2.2.4. to interpret the terms of the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration (and,
in the exercise of this power, may correct any defect, omission or inconsistency
in the Plan or in any Award Agreement, in a manner and to the extent it deemed
necessary or desirable);
2.2.5. to accelerate the terms of the Plan or any Award;
2.2.6. to amend the terms of the Plan or any Award;
2.2.7. to adopt forms of Award Agreements for use under the Plan;
2.2.8. to allow Participants to satisfy the minimum withholding tax obligations
by electing to have the Company withhold from the shares covered by an Award
that number of shares having a Fair Market Value equal to the amount required to
be withheld; and

 

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2.2.9. to make all determinations deemed necessary or advisable for the
administration of the Plan.
2.3. Delegation. Except with regard to Awards to Non-Employee Directors, the
Board may delegate any or all of its powers and authority relating to the
administration of the Plan (but not the power to amend or terminate the Plan) to
a Committee of two (2) or more members of the Board. If and to the extent that
administrative responsibility is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers and
authority theretofore possessed by the Board, including the power to delegate to
a subcommittee any of the administrative powers the Committee is authorized to
exercise (and, as appropriate, references in the Plan to the Board shall be
deemed to be the Committee or subcommittee). If a Committee is appointed, then,
unless the Board determines otherwise, its members shall consist solely of
individuals who qualify as “non-employee directors” under Rule 16b-3 promulgated
under Section 16 of the Exchange Act and as “outside directors” under Section
162(m) of the Code. If for any reason the Committee does not satisfy the
“non-employee director” requirements of Rule 16b-3 or the “outside director”
requirements of Section 162(m) of the Code, such non-compliance shall not affect
the validity of the awards, interpretations or other actions of the Committee.
The Board may delegate nondiscretionary administrative duties to such employees
of the Company as it deems proper.
2.4. Indemnification. The Company shall indemnify and hold harmless to the
fullest extent permitted by law each member of the Board and the Committee and
any employee or director of the Company to whom any duty or power relating to
the administration or interpretation of the Plan is delegated from and against
any loss, cost, liability (including any sum paid in settlement of a claim with
the approval of the Board), damage and expense (including legal and other
expenses incident thereto) arising out of or incurred in connection with the
Plan, unless and except to the extent attributable to such person’s fraud or
willful misconduct.
2.5. Decisions. All decisions, determinations and interpretations of the Board
shall be final, binding and conclusive on all persons.
3. Share Reserve. Subject to adjustment pursuant to Section 11, the aggregate
number of shares of Common Stock that may be issued pursuant to the Plan is
5,000,000 shares. If any Option or Stock Appreciation Right expires or is
terminated without being exercised in whole or in part, the unexercised or
released shares from such Option or Stock Appreciation Right shall be available
for future issuance under the Plan. Shares that are subject to an Award that is
forfeited or cancelled or that are withheld in order to pay the purchase price
for shares of Common Stock covered by any Award or to satisfy the tax
withholding obligations associated with any Award under the Plan shall be
available for future issuance under the Plan. Shares of Common Stock available
for issuance under the Plan may be authorized and unissued, held by the Company
in its treasury or otherwise acquired for purposes of the Plan. No fractional
shares of Common Stock shall be issued under the Plan. Subject to adjustment
pursuant to Section 11, the maximum number of shares of Common Stock with
respect to which Options or Stock Appreciation Rights may be granted during any
calendar year to any employee may not exceed 300,000 shares.
4. Eligibility. Awards may be granted under the Plan to officers, employees,
directors and consultants of the Company or its Affiliates. Incentive Stock
Options may be granted only to employees of the Company or its Affiliates.
Non-Employee Directors shall receive automatic grants of Nonstatutory Stock
Options pursuant to Section 8 of the Plan. The Company may also, from time to
time, assume

