exv10w3





EXHIBIT 10.3


GLOBAL PHARMACEUTICAL CORPORATION




1995 STOCK INCENTIVE PLAN




1. Purpose




          The purpose of this plan (the “Plan”) is to secure for Global
Pharmaceutical Corporation (the “Company”), and its stockholders, the benefits
arising from the ownership of stock options by directors and key employees
(including, without limitation, officers) of the Company or Subsidiaries (as
defined in Section 18 hereof) who are expected to contribute to the Company’s
future growth and success.




2. Types of Plan Benefits and Administration




          (a) Types of Awards. Under the Plan, the Company may in its soles
discretion grant, with respect to the Company’s common stock, par value $.01
per share (“Common Stock”), options (“Options”) to key employees (the “Key
Employees”), as authorized by action of the Board of Directors of the Company
(or a committee designated by the Board of Directors), and the company shall,
subject to the terms and conditions hereof, grant to each director of the
Company who is not an employee and who was not a director on or before
September 1, 1995 (an “Eligible Director”), Options in accordance with the
formula set forth in Section 7 hereof. As used in the Plan, an “Award” shall
mean an Option and an “Award Owner” shall mean the owner of an Option. Options
granted pursuant to the Plan to Key Employees may be either incentive stock
options (“Incentive Stock Options”) meeting the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended (the “Code”), or non-statutory
options (“Non-Statutory Stock Options”), which are not intended to or do not
meet the requirements of Code Section 422. Options granted to Eligible
Directors pursuant to the Plan shall be only Non-Statutory Stock Options.




          (b) Administration. The Plan will be administered by the Board of
Directors of the Company, except to the extent the Board of Directors appoints
from among its members a committee to administer the Plan (in either case, the
group administering the Plan is hereinafter referred to as the “Committee”).
The Committee’s construction and interpretation of the terms and provisions of
the Plan shall be final and conclusive. The Committee may in its sole
discretion grant Options to purchase shares of the Company’s Common Stock to
Key Employees, and issue shares upon exercise of such Options, as provided on
the Plan. The Committee shall grant Options to purchase shares of the
Company’s Common Stock to the Eligible Directors, and issue shares upon
exercise of such Options, as provided in the Plan. The Committee shall have
the authority, subject to the express provisions of the Plan, including, but
not limited to Section 7 hereof, to construe the respective Award agreements
and the Plan; to prescribe, amend and rescind rules and regulations relating
to the Plan; to determine the terms and provisions of the respective Award
agreements, which need not be identical; to advance the lapse of any waiting
or installment periods and exercise dates; and to make all other
determinations in the sole judgement of the Committee necessary or desirable
for the administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any Award
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and such determination shall be in the




1









 




sole and final judgement of the Committee. No director shall be liable for any
action or determination taken or made under or with respect to the Plan or any
Award in good faith.




3. Eligibility




          (a) Generally




               (i) Except as provided in paragraph (b) of this Section 3
and Section 7 hereof, Awards shall be granted only to persons selected by the
Committee who are, at the time of grant, directors or employees (including,
without limitation, officers) of the Company or any Subsidiary of the Company.



               (ii) A Key Employee may be granted Incentive Stock Options
and/or Non-Statutory Stock Options. A Key Employee who has been granted an
Award may, if he or she is otherwise eligible, be granted one or more
additional Awards if the Committee shall so determine.



          (b) Incentive Stock Options. No person shall be granted any Incentive
Stock Option under Plan unless, at the time such Option is granted, such
person is an employee of the Company or any Subsidiary of the Company, and
does not own, directly or indirectly, Common Stock of the Company possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or of any Subsidiary (unless the requirements of Section 6(f)(i)
are satisfied).




4. Stock Subject to Plan




          Subject to adjustment as provided in Sections 13 and 14 below, the
maximum number of shares of Common Stock of the Company that may be issued and
sold pursuant to Options granted under the Plan is 400,000 shares in the
aggregate (one share per Option). The Company shall reserve for the purposes
of the Plan, out of its authorized but unissued shares of Common Stock or out
of shares held in the Company’s treasury, or partly out of each, such number
of shares of Common Stock as shall be determined by the Committee. If Options
granted under the Plan shall expire or terminate for any reason without having
been exercised in full, the shares subject to the unexercised portions of such
Options shall again be available for subsequent Award grants under the Plan.
Common Stock issuable upon exercise of Options may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Committee.




5. Form of Option Agreements




          As a condition to the grant of an Option under the Plan, each Key
Employee recipient of an Option shall execute an Option Agreement,
substantially in the form of Exhibit A to the Plan (in the case of Incentive
Stock Options) or Exhibit B to the Plan ( in the case of Non-Statutory Stock
Options) or in such other form not inconsistent with the Plan as shall be
specified by the Committee at the time such Option is granted. Each Eligible
Director, as a condition to the grant




2









 




of Options to him or her pursuant to Section 7(a) hereof, shall execute an
Option Agreement, substantially in the form of Exhibit C to the Plan.




