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Exhibit 10.16

Watson Pharmaceuticals, Inc.
2001 INCENTIVE AWARD PLAN
NOTICE OF GRANT AND SIGNATURE PAGE

        Congratulations, you ("Holder") have been granted an option to purchase
Common Stock of Watson Pharmaceuticals, Inc., a Nevada corporation (the
"Company"). The Option is subject to the terms and conditions of the Award
Agreement and the 2001 Incentive Award Plan of the Company, as amended from time
to time (the "Plan"), which are attached hereto as Exhibit 1-A and 1-B, and of
which this Notice of Grant and Signature Page is a part. By signing this Notice
of Grant and Signature Page, you represent and warrant to the Company that you
have read the Award Agreement and the Plan and agree to be bound by their terms.
Capitalized terms not otherwise defined in this Notice of Grant and Signature
Page shall be as defined in the Plan and the Award Agreement.

        Subject to the terms of the Award Agreement and the Plan, the terms of
this Option are set forth below:

Type of Option: Incentive Stock Option     Non-Qualified Stock Option    

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Holder's Name: [First Name and Last Name]   Total Number of Option Shares:      
   

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Date of Grant: [Month, Day, Year]     Purchase Price Per Share: $

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        Subject to the terms of the Award Agreement and the Plan, this Option
shall become exercisable in accordance with the following schedule:

On and After This Date

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  This Option Shall be Exercisable With Respect to
the Following Number of Shares in Each Period
Becoming Fully Vested on the Date Shown.

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Month, Day, Year   Number Month, Day, Year   Number Month, Day, Year   Number
Month, Day, Year   Number Month, Day, Year   Number    

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  Total Shares   Total

NOTE, schedule does not reflect cumulative vesting.

        IN WITNESS WHEREOF, the Company has granted this Option, subject to the
terms set forth herein, on the date of grant specified above.

    WATSON PHARMACEUTICALS, INC.
 
 
     

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Allen Chao, Ph.D.,
Chairman and Chief Executive Officer ACCEPTED:    
 
 
 

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Holder's Signature    
 
 
 

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Address    
 
 
 

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Holder's Taxpayer Identification Number  
GRANT NO: 0000XXXX
 
 
Note: This document constitutes the Company's offer to enter into an agreement
under the terms set forth herein. This offer will expire without further notice
at 5 o'clock Pacific Time sixty days after the date of grant of the Option set
forth above, unless this offer is accepted by Holder by the delivery of this
original Notice of Grant and Signature Page, executed by Holder to the Company
on or prior to the offer's expiration date.

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EXHIBIT 1-A

AWARD AGREEMENT

        THIS AWARD AGREEMENT, dated as of the Date of Grant appearing on the
Notice of Grant and Signature Page hereof, is made by and between Watson
Pharmaceuticals, Inc., a Nevada corporation (the "Company"), and the Employee or
Consultant whose name and signature appear on the Notice of Grant and Signature
Page hereof (the "Holder").

        WHEREAS, the Company wishes to grant the Holder an option (the "Option")
to purchase shares of its common stock, par value $.0033 per share (the "Common
Stock"), pursuant to the terms of the Notice of Grant and Signature Page, this
Agreement and the 2001 Incentive Award Plan of Watson Pharmaceuticals, Inc., as
amended from time to time (the terms of which are hereby incorporated by
reference and made a part of this Agreement, the "Plan"); and

        WHEREAS, it has been determined that it would be to the advantage and
best interest of the Company and its stockholders to grant Holder the Option as
an inducement to enter into or remain in the service of the Company or its
Subsidiaries and as an incentive for increased efforts during such service.

        NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I
GRANT OF OPTION

        Section 1.1—Grant of Option and Purchase Price.    The Company grants to
Holder the option to purchase any part or all of an aggregate of that many
shares of Common Stock as set forth on the Notice of Grant and Signature Page
hereto, upon the terms and conditions set forth in this Agreement. The per share
purchase price of the shares of Common Stock covered by the Option shall be as
set forth on the Notice of Grant and Signature Page hereto, without commission
or other charge.