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outstanding awards granted by another company, whether in connection with an
acquisition of such other company or otherwise, by either (i) granting an Award
under the Plan in replacement of the award assumed by the Company, or
(ii) treating the assumed award as if it had been granted under the Plan.
5. Options.
5.1. Option Grant. Subject to the provisions hereof, the Board may grant
Incentive Stock Options and Nonstatutory Stock Options to eligible personnel on
such terms and conditions as the Board deems appropriate.
5.2. Exercise Price. The exercise price of an Option shall not be less than the
par value of the Common Stock, provided that (i) the exercise price of an
Incentive Stock Option shall not be less than the Fair Market Value of the
Common Stock on the date the Option is granted, and (ii) the exercise price of
an Incentive Stock Option granted to a Ten Percent Stockholder shall not be less
than 110% of the Fair Market Value of the Common Stock on the date the Option is
granted.
5.3. Option Term. No Option granted under the Plan may be exercisable (if at
all) more than ten (10) years after the date the Option is granted (or, in the
case of an Incentive Stock Option granted to a Ten Percent Stockholder, five
(5) years.)
5.4. Vesting and Exercise of Options. The Board may establish such vesting and
other conditions and restrictions on the exercise of an Option and/or upon the
issuance of Common Stock in connection with the exercise of an Option as it
deems appropriate. Subject to satisfaction of applicable withholding
requirements, once vested and exercisable, an Option may be exercised by
transmitting to the Company: (i) a notice specifying the number of shares to be
purchased and (ii) payment of the exercise price. The exercise price of an
Option may be paid in cash and/or such other form of payment as the Company may
permit.
5.5. Rights as a Stockholder. No shares of Common Stock shall be issued in
respect of the exercise of an Option until full payment of the exercise price
and the applicable tax withholding obligations with respect to such exercise has
been made or provided for. The holder of an Option shall have no rights as a
stockholder with respect to any shares covered by an Option until the date such
shares are issued. Except as otherwise provided herein, no adjustments shall be
made for dividend distribution or other rights for which the record date is
prior to the date such shares are issued.
5.6. Buy Out and Settlement. The Board, on behalf of the Company, may at any
time offer to buy out any Option on such terms and conditions as the Board shall
establish.
5.7. Options Non-Transferable. Options granted under the Plan shall not be
transferable or assignable by a Participant, and may not be made subject to
execution, attachment or similar process, otherwise then by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of a
Participant only by the Participant. Notwithstanding the foregoing, the Board
may determine at the time of grant or thereafter that a Nonstatutory Stock
Option is transferable in whole or in part to such persons, under such
circumstances, and subject to such conditions as the Board may prescribe.
5.8. Assumed Options. In the event the Company assumes an option granted by
another company, the exercise price and the number and nature of shares issuable
upon exercise of such assumed option shall be adjusted appropriately as
determined by the Board. In the event the Company elects to

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grant a new Option rather than assuming an existing option, such new Option need
not be granted at Fair Market Value on the date of grant and may instead be
granted with a similarly adjusted exercise price.
5.9. Replacement Options. Without in any way limiting the authority of the Board
to make or not to make grants of Options, the Board shall have the authority
(but not an obligation) to include as part of any Award Agreement a provision
entitling the Participant to a replacement Option in the event the Participant
exercises the Option evidenced by the Award Agreement, in whole or in part, by
surrendering other shares of Common Stock in accordance with the Plan and the
terms and conditions of the Award Agreement.
6. Stock Appreciation Rights.
6.1. Stock Appreciation Right Grant. Subject to the provisions hereof, the Board
may award Stock Appreciation Rights to eligible personnel upon such terms and
conditions as it deems appropriate. A Stock Appreciation Right is an Award
entitling the Participant, upon exercise, to receive an amount, in cash or
shares of Common Stock or a combination thereof, as determined by the Board in
its sole discretion, determined with reference to the appreciation, if any, in
the fair market value of Common Stock during the period beginning on the date
the Stock Appreciation Right is granted and ending on the date the Stock
Appreciation Right is exercised.
6.2. Types of Stock Appreciation Rights. Stock Appreciation Rights may be
awarded under the Plan in conjunction with an Option (“tandem SARs”) or
independent of any Option (“stand-alone SARs”). Tandem SARs awarded in
conjunction with a Nonstatutory Stock Option may be awarded either at or after
the time the Nonstatutory Stock Option is granted. Tandem SARs awarded in
conjunction with an Incentive Stock Option may only be awarded at the time the
Incentive Stock Option is granted.
6.3. Exercisability. Except as otherwise provided herein, a tandem SAR shall be
exercisable only at the time and to the same extent and subject to the same
conditions as the related Option is exercisable. The exercise of a tandem SAR
shall cancel the related Option to the extent of the shares of Common Stock with
respect to which the Stock Appreciation Right is exercised, and vice versa.
Tandem SARs may be exercised only when the Fair Market Value of the Common Stock
to which it relates exceeds the Option exercise price. The Board may impose such
additional service or vesting conditions upon the exercise of a Stock
Appreciation Right (tandem or stand-alone) as it deems appropriate.
6.4. Exercise. A Stock Appreciation Right may be exercised by giving written
notice to the Company identifying the Stock Appreciation Right that is being
exercised, specifying the number of shares covered by the exercise and
containing such other information or statements as the Board may require. The
Board may establish such rules and procedures as it deems appropriate for the
exercise of Stock Appreciation Rights under the Plan. Upon the exercise of a
Stock Appreciation Right, the Participant shall be entitled to receive an amount
(in cash and/or shares of Common Stock as determined by the Board) equal to the
product of (i) the number of shares with respect to which the Stock Appreciation
Right is being exercised and (ii) the difference between the Fair Market Value
of a share of the Common Stock on the date the Stock Appreciation Right is
exercised and the Fair Market Value of a share of Common Stock on the date the
Stock Appreciation Right is granted.
6.5. SARs Non-Transferable. Stock Appreciation Rights shall not be transferable
by a Participant other than upon the Participant’s death to a beneficiary
designated by the Participant in a manner acceptable to the Board, or, if no
designated beneficiary shall survive the Participant, pursuant to