6. Grants of Awards to Key Employees




          (a) Disinterested Committee. Any Key Employee who is a director or
officer of the Company shall be granted Awards only if such person has been
selected for participation and the terms and provisions of such Awards have
been determined, solely by, and in sole discretion of, a Committee of two or
more directors, each of whom is a “disinterested person.” For purposes of the
Plan, a person shall be deemed to be “disinterested” only if such person
qualifies as a “disinterested person” within the meaning of paragraph (c)(2)
of Rule 16b-3 of the Securities and Exchange Commission (the “SEC”). The term
“officer” shall have the same meaning as in paragraph (f) of Rule 16a-1. To
the extent required to comply with the rules under 16b-3, all references to
the Committee in the Plan shall mean and relate to the Committee of two or
more “disinterested persons” described in this Section 6(a). The foregoing
provisions do not apply to any grant which occurs prior to the date the
Company first registers its Common Stock under Section 12 of the Securities
Exchange Act of 1934.




          (b) Purchase Price. The purchase price per share of stock issuable
upon the exercise of an Option granted pursuant to this Section 6 shall be (i)
with respect to an Option granted on or after the date of initial public
offering of shares of Common Stock (the “IPO”) but prior to the second
anniversary thereof, the greater of (A) the Fair Value (as defined in Section
18 hereof) on the date that such Option is granted or (B) the initial public
offering price of a share of Common Stock (the “IPO Price”) or (ii) with
respect to an Option granted prior to the IPO or on or after the second
anniversary of the IPO, the Fair Value on the date that such Option is
granted. Notwithstanding anything to the contrary contained herein, in the
case if an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Value of such stock at the date of grant of such Option, or
less than 110% of such Fair Value in the case of Options described in Section
6(f)(i).




          (c) Exercise Period. Each Award to a Key Employee shall expire on
such date as the Committee shall determine on the date such Award is granted,
but in no event after the expiration of ten years from the date on which such
Award is granted, and in all cases each Award shall be subject to earlier
termination as provided in the Plan. In no event may any Option granted
pursuant to this Section 6 be exercised prior to the initial public offering
of the Company’s Common Stock.




          (d) Vesting of Awards. An Award granted to a Key Employee may be
exercised, and payment shall be made upon exercise of such Award, only to the
extent that such Award has vested. Awards shall vest in accordance with the
schedule of terms set forth in the Award agreement executed by the Award Owner
and a duly authorized officer of the Company. The committee may accelerate the
vesting of any Option granted pursuant to this Section 6. Notwithstanding the
foregoing, unless the Committee specifically authorizes a different vesting
schedule with respect to an Award, an Award to a Key Employee shall become
exercisable based on the number of full years of service that such Award Owner
has completed with the Company




3









 




or a Subsidiary since the date of the grant of such Award, in accordance with
the following schedule:




	 	 	 	 	 
	Number of Years of Service	 	Percentage of Award Available
	Since Date of Grant	 	for Exercise (Cumulative)
	1
	 	 	25%	 
	2
	 	 	50%	 
	3
	 	 	75%	 
	4
	 	 	100%	 






          (e) Effect of Termination of Employment. No Award to a Key Employee
may be exercised unless, at the time of such exercise, the Key Employee is
and, continuously since the date of grant of his or her Award has been, an
employee of the Company or a Subsidiary, except that subject to Section 6(d)
and if and to the extent of the Award agreement or instrument so provides:




               (i) If the Key Employee ceases to be an employee of the
Company or a Subsidiary for any reason other than death or disability or a
discharge for “cause” (as defined in (iv) below), the right to exercise the
Award shall terminate three months after such cessation (or within such lesser
period as may be specified in the Award agreement or instrument);



               (ii) if the Key Employee dies while an employee of the
Company or a Subsidiary, or within three months after the Key Employee ceases
to be such an employee, the Awards may be exercised by the administrator of
the Key Employee’s estate, or by the person to whom the options are
transferred by will or the laws of descent and distribution, within the period
of one year after the date of death (or within such lesser period as may be
specified in the Award agreement or instrument);



               (iii) if the Key Employee becomes disabled (within the
meaning of Section 22(e)(3) of the Code) while an employee of the Company or a
Subsidiary, the Awards may be exercised within the period of one year after
the date the Key Employee ceases to be an employee of the Company or
Subsidiary because of such disability (or within such lesser period as may be
specified in the Award agreement or instrument); and



               (iv) if the Key Employee, prior to the expiration date of an
Award, ceases his or her services as an employee of the Company or a
Subsidiary, because he or she is discharged for “cause” (as defined below),
the right to exercise an Option shall terminate immediately upon such
cessation of such services. “Cause” shall mean: willful misconduct in
connection with the Key Employee’s performance of services for the Company or
willful failure to perform his or her services in the best interest of the
Company, as determined by the Committee, which determination shall be
conclusive;



4









 




provided, however, that in no event may any Award be exercised after the
expiration date of the Award. Any Award or portion thereof that is not
exercised during the applicable time period specified above (or any shorter
period in the Award agreement or instrument) shall be deemed terminated at the
end of applicable time period for purposes of Section 4 hereof.