        Section 1.2—Consideration to Company.    In consideration of the
granting of this Option by the Company, the Holder agrees to render faithful and
efficient services to the Company or a Subsidiary, with such duties and
responsibilities as the Company shall from time to time prescribe, for a period
of at least one (1) year from the date this Option is granted. Nothing in this
Agreement or in the Plan shall confer upon the Holder any right to continue in
the employ or engagement of the Company or any Subsidiary, or shall interfere
with or restrict in any way the rights of the Company and its Subsidiaries,
which are hereby expressly reserved, to discharge or terminate the engagement
with the Holder at any time for any reason whatsoever, with or without Cause.

ARTICLE II
PERIOD OF EXERCISABILITY

        Section 2.1—Exercisability.    Subject to Section 2.2, Section 4.5 and
the terms of any written agreement between the Company and the Holder relating
to the exercisability of the Option, the Option shall become exercisable as set
forth in the Notice of Grant and Signature Page hereto. No portion of the Option
which is unexercisable at Termination of Consultancy or Termination of
Employment, as applicable, shall thereafter become exercisable. Each such
installment which becomes exercisable pursuant to this Section 2.1 shall remain
exercisable until it becomes unexercisable under Section 2.2 or the Plan.

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        Section 2.2—Expiration of Option.    The Option may not be exercised to
any extent by anyone after the first to occur of the following events:

        (a)   The expiration of ten (10) years from the date the Option was
granted;

        (b)   Except in the case of the Holder's disability (within the meaning
of Section 22(e)(3) of the Code) or as set forth in Sections 2.2(d) and (e), the
expiration of three (3) months from the date of the Holder's Termination of
Consultancy or Termination of Employment, as applicable, unless the Holder dies
within said three month period;

        (c)   In the case of the Holder's disability (within the meaning of
Section 22(e)(3) of the Code), the expiration of one (1) year from the date of
the Holder's Termination of Consultancy or Termination of Employment, as
applicable, by reason of the Holder's disability;

        (d)   The expiration of one (1) year from the date of the Holder's
death; or

        (e)   Upon Holder's Termination of Consultancy or Termination of
Employment, as applicable, by the Company or a Subsidiary of the Company for
Cause, at the discretion of the Committee effective upon written notice to the
Holder.

        Section 2.3—Special Tax Consequences.    The Holder acknowledges that,
to the extent that the aggregate Fair Market Value of stock with respect to
which "incentive stock options" (within the meaning of Section 422 of the Code,
but without regard to Section 422(d) of the Code), including the Option, are
exercisable for the first time by the Holder during any calendar year under the
Plan and all other incentive stock option plans of the Company, any Subsidiary
and any parent corporation thereof (within the meaning of Section 422 of the
Code)) exceeds $100,000, such options shall not be treated as "incentive stock
options" to the extent required by Section 422 of the Code. The Holder further
acknowledges that the rule set forth in the preceding sentence shall be applied
by taking options into account in the order in which they were granted. For
purposes of these rules, the Fair Market Value of stock shall be determined as
of the time the option with respect to such stock is granted.

ARTICLE III
EXERCISE OF OPTION

        Section 3.1—Person Eligible to Exercise.    During the lifetime of the
Holder, only Holder may exercise the Option or any portion thereof. After the
death of Holder, any exercisable portion of the Option may, prior to the time
when the Option becomes unexercisable under Section 2.2 or the Plan, be
exercised by Holder's personal representative or by any person empowered to do
so under the deceased Holder's will or under the then applicable laws of descent
and distribution.

        Section 3.2—Partial Exercise.    Any exercisable portion of the Option
or the entire Option, if then wholly exercisable, may be exercised in whole or
in part as to whole shares only at any time prior to the time when the Option or
portion thereof becomes unexercisable under Section 2.2 or the Plan.