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the Participant’s will or by the laws of descent and distribution. All Stock
Appreciation Rights shall be transferable, to the extent permitted above, only
with the underlying option.
7. Stock Bonus Awards. Subject to the provisions hereof, the Board may grant
Stock Bonus Awards to eligible personnel upon such terms and conditions as the
Board deems appropriate. The terms and conditions of Stock Bonus Awards may
change from time to time, and the terms and conditions of each Award Agreement
need not be identical.
7.1. Consideration. A Stock Bonus Award shall be awarded in consideration for
part or future services rendered to the Company or its Affiliates.
7.2. Vesting. Shares of Common Stock awarded pursuant to a Stock Bonus may, but
need not, be subject to a vesting schedule determined by the Board.
7.3. Transferability. Shares of Common Stock received pursuant to a Stock Bonus
Award shall be transferable by the Participant only upon such terms and
conditions as are set forth in the Award Agreement, as the Board shall determine
in its discretion, so long as shares remain subject to the terms of the Award
Agreement.
8. Non-Employee Director Stock Option Awards. Subject to the provisions hereof
and without further action by the Board, during the term of the Plan, (i) each
Non-Employee Director then in service shall be granted a Nonstatutory Stock
Option to purchase 2,000 shares of Common Stock on the trading day following the
Effective Date, and (ii) each Non-Employee Director then in service shall be
granted a Nonstatutory Stock Option to purchase 2,000 shares of Common Stock on
the trading day following each annual meeting of the Company’s stockholders that
occurs at least one year after his or her commencement of service as a
Non-Employee Director. Unless otherwise determined by the Board, each Option
granted pursuant to this Section 8 shall be subject to the following terms and
conditions:
8.1. Exercise Price. The purchase price per share shall be equal to the Fair
Market Value of the Common Stock on the date the Option is granted.
8.2. Vesting Conditions. Each Option shall vest and become exercisable in annual
one-third increments on the first, second and third anniversaries of the date
the Option is granted, provided that the Participant remains in the continuous
service on the Board through each applicable anniversary date.
8.3. Effect of Termination of Service. If a Non-Employee Director’s service
terminates for any reason (other than death or Disability) or no reason, then
any Option held by the Non-Employee Director, to the extent not then
exercisable, shall thereupon terminate. Any Option held by the Non-Employee
Director which is exercisable at the time of such termination of service shall
remain exercisable during the ninety (90) day period following such termination
or, if sooner, until the expiration of the stated term of the Option and, to the
extent not exercised within such period, shall thereupon terminate. The
provisions of Section 9.1.1 shall apply in the event a Non-Employee Director’s
service terminates due to his or her death or Disability.
8.4. Capital Transactions; Change in Control. The provisions of Section 11 shall
apply.
8.5. Expiration. Except as otherwise provided herein, if not previously
exercised, each Option shall expire on the tenth anniversary of the date the
Option is granted.