          (f) Incentive Stock Options. Options granted under Plan that are
intended to be Incentive Stock Options shall be specifically designated as
intending to be Incentive Stock Options and shall be subject to the following
additional terms and conditions.




               (i) 10% Stockholder. If any Key Employee to whom an
Incentive Stock Option is to be granted under the Plan is at the time of the
grant such Option the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
Subsidiary, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual: (x) the exercise price per
share of the Common Stock subject to such Incentive Stock Option shall not be
less than 110% of the Fair Value (as defined in Section 18) of one share of
Common Stock at the time of grant; and (y) the option exercise period shall
not exceed five years from date of grant.



               (ii) Dollar Limitation. Common Stock of the Company that is
acquired pursuant to the exercise of an Incentive Stock Option granted to a
Key Employee under the Plan shall be deemed to be acquired pursuant to the
exercise of an Incentive Stock Option under Code Section 422, only to the
extent that the aggregate Fair Value (determined as of the respective dates or
dates of grant) of the Common Stock with respect to which such Incentive Stock
Option, and all other Incentive Stock Options that are granted to such Key
Employee under the Plan (and under any other incentive stock option plans of
the Company or any Subsidiary), are exercisable for the first time by such Key
Employee in any one calendar year, does not exceed $100,000. To effectuate the
provisions of this Section 6(f), the Committee may designate the shares of
Common Stock that are treated as acquired pursuant to the exercise of an
Incentive Stock Option by issuing a separate certificate for such shares an
identifying such certificates as Incentive Stock Option stock in its stock
transfer records.



               (iii) If a Key Employee makes a disposition, within meaning
of Section 424(c) of the Code and regulations promulgated thereunder, of any
share or shares of Common Stock issued to such Key Employee pursuant to the
exercise of an Incentive Stock Option within the two-year period commencing on
the day after the date of the grant or within the one-year period commencing
on the day after the date of transfer of such share or shares to the Key
Employee pursuant to such exercise, the Key Employee shall, within ten (10)
days of such disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office.



               Except as modified by the preceding provisions of this
Section 6(f), all the provisions of the Plan applicable to Options shall be

applicable to Incentive Stock Options granted hereunder.



5









 





          (g) Options Granted at Initial Public Offering Price. If, prior to
the IPO, Options are authorized or committed to be granted at the IPO Price,
such Options shall be granted upon effectiveness of the IPO.




7. Non-discretionary Formula Grants of Awards to Eligible Directors




          (a) Non-discretionary Grants. Notwithstanding anything to the
contrary contained in this Plan, Eligible Directors shall be granted Options
(“Director Options”) as follows: (i) immediately prior to the initial public
offering of shares of Common Stock, each Eligible Director shall be granted
30,000 Director Options to purchase 30,000 shares of Common Stock in the
aggregate, subject to vesting as provided in Section 7(d) below and (ii) on
the first business day following the annual meeting of shareholders of the
Company to elect directors in 1996, and thereafter on the first business day
following each successive annual meeting of shareholders so long as Director
Options remain available for grant, each person who is elected as a director
at that meeting and is an Eligible Director, and each person who continues to
serve as a director after that meeting, and is an Eligible Director, shall be
granted 10,000 Director Options to purchase 10,000 shares of Common Stock in
the aggregate, subject to vesting as provided in Section 7(d) below.




          (b) Purchase Price. The purchase price per share of stock issuable
upon the exercise of an Option granted pursuant to this Section 7 shall be (i)
with respect to an Option granted prior to second anniversary of the date of
the IPO, the greater of (A) the Fair Value on the date that such Option is
granted or (B) the IPO or (ii) with respect to an Option granted on or after
the second anniversary of the IPO, the Fair Value on the date that such Option
is granted.




          (c) Exercise Period. The term of each Option granted pursuant to this
Section 7 shall be ten years from the date of the grant thereof, subject to
earlier termination as herein provided. Any Option that is not exercised
during the applicable time period specified in this Section 7 shall be deemed
terminated at the end of the applicable time period for purposes of Section 4
hereof. In no event may any Option granted pursuant to this Section 7 be
exercised prior to the initial public offering of the Company’s Common Stock
or after the expiration date thereof.




          (d) Vesting of Awards. Director Options shall be exercisable by an
Eligible Director only to the extent that they have vested, and shall vest
based on years of service as follows:




	 	 	 	 	 
	Number of Years of Service	 	Percentage of Award Available
	Since Date of Grant	 	for Exercise (Cumulative)
	1
	 	 	33%	 
	2
	 	 	66%	 
	3
	 	 	100%	 





; provided, however, one-third of the initial grant (10,000 Options) shall be
vested upon its grant and the remaining two-thirds of the grant (20,000
Options) shall vest according to the schedule above.




