Exhibit 10.5


 


Employee - Option


 


WATSON Pharmaceuticals, Inc.


AMENDMENT AND RESTATEMENT OF THE 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 Amendment and Restatement of The 2001 Incentive Award Plan of Watson
Pharmaceuticals, Inc., 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 

  
	
   

  	
   

  	
   

  
	
  Holder’s Name: [First
  Name and Last Name]

  	
   

  	
  Total Number of
  Option Shares:

  
	
   

  	
   

  	
   

  
	
  Date of Grant: [Month,
  Day, Year]

  	
   

  	
  Purchase Price
  Per Share: $

  



 


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


 


	
   

  	
   

  	
  This
  Option Shall be Exercisable With Respect to

  
	
   

  	
   

  	
  the
  Following Number of Shares in Each Period

  
	
  On and After This Date

  	
   

  	
  Becoming
  Fully Vested on the Date Shown.

  
	
  Month,
  Day, Year

  	
   

  	
  Number

  
	
  Month,
  Day, Year

  	
   

  	
  Number

  
	
  Month,
  Day, Year

  	
   

  	
  Number

  
	
  Month,
  Day, Year

  	
   

  	
  Number

  
	
  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.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Allen
  Chao, Ph.D.,

  
	
   

  	
  Chairman
  and Chief Executive Officer

  



 


	
  ACCEPTED:

  	
   

  
	
   

  	
  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.

  

  

                              GRANT
  NO. 0000XXXX

  
	
   

  	
   

  
	
  Holder’s Signature

  	
   

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Holder’s
  Taxpayer Identification Number

  	
   

  



 





















 


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 whose name and signature
appear on the Notice of Grant and Signature Page hereof (“Holder”).


 


WHEREAS,
the Company wishes to grant 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 Amendment and
Restatement of 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, 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 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 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
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 Employment 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 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 Holder’s Termination of Employment,
unless Holder dies within said three month period;


 


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


 


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


 


(e)                                  Upon Holder’s Termination of Employment by the Company or a
Subsidiary of the Company for Cause, at the discretion of the Administrator
effective upon written notice to Holder.


 


Section 2.3
– Special Tax Consequences.  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 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.  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 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 Administrator,
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 Administrator
stating that the Option, or a portion thereof, is exercised.  The notice shall be signed by Holder or other
person then entitled to exercise the Option or such portion; and


 


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


 


(ii)  With the consent of the Administrator
(which consent may be withheld in its sole and absolute discretion), (A) shares
of the Company’s Common Stock owned by 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 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 Administrator
(which consent may be withheld in its sole and absolute discretion), a notice
that 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 Administrator
(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 Administrator (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 the Option (or which may be repurchased from Holder
within six months after such shares of Common Stock were acquired by Holder from
the Company) in order to satisfy Holder’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 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


 


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governmental regulatory body,
which the Administrator shall, in its absolute discretion, deem necessary or
advisable; and


 


(c) 
The obtaining of any approval or other clearance from any state or federal
governmental agency which the Administrator 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 Administrator 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.  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 Holder.


 


ARTICLE IV


OTHER PROVISIONS


 


Section 4.1
– Administration.  The Administrator
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 Holder are
not affected adversely.  All actions
taken and all interpretations and determinations made by the Administrator in
good faith shall be final and binding upon Holder, the Company and all other
interested persons.  No member of the Administrator
shall be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or the Option.


 


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 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 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 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.


 


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 Holder shall be
addressed to him at the address given beneath his signature hereto.  By a notice given pursuant to this


 


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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 Holder shall, if Holder is then deceased, be given to 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.  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 (i) ”Cause”, as defined
in the employment agreement, if any, between the Company or a Subsidiary of the
Company and Holder, as in effect from time to time, or (ii) in the absence
of such an employment agreement, as determined by the Administrator in its sole
discretion, (A) Holder’s conviction of, or no contest plea to, a felony or
a misdemeanor involving moral turpitude, or (B) 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 Holder’s duties or loyalty to the Company, or (C) Holder’s
fraud, embezzlement or criminal conduct that is damaging to the Company, or (D) Holder’s
willful or continued failure to substantially perform his or her duties to the
Company.


 


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EXHIBIT 1-B


 


AMENDMENT AND RESTATEMENT OF THE 2001
INCENTIVE AWARD PLAN