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9. Termination of Employment or Service. Except as specifically provided in
Section 8, and unless otherwise determined by the Board at grant or, if no
rights of the Participant are thereby reduced, thereafter, and subject to
earlier termination in accordance with the provisions hereof, the following
rules apply with regard to Awards held by a Participant (other than Awards
covered by Section 8) at the time of his or her termination of employment or
other service with the Company and its Affiliates.
9.1. Stock Options and Stock Appreciation Rights.
9.1.1. If a Participant’s employment or service terminates due to his or her
death or Disability, then (i) any Option or Stock Appreciation Right held by the
Participant which is not then exercised shall terminate, and (ii) any such
Option or Stock Appreciation Right may be exercised, to the extent otherwise
exercisable on the date his or her employment or service terminates, by the
Participant (or in the event of death, his or her legal representative) at any
time within one year from the date his or her employment or service terminates,
but in no event after expiration of the stated term, and, to the extent not
exercised within such time period, shall thereupon terminate.
9.1.2. If a Participant’s employment or service is terminated by the Company or
its Affiliates for Cause or if, at the time of a Participant’s termination,
grounds for termination for Cause exist, then notwithstanding anything to the
contrary contained herein, any Option or Stock Appreciation Right held by the
Participant (whether or not otherwise vested) shall immediately terminate and
cease to be exercisable. “Cause” means (i) in the case where there is no
employment or consulting agreement between the Participant and the Company or
its Affiliates or where such an agreement exists but does not define “Cause” (or
words of like import), a termination classified by the Company as a termination
due to the Participant’s dishonesty, fraud, insubordination, willful misconduct,
refusal to perform services or materially unsatisfactory performance of his or
her duties, or (i) in the case where there is an employment or consulting
agreement between the Participant and the Company or its Affiliates, a
termination that is or would be deemed for “cause” (or words of like import)
under such agreement.
9.1.3. If a Participant’s employment or service terminates for any reason (other
than death, Disability or Cause at a time when Cause exists) or no reason, then
any Option or Stock Appreciation Right held by the Participant, to the extent
not then exercisable, shall thereupon terminate. Any Option or Stock
Appreciation Right held by the Participant which is exercisable at the time of
such termination of employment or service shall remain exercisable during the
thirty (30) days period following such termination of employment or service or,
if sooner, until the expiration of the stated term of the Option or Stock
Appreciation Right and, to the extent not exercised within such period, shall
thereupon terminate.
9.2. Stock Bonuses. If a Participant’s employment or service terminates, then
any shares of Common Stock held by the Participant which have not vested as of
the date of termination under the terms of the Award Agreement shall be
forfeited.
10. Miscellaneous.

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10.1. No Employment or other Service Rights. Nothing in the Plan or any
instrument executed or Award granted pursuant thereto shall confer upon any
Participant or other holder of Awards any right to continue to be employed by or
serve the Company or an Affiliate in the capacity in effect at the time the
Award was granted or shall affect the right of the Company or an Affiliate to
terminate such employment or service.
10.2. Investment Assurance. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to reflect conditions imposed
under an Award or to comply with applicable securities laws, including, but not
limited to, legends restricting the transfer of the stock.
10.3. Withholding Obligations. As a condition to the exercise of any Award or
the delivery of any shares of Common Stock pursuant to any Award or the lapse of
restrictions on any Award, or in connection with any other event that gives rise
to a federal or other governmental tax withholding obligation on the part of the
Company relating to an Award, (i) the Company may deduct or withhold (or cause
to be deducted or withheld) from any payment or distribution to a Participant
whether or not pursuant to the Plan or (ii) the Company shall be entitled to
require that the Participant remit cash to the Company (through payroll
deduction or otherwise), in each case in an amount sufficient in the opinion of
the Company to satisfy such withholding obligation. If the event giving rise to
the withholding obligation involves a transfer of shares of Common Stock, then,
unless the applicable Award Agreement provides otherwise, at the discretion of
the Board, the Participant may satisfy the withholding obligation described
under this Section 10.3 by electing to have the Company withhold shares of
Common Stock (which withholding shall be at a rate not in excess of the
statutory minimum rate) or by tendering previously owned shares of Common Stock,
in each case having a Fair Market Value equal to the amount of tax to be
withheld (or by another mechanism as may be required or appropriate to conform
with local tax and other rules).
11. Adjustments Upon Changes in Common Stock.
11.1. Capitalization Adjustments. If any change is made in the Common Stock
subject to the Plan, or subject to any Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan shall be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
and the maximum number of securities that may be awarded to any employee, and
the outstanding Awards shall be appropriately adjusted in the class(es) and
number of securities and price per share of stock subject to such outstanding
Awards. The Board, the determination of which shall be final, binding and
conclusive, shall make such adjustments. The conversion of any convertible
securities of the Company shall not be treated as a transaction “without receipt
of consideration” by the Company.
11.2. Change in Control — Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, then Awards outstanding under the
Plan shall terminate if not exercised (if applicable) immediately prior to, or
simultaneous with, such event.
11.3. Change in Control — Asset Sale, Merger, Consolidation or Reverse Merger.
In the event of (i) a sale of all or substantially all of the assets of the
Company, (ii) a merger in which the Company is not the surviving corporation