6









 





          (e) Effect of Termination of Services or Death. If an Eligible
Director ceases to serve as a director of the Company or a Subsidiary, the
Options that have been previously granted to that Eligible Director and that
are vested as of the date of such cessation may be exercised by the Eligible
Director after the date such Eligible Director ceases to be a director of the
Company or a Subsidiary. If an Eligible Director dies while a director of the
Company or Subsidiary, the Options that have been previously granted to that
Eligible Director and that are vested as of the date of such death may be
exercised by the administrator of the Eligible Director’s estate, or by the
person to whom such Options are transferred by will or the laws of descent and
distribution. In no event, however, may any Option be exercised after the
expiration date of such Option. Any Option or portion thereof that is not
exercised during the applicable time period specified above shall be deemed
terminated at the end of the applicable time period for purpose of Section 4
hereof.




          (f) Limitation on Amendments to Terms of Non-discretionary Grants.
Notwithstanding anything to the contrary contained in this Plan, the
provisions of this Section 7 shall not be amended more than once every six
months, other than to comport with changes in the Code, the Employee
Retirement Income Security Act of 1974, as amended, or rules thereunder. Any
reference to Option or Options in this Section 7 shall refer to Options
granted to Eligible Directors pursuant to this Section 7.




8. Method of Exercise




          An Award Owner may exercise an Option granted hereunder by delivering
to the Company at its main office (to the attention of the Secretary) written
notice of exercise, which notice shall specify the number of shares with
respect to which the Option is being exercised, together with payment of the
purchase price in exchange for the Company’s issuance and delivery of
certificates therefor. The purchase price for any shares of Common Stock
purchased pursuant to the exercise of an Option shall be paid in full upon
such exercise by any one or a combination of the following: (i) cash (by
check), (ii) transferring shares of fully paid Common Stock to the Company
with a Fair Value equal to the aggregate purchase price, or (iii) solely with
respect to Options that are not Director Options, by cash payments in
installments or pursuant to a full recourse promissory note, in either case,
upon such terms as the Committee deems appropriate. Notwithstanding the
foregoing, the Committee shall have discretion to determine at the time of
grant of each Option (other than a Director Option) or at any later date (up
to and including the date of exercise) the form of payment acceptable in
respect of the exercise of such Option. The written notice pursuant to this
Section 8 may also provide instructions to the Company that upon receipt of
purchase price in cash from the Award Owner’s broker or dealer, designated as
such on the written notice, in payment for any shares directly to the
designated broker or dealer. Any shares transferred to the Company as payment
of the purchase price under an Option shall be valued at their Fair Value on
the day preceding the date of exercise of such Option. If requested by the
Committee, the Award Owner shall deliver the related Award agreement to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and return such agreement to the Award Owner. No fractional shares (or cash in
lieu thereof) shall be issued upon exercise of an Option and the number of
shares that may be purchased upon exercise shall be rounded to the nearest
number of whole shares.




7









 





9. Reload Options




          Options (other than Director Options) granted under the Plan may, in
the discretion of the Committee, include the right to acquire a reload option
(“Reload Option”). The term “Reload Option” shall mean the right to purchase a
number of shares of Common Stock equal to the number of shares tendered by a
Key Employee in exercising an Option, and the number of wholes shares, if any,
withheld by the Company in satisfaction of Withholding Taxes (as defined in
Section 20). A Reload Option shall have a purchase price equal to the Fair
Value of Common Stock on the date the Key Employee receives the Reload Option
and a term extending to the expiration date of the Option with respect to
which Reload Option was granted.




10. Nontransferability of Awards




          No Award granted under the Plan shall be assignable or transferable
by the person to whom it was granted, either voluntarily or by operation of
law, except by will or the laws of descent and distribution. During the life
of recipient, the Award shall be exercisable only by or on behalf of such
person.




11. General Restrictions




          (a) Award Owner Representations. The Company may require a person to
whom an Award is granted, as a condition of exercising such Award, to:




               (i) give such written assurances, in substance and form
satisfactory to the Company, as the Company deems necessary or appropriate in
order to comply with federal and applicable state securities laws, including,
without limitation, that such person is acquiring the Common Stock subject to
the Award for his or her own account for investment and not with an present
intention of selling or otherwise distributing the same;



               (ii) with respect to Key Employees only, grant to the
Company the right, which may be upon such terms as the Committee, in its sole
discretion, prescribes, to repurchase from the Award Owner any or all shares
acquired by such Award Owner through the exercise of an Award which such Award
Owner may at any time desire to sell, transfer or otherwise dispose of; and



               (iii) if the Award Owner is a director or officer, give
written assurances, in substance and form satisfactory to the Company, that
such person has consulted with competent counsel as to the application of
Section 16(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) to
such exercise.