        Section 3.3—Manner of Exercise.    The Option, or any exercisable
portion thereof, may be exercised solely by delivery to the Secretary of the
Company, or such other person or entity designated by the Committee, or his, her
or its office, as applicable, of all of the following prior to the time when the
Option or such portion becomes unexercisable under Section 2.2 or the Plan:

        (a)   A written notice complying with the applicable rules established
by the Committee stating that the Option, or a portion thereof, is exercised.
The notice shall be signed by the Holder or other person then entitled to
exercise the Option or such portion; and

        (b)   (i) Full cash payment to the Secretary of the Company for the
shares with respect to which such Option or portion is exercised;

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        (ii)   With the consent of the Committee (which consent may be withheld
in its sole and absolute discretion), (A) shares of the Company's Common Stock
owned by the Holder, duly endorsed for transfer to the Company, with a Fair
Market Value on the date of delivery equal to the aggregate exercise price of
the Option or exercised portion thereof, or (B) shares of the Company's Common
Stock issuable to the Holder upon exercise of the Option, with a Fair Market
Value on the date of delivery equal to the aggregate exercise price of the
Option or exercised portion thereof;

        (iii)  With the consent of the Committee (which consent may be withheld
in its sole and absolute discretion), a notice that the Holder has placed a
market sell order with a broker with respect to shares of the Company's Common
Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the Option exercise price; or

        (iv)  With the consent of the Committee (which consent may be withheld
in its sole and absolute discretion), any combination of the consideration
provided in the foregoing subparagraphs (i), (ii) and (iii); and

        (c)   Full payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option. With the consent of the Committee (which consent
may be withheld in its sole and absolute discretion), all or part of such
payment may be made in the form of (i) shares of the Company's Common Stock
owned by Holder, duly endorsed for transfer, with a Fair Market Value equal to
the sums required to be withheld, or (ii) shares of the Company's Common Stock
issuable to Holder upon exercise of the Option with a Fair Market Value equal to
the sums required to be withheld; provided, that the number of shares of Common
Stock which may be withheld with respect to the issuance, vesting, exercise or
payment of any Option (or which may be repurchased from the Optionee of such
Option within six months after such shares of Common Stock were acquired by the
Optionee from the Company) in order to satisfy the Optionee's federal and state
income and payroll tax liabilities with respect to the issuance, vesting,
exercise or payment of the Option shall be limited to the number of shares which
have a Fair Market Value on the date of withholding or repurchase equal to the
aggregate amount of such liabilities based on the minimum statutory withholding
rates for federal and state tax income and payroll tax purposes that are
applicable to such supplemental taxable income; and

        (d)   In the event the Option or portion shall be exercised pursuant to
Section 3.1 by any person or persons other than the Holder, appropriate proof of
the right of such person or persons to exercise the Option.

        Section 3.4—Conditions to Issuance of Stock Certificates.    The shares
of stock deliverable upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares or, to the extent
applicable to the Company, issued shares which have then been reacquired by the
Company. Such shares shall be fully paid and nonassessable. The Company shall
not be required to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:

        (a)   The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed; and

        (b)   The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable; and

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        (c)   The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

        (d)   The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish for reasons of
administrative convenience; and

        (e)   The receipt by the Company of full payment for such shares,
including payment of all amounts which, under federal, state or local tax law,
the Company (or other employer corporation) is required to withhold upon
exercise of the Option.

        Section 3.5—Rights as Stockholder.    The Holder shall not be, nor have
any of the rights or privileges of, a stockholder of the Company in respect of
any shares purchasable upon the exercise of any part of the Option unless and
until certificates representing such shares have been issued by the Company to
the Holder.

ARTICLE IV
OTHER PROVISIONS

        Section 4.1—Administration.    The Committee shall have the power to
interpret the Plan and this Agreement, and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith, to interpret, amend or revoke any such rules and to amend this
Agreement provided that the rights or obligations of the Holder are not affected
adversely. Any grant or award under the Plan need not be the same with respect
to each holder. All actions taken and all interpretations and determinations
made by the Committee in good faith shall be final and binding upon the Holder,
the Company and all other interested persons. No member of the Committee shall
be personally liable for any action, determination or interpretation made in
good faith with respect to the Plan or the Option. In its absolute discretion,
the Board may at any time and from time to time exercise any and all rights and
duties of the Committee under the Plan and this Agreement except with respect to
matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations
or rules issued thereunder, are required to be determined in the sole discretion
of the Committee. In addition, the Committee has the authority, in its
discretion, to delegate all or any part of its responsibilities and powers under
this Agreement to any person or persons selected by it.

