Exhibit 10.3


 


Non-Employee Director – 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:
  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 on the first anniversary of the Date of Grant with respect to the total
number of shares of Common Stock subject thereto.


 


IN WITNESS WHEREOF, the Company has granted this
Option, subject to the terms set forth herein, or 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 ninety 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 Director 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, 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 as a Director of the Company.


 


ARTICLE II


PERIOD OF EXERCISABILITY


 


Section 2.1
- Exercisability.  Subject to Section 2.2
and Section 4.5, 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
Directorship shall thereafter become exercisable.  If the Option becomes exercisable pursuant to
this Section 2.1, the Option shall remain exercisable until it becomes
unexercisable under Section 2.2 or the Plan.


 


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:


 


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


 


(b)                                 The
expiration of two (2) years from the date of Holder’s Termination of
Directorship.


 


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


 


(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 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 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


 


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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 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


 


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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 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 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 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


 


All
capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Plan.


 


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EXHIBIT 1-B


 


AMENDMENT AND RESTATEMENT OF THE 2001
INCENTIVE AWARD PLAN