Certificates representing shares issued upon exercise of the Award shall bear
such legends as are deemed appropriate by legal counsel to the Company, unless
the Award Owner provides a written opinion of legal counsel, satisfactory to
the Company, that any such legend is not required.




8









 





          (b) Compliance With Securities Laws.




               (i) Each Award shall be subject to the requirement that, if
at any time counsel to the Company shall determine that the listing,
registration or qualification of such Award or the shares subject to such
Award upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with the grant or exercise of such Award or the
issuance or purchase of shares thereunder, such Award shall not be effective
or may not be accepted or exercised in whole or in part (as applicable) unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration, qualification, consent or approval.



               (ii) The Company shall provide each Award Owner with such
information, statements, discussions and analyses with respect to the Company
in such manner and at such times as may be required under state or federal
securities laws.



12. Rights as a Stockholder.




          The Award Owner shall have no rights as a stockholder with respect to
any shares covered by the Award until the date upon which the stock
certificates are issued to him or her for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date on which such
stock certificate is issued.




13. Recapitalization




          In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision, an
appropriate and proportionate adjustment shall be made in the number and kind
of shares subject to the Plan and in the number, kind, and per share exercise
price, of shares subject to unexercised Options or portions thereof granted
prior to such adjustment. Any such adjustment to an outstanding Option shall
be made without change in the total price applicable to the unexercised
portion of such Option as of the date of the adjustment. No such adjustment
shall be made with respect to an Incentive Stock Option that would, within
meaning of any applicable provisions of the Code, constitute a modification,
extension or renewal of any Option or a grant of additional benefits to the
holder of an Option.




14. Reorganization




          In the event the Company is merged or consolidated with another
entity or person other than an Affiliate, and the Company is not a surviving
entity, or in the event all or substantially all of the assets or more than
20% of the outstanding stock of the Company entitled to vote for directors is
acquired by any other entity or person other than an Affiliate or any entity
or person or any affiliate thereof owning 5% or more of the outstanding voting
stock of the Company prior




9









 




to the effective date of the initial public offering of the Company’s Common
Stock, or in the event of a reorganization or liquidation of the Company, the
Committee, or the board of directors of any corporation assuming the
obligations of the Company, shall, as to outstanding Awards, either (i) in the
case of a merger, consolidation or reorganization of the Company, make
appropriate provision for the protection of any such outstanding Awards by the
substitution on an equivalent basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation that will be
issuable in respect of the shares of Common Stock of the Company (provided
that no additional benefits shall be conferred upon Award Owners as a result
of such substitution), or (ii) upon written notice the Award Owners, provide
that all unexercised Awards must be exercised within a specified number of
days or the date of such notice or they will be terminated or (iii) upon
written notice to the Award Owners, provide that all unexercised Awards shall
be purchased by the Company or its successor within a specified number of days
of the date of such notice at a price equal to the value the Award Owners
would have received if they then exercised all their Awards and immediately
received full payment in respect of such exercise, as determined in good faith
by the Committee.




15. No Special Employment Rights




          Nothing contained in the Plan or in any Award granted under the Plan
shall confer upon any Award Owner any right with respect to the continuation
of his or her employment by the Company (or any Subsidiary) or interfere in
any way with the right of the Company (or any Subsidiary ), subject to terms
of any separate employment agreement to the contrary, at any time to terminate
such employment or to increase or decrease the compensation of the Award Owner
from the rate in existence at the time of the grant of an Award. Whether an
authorized leave of absence, or absence in military or government service,
shall constitute termination or cessation of services for purposes of this
Plan shall be determined by the Committee.




16. No Special Directorship Rights




          Nothing contained in the Plan or in any Award granted under the Plan
shall constitute evidence of any agreement or understanding, express or
implied, that an Eligible Director has a right to continue as a director for
any period of time.




17. Other Employee Benefits




          The amount of any income deemed to be received by an Award Owner as a
result of the exercise of an Award or the sale of shares received upon such
exercise will not constitute “compensation” or “earnings” with respect to
which any other benefits of such person are determined by the Company,
including without limitation benefits under any pension, profit sharing, life
insurance or salary continuation plan.




18. Definitions




          (a) Affiliate. The term “Affiliate” shall mean a corporation or other
entity or person which, at the time of reference, directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the Company.




10









 





          (b) Fair Value. The term “Fair Value” of a share of Common Stock
shall mean (i) if the Common Stock is traded on a national securities
exchange, the closing price for such stock on the day immediately preceding
the date of determination or if there is no closing price on such date, the
last preceding closing price, (ii) if the Common Stock is not traded on a
national securities exchange, the mean of the high bid and ask quotes of such
stock as reported in the NASDAQ/NMS reports or the National Quotation Bureau
Inc.’s pink sheets or in the NASD Bulletin Board on the day immediately
preceding the date of determination or if there were no high bid and ask
quotes on such date, the last preceding day that there were , and (iii) if
neither (i) or (ii) are applicable, as determined in good faith by the
Committee.