        Section 4.2—Option Not Transferable.    Neither the Option nor any
interest or right therein or part thereof shall be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution or, subject to the consent of the Administrator, pursuant to a DRO,
unless and until the shares underlying such Option have been issued. Neither the
Option nor any interest or right therein or part thereof shall be liable for the
debts, contracts or engagements of the Holder or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

        During the lifetime of the Holder, only he may exercise an Option (or
any portion thereof) granted to him under the Plan, unless it has been disposed
of with the consent of the Administrator pursuant to a DRO. After the death of
the Holder, any exercisable portion of an Option may, prior to the time when
such portion becomes unexercisable under the Plan or this Agreement, be
exercised by his personal representative or by any person empowered to do so
under the deceased Holder's will or under the then applicable laws of descent
and distribution.

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        Section 4.3—Notices.    Any notice to be given under the terms of this
Agreement to the Company shall be addressed to the Company in care of its
Secretary, and any notice to be given to the Holder shall be addressed to him at
the address given beneath his signature hereto. By a notice given pursuant to
this Section 4.3, either party may hereafter designate a different address for
notices to be given to him. Any notice which is required to be given to the
Holder shall, if the Holder is then deceased, be given to the Holder's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 4.3. Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.

        Section 4.4—Titles and Construction.    Titles are provided herein for
convenience only and are not to serve as a basis for interpretation or
construction of this Agreement. This Agreement shall be administered,
interpreted and enforced under the internal laws of the State of California,
without regard to conflicts of laws thereof.

        Section 4.5—Conformity to Securities Laws.    The Holder acknowledges
that the Plan is intended to conform to the extent necessary with all provisions
of the Securities Act and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, including
without limitation Rule 16b-3. Notwithstanding anything herein to the contrary,
the Plan shall be administered, and the Option is granted and may be exercised,
only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, the Plan and this Agreement shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

ARTICLE V
DEFINITIONS

        Whenever the following terms are used in this Agreement, they shall have
the meaning specified below. The masculine pronoun shall include the feminine
and neuter, and the singular the plural, where the context so indicates. All
capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Plan.

        "Cause" shall mean the following:

        (a)   in the case of an Employee, (i) "Cause", as defined in the
employment agreement, if any, between the Company or a Subsidiary of the Company
and the Holder, as in effect from time to time, or (ii) in the absence of such
an employment agreement, as determined by the Committee in its sole discretion,
(A) the Holder's conviction of, or no contest plea to, a felony or a misdemeanor
involving moral turpitude, or (B) the Holder's gross negligence or misconduct,
or material violation of the Company's policies (including without limitation
the Company's policy on insider trading), or a material breach of the Holder's
duties or loyalty to the Company, or (C) the Holder's fraud, embezzlement or
criminal conduct that is damaging to the Company, or (D) the Holder's willful or
continued failure to substantially perform his or her duties to the Company.

        (b)   in the case of a Consultant, as determined by the Committee in its
sole discretion, (A) the Holder's conviction of, or no contest plea to, a felony
or a misdemeanor involving moral turpitude, or (B) the Holder's gross negligence
or misconduct, or material violation of the Company's policies applicable to
Holder (including without limitation the Company's policy on insider trading),
or a material breach of Holder's duties to the Company (including without
limitation, a material breach of the terms of any consulting agreement between
the Company and the Holder), or (C) the Holder's fraud, embezzlement or criminal
conduct that is damaging to the Company, or (D) the Holder's willful or
continued failure to substantially perform his or her duties to the Company.

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EXHIBIT 1-B

2001 INCENTIVE AWARD PLAN

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Exhibit 10.16