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or (iii) a reverse merger in which the Company is the surviving corporation but
the shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise, then any surviving corporation or acquiring
corporation shall assume any Awards outstanding under the Plan or shall
substitute similar awards (including an award to acquire the same consideration
paid to the stockholders in the transaction described in this Section 11.3 for
those Awards outstanding under the Plan). In the event any surviving corporation
or acquiring corporation refuses to assume such Awards or to substitute similar
awards for those Awards outstanding under the Plan, then the vesting of all
outstanding Awards (and, if applicable, the time during which such Awards may be
exercised) shall be accelerated in full, and the Awards shall terminate if not
exercised (if applicable) at or prior to such event.
12. Amendment and Termination. The Board may amend or terminate the Plan,
provided, however, that no such action may adversely affect the rights of a
Participant under any outstanding Award without the consent of the Participant.
Except as otherwise provided in Section 11, any amendment which would increase
the number of shares of Common Stock for which Awards may be granted under the
Plan (in the aggregate or on an individual basis) or modify the class of
employees eligible to receive Awards under the Plan shall be subject to the
approval of the stockholders of the Company. The Board may amend the terms of
any Award Agreement at any time and from time to time, provided, however, that
any amendment which would adversely affect the rights of the Participant may not
be made without the consent of the Participant.
13. Effective Date of Plan. The Plan shall become effective at the Effective
Time.
14. Definitions.
14.1. “Affiliate” means any parent corporation or subsidiary corporation of the
Company, whether now or hereafter existing, as those terms are defined in
Section 424(e) and (f), respectively, of the Code.
14.2. “Award” means any Option, Stock Appreciation Right or Stock Bonus granted
under the Plan.
14.3. “Award Agreement” means a written agreement or other instrument between
the Company and a holder of an Award evidencing the terms and conditions of an
individual Award.
14.4. “Board” means the Board of Directors of the Company.
14.5. “Code” means the Internal Revenue Service Code of 1986, as amended.
14.6. “Committee” means a committee appointed by the Board in accordance with
Section 2.3.
14.7. “Common Stock” means the common stock, par value $.01, of the Company.
14.8. “Company” means Impax Laboratories, Inc., a Delaware corporation.
14.9. “Disability” means the dates and permanent disability of a person within
the meaning of Section 22(e) of the Code.

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14.10. “Effective Time” means the “Effective Time” as defined in the Agreement
and Plan of Merger by and between Global Pharmaceuticals Corporation and Impax
Pharmaceuticals, Inc. dated July 26, 1999.
14.11. “Exchange Act” means the Securities Exchange Act of 1934, as amended.
14.12. “Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows: (i) if the Common Stock is listed on any established
stock exchange or traded on the NASDAQ National Market System or the NASDAQ
SmallCap Market, the Fair Market Value of a share of Common Stock shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with
the greatest volume of trading in the Common Stock) on the last market trading
day prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Board deems reliable; and (ii) in the absence of such
markets for the Common Stock, the Fair Market Value shall be determined in good
faith by the Board.
14.13. “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
14.14. “Non-Employee Director” means a member of the Board who is not also an
employee of, or consultant to, the Company or its Affiliates.
14.15. “Nonstatutory Option” means an Option that does not qualify as an
Incentive Stock Option.
14.16. “Option” means an Incentive Stock Option or a Nonstatutory Stock Option
granted pursuant to the Plan.
14.17. “Participant” means a person to whom an Award is granted pursuant to the
Plan or, if applicable, such other person who holds an Award.
14.18. “Plan” means this Impax Laboratories, Inc. 1999 Equity Incentive Plan.
14.19. “Securities Act” means the Securities Act of 1933, as amended.
14.20. “Stock Appreciation Right” means a stock appreciation right granted
pursuant to Section 6 of the Plan.
14.21. “Stock Bonus” means a stock bonus granted pursuant to Section 7 of the
Plan.
14.22. “Ten Percent Stockholder” means a person who owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any of its Affiliates.

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