          (c) Rule 16b-3. The term “Rule 16b-3” shall mean Rule 16b-3 of the
SEC (or any successor rule).




          (d) Subsidiary. The term “Subsidiary” shall mean any corporation in
an unbroken chain of corporations beginning with the Company if, at the time
of the grant of the Award, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.




19. Amendment of the Plan




          (a) Except as provided in Section 7 hereof, the Board may at any time
and from time to time modify or amend the Plan in any respect, provided that,
unless the Board shall have received the consent of the stockholders, the
Board may not make any amendments that require approval of the stockholders
under Rule 16b-3. In addition, the Board shall not modify or amend the Plan in
a manner that would require stockholder approval under Section 422 of the
Code, without obtaining such stockholder approval, if such amendment would
affect the status of any Incentive Stock Option as an incentive stock option
under Section 422 of the Code. The termination or any modification or
amendment of the Plan shall not, without the consent of an Award Owner, affect
his or her rights under an Award previously granted to him or her. With the
consent of the Award Owners affected, the Committee may amend outstanding
Award agreements in a manner not inconsistent with the Plan.




          (b) Notwithstanding the provisions of Sections 19(a)(i) and (iii),
the Board shall have the right, but not the obligation, without the consent of
the Company’s stockholders, to (i) amend or modify the terms and provisions of
the Plan and of any outstanding Incentive Stock Option granted under the Plan
to the extent necessary to qualify any or all such options for such favorable
federal income tax treatment (including deferral of taxation upon exercise),
as may be afforded incentive stock options under Section 422 of the Code; and
(ii) amend or modify the terms and provisions of the Plan and of any
outstanding Award granted under the Plan to the extent necessary to comply
with any securities law to which, in the opinion of counsel to the Company,
the Plan or Award is subject.




11









 





20. Withholding




          At such times as an Award Owner recognizes taxable income in
connection with the receipt of shares of Common Stock hereunder (a “Taxable
Event”), the Award Owner shall pay to the Company an amount equal to federal,
state and local income taxes and other amounts as may be required by law to be
withheld by the Company in connection with the Taxable Event (the “Withholding
Taxes”) prior to the issuance, or release from escrow, of such shares. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Committee may, in its discretion and subject to compliance with applicable
securities laws and regulations, withhold Common Stock having an aggregate
Fair Value on the date preceding the date of such issuance equal to the
Withholding Taxes.




21. Effective Date and Duration of the Plan




          (a) Effective Date. The Plan shall become effective when adopted by
the Board, but no award granted under the Plan (other than Director Options
granted pursuant to Section 7 hereof) shall become exercisable unless and
until the Plan shall have been approved by the Company’s stockholders within
twelve months before or after the date of such adoption. If such stockholder
approval is not obtained within such period, any Award previously granted
under the Plan (other than Director Options, which shall remain in effect but
which shall not qualify for the exemption from Section 16(b) of the Exchange
Act under Rule 16b-3) shall terminate and no further Awards shall be granted.
Subject to this limitation, Awards may be granted under the Plan at any time
after the effective date and before the date fixed for termination of the
Plan.




          (b) Termination. The Plan shall terminate upon the earlier of (i)
September 14, 2005 or (ii) the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise of Awards
granted under the Plan. If the date of termination is determined under (i)
above, then Awards outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such
Awards.




22. Governing Law




          The Plan and all Award agreements issued hereunder shall be governed
by the laws of the State of Delaware.




23. Expenses of Administration




          All costs and expenses incurred in the operation and administration
of this Plan shall be borne by the Company.




          The Plan was adopted by the Board of Directors in November 2, 1995
and this form of the Plan was adopted by the Board of Directors on September
15, 1995 and approved by the stockholders on November 3, 1995.




12









 





     Amendment to Global Pharmaceutical Corporation 1995 Stock Incentive Plan



   The Global Pharmaceutical Corporation 1995 Stock Incentive Plan (the “Plan”),
be, and it hereby is, amended as follows:



   The following sentence shall be added to the end of Section 7(a) of the Plan:




Notwithstanding the prior sentence, each person who is elected as a
director at any time after the date of the annual meeting of
stockholders and is an Eligible Director shall be granted, on the
effective date of such election, 10,000 Director Options to purchase
10,000 shares of Common Stock in the aggregate, subject to vesting
as provided in Section 7(d) below, so long as Director Options
remain available for grant. Such Director Options shall be granted
in lieu of the Director Options which would otherwise be granted to
such director on the first business day following the next annual
meeting of the stockholders pursuant to the first sentence of this
Section 7(a).




 








 






Exhibit A


GLOBAL PHARMACEUTICAL CORPORATION


INCENTIVE STOCK OPTION AGREEMENT


1. Grant of Options


Global Pharmaceutical Corporation, a Delaware corporation (the
“Company”), hereby grants to                     
(the “Optionee”),                     
Options (the “Options”), pursuant to the Company’s 1995 Stock
Incentive Plan (the “Plan”), to purchase an aggregate of                     
shares of common stock, $.01 par value per share (“Common Stock”), of
the Company at a price of $                     per share (the “Exercise Price Per
Share”), purchasable as set forth in and subject to the terms and
conditions of this Option Agreement and the Plan. All undefined
capitalized terms herein shall have the same meaning as set forth in
the Plan.


2. Incentive Stock Options


These Options are intended to qualify as incentive stock options
(“Incentive Stock Options”) within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).


3. Exercise of Options and Provisions for Termination


          (a) Exercisability of Options. The Options shall become exercisable
and option shares may be purchased based on the number of full years of
service for the Company or a Subsidiary that have expired since the date of
grant (set forth on the signature page hereof), in accordance with the
following schedule:



	 	 	 	 	 
	 	 	Percentage of Option Shares
	Number of Years of Service 	 	Available
	Since Date of Grant	 	for Purchase (Cumulative)
	1
	 	 	25%	 
	2
	 	 	50%	 
	3
	 	 	75%	 
	4
	 	 	100%	 





Notwithstanding the foregoing, the Options shall not be exercisable prior to
the initial public offering of the Company’s Common Stock and unless such
exercise is in compliance with the Securities Act of 1933, as amended (the
“Securities Act”), all other applicable laws and regulations (including state
securities laws) and the requirements of any securities exchange on which the
shares of Common Stock are listed.


A-1








 





          (b) Expiration Date. Except as otherwise provided in this Option
Agreement or the Plan, the Options may not be exercised after the date
(hereinafter the “Expiration Date”) that is the tenth anniversary of the date
of grant, or, if the Optionee is a 10% Stockholder as described in Section 6
of the Plan, the fifth anniversary of the date of grant.


          (c) Effect of Termination of Employment. The Options may not be
exercised by an Optionee unless, at the time of such exercise, the Optionee
is, and continuously since the date of grant of his or her Options has been,
an employee of the Company or a Subsidiary, except that subject to the Options
vesting as of the date of termination of employment:


               (i) If the Optionee ceases to be an employee of the Company
or a Subsidiary for any reason other than death or disability or a discharge
for “cause” (as defined in (iv) below), the right to exercise the Options
shall terminate three months after such cessation;


               (ii) if the Optionee dies while an employee of the Company
or a Subsidiary, or within three months after the Optionee ceases to be such
an employee, the options may be exercised by the Administrator of the
Optionee’s estate, or by the person to whom the options are transferred by
will or the laws of descent and distribution, within the period of one year
after the date of death, however, Options exercised more than three months
after the Optionee ceased to be an employee may not qualify for treatment as
Incentive Stock Options;


               (iii) if the Optionee becomes disabled (within the meaning
of the Plan) while an employee of the Company or a Subsidiary, the Options may
be exercised within the period of one year after the date the Optionee ceases
to be an employee of the Company or Subsidiary because of such disability; and


               (iv) if the Optionee, prior to the expiration date of the
Options, ceases his or her services as an employee of the Company or a
Subsidiary, because he or she is discharged for “cause” (as defined below),
the right to exercise the Options shall terminate immediately upon such
cessation of such services. “Cause” shall mean: willful misconduct in
connection with the Optionee’s performance of services for the Company or
willful failure to perform his or her services in the best interest of the
Company, as determined by the Board of Directors, which determination shall be
conclusive;


provided, however, that in no event may the options be exercised after the
expiration date thereof.


          (d) Exercise Procedure. Subject to the conditions set forth in this
Agreement and, if applicable, Section 6 of the Plan, the Options shall be
exercised by the Optionee’s delivery of written notice of exercise to the
Secretary of the Company, specifying the number of shares to be purchased and
the Exercise Price Per Share to be paid therefor and accompanied by payment in
accordance with Section 4 hereof. The Optionee may purchase less than the
total number of shares covered hereby, provided that no exercise of less than
all the Options may be for less than 100 whole shares.


A-2








 





4. Payment of Purchase Price



           Payment of the Exercise Price Per Share for shares purchased upon
exercise of an Option shall be made by delivery to the Company of the purchase
price, payable in cash (by check) or any other method of payment that is
permitted by the Plan and specifically authorized by the Committee on or
before the time of exercise.



5. Delivery of Shares


          The Company shall, upon payment of the Exercise Price Per Share for
the number of shares purchased and paid for, make prompt delivery of such
shares to the Optionee. No shares shall be issued and delivered upon exercise
of an Option unless and until, in the opinion of counsel for the Company, any
applicable registration requirements of the Securities Act, any applicable
listing requirements of any national securities exchange on which stock of the
same class is then listed, and any other requirements of law, including state
securities laws, or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.


6. Non-transferability of Options



           Except as provided in Section 3(c)(ii) hereof, the Options are
personal and no rights granted hereunder may be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise), except
by will or the laws of descent and distribution, nor shall any such rights be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of an Option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon any Option or such rights, this Option
Agreement and such rights shall, at the election of the Company, become null
and void.


7. No Special Employment Rights



          Nothing contained in the Plan or this Option Agreement shall be
construed or deemed by any person under any circumstances to bind the Company
to continue the services of the Optionee for the period within which the
Options may be exercised. However, during the period in which the Optionee is
rendering services, the Optionee shall render diligently and faithfully the
services which are assigned to him or her from time to time by the Board of
Directors or by the executive officers of the Company and shall at no time
take any action which directly or indirectly would be inconsistent with the
best interests of the Company.


8. Rights as a Stockholder


           The Optionee shall have no rights as a stockholder with respect to
any shares which may be purchased by exercise of the Options unless and until
a certificate representing such shares is duly issued to the Optionee. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date on
such stock certificate.



A-3








 








9. Recapitalization




          In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision, an
appropriate and proportionate adjustment shall be made in the number and kind
of shares subject to the Plan and in the number, kind and per share exercise
price, of shares subject to unexercised Options or portions thereof granted
prior to such adjustment. Any such adjustment to an outstanding Option shall
be made without change in the total price applicable to the unexercised
portion of such Option as of the date of the adjustment. No such adjustment
shall be made with respect to an Option that would, within the meaning of any
applicable provisions of the Code, constitute a modification, extension or
renewal of any Option or a grant of additional benefits to the Optionee.




10. Reorganization




          In the event the Company is merged or consolidated with another
entity and the Company is not a surviving entity, or in the event all or
substantially all of the assets or more than 20% of the outstanding voting
stock of the Company entitled to vote for directors is acquired by any other
entity or person other than an Affiliate or any entity or person or any
affiliate thereof owning 5% or more of the outstanding voting stock of the
Company prior to the effective date of the initial public offering of the
Company’s Common Stock, or in the event of a reorganization or liquidation of
the Company, prior to the Expiration Date or termination of this Option
Agreement, the Optionee shall, with respect to the options or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 14 of the Plan.




11. Withholding Taxes




          The Company’s obligation to deliver shares upon the exercise of an
Option shall be subject to the Optionee’s satisfaction of all applicable
federal, state and local income and employment tax withholding requirements
(“Withholding Taxes”) with respect to the Option. The Optionee shall pay the
Withholding Taxes to the Company in cash prior to the issuance, or release
from escrow, of shares of Common Stock. In satisfaction of the Withholding
Taxes, the Committee may, in its discretion and subject to compliance with
applicable securities laws and regulations, withhold a portion of the shares
issuable to the Optionee upon exercise of the Option having an aggregate Fair
Value on the date preceding the date of such issuance equal to the Withholding
Taxes.




12. Optionee Representations; Legend




          (a) Representations. The Optionee represents, warrants and covenants
that he or she has had such opportunity as he or she has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit the optionee to evaluate the merits and risks of his or her investment
in the Company. The Optionee understands that there may be





A-4









 







restrictions on his or her ability to resell any shares acquired on exercise
of an Option, including insider trading laws and the Company’s insider trading
policy, as well as other restrictions that will apply if the Optionee is an
“affiliate” of the Company. By making payment upon exercise of an Option, the
Optionee shall be deemed to have reaffirmed, as of the date of such payment,
the representations made in this Section 12.




          (b) Legend on Stock Certificate. The Optionee understands that, any
shares of Common Stock acquired upon exercise of an Option may not have been
registered under the Securities Act, nor the securities laws of any state.
Accordingly, unless all such registrations are then in effect, all stock
certificates representing shares of Common Stock issued to the Optionee upon
exercise of an Option shall have affixed thereto a legend substantially in the
following form, in addition to any other legends required by applicable state
law:




          “THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1993, AS AMENDED, NOR THE SECURITIES LAW OF ANY STATE. CONSEQUENTLY, THE
SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION, OR AN EXEMPTION FROM REGISTRATION UNDER SUCH
LAWS.”




13. Limitation on Disposition of Incentive Stock Option Shares




          It is understood and intended that these Options shall qualify as
Incentive Stock Options, as defined in Section 422 of the Code. Accordingly,
the Optionee understands that in order to obtain the benefits of an Incentive
Stock Option under Section 421 of the Code, no sale or other disposition may
be made of any shares acquired upon exercise of an Option within the one year
period beginning on the day after the day of the issuance of such shares to
him or her, nor within the two year period beginning on the day after the date
of grant of such Option. If the Optionee disposes of any such shares (whether
by sale, exchange, gift, transfer or otherwise) prior to the expiration of
either such period, he or she will notify the Company in writing within ten
days after such disposition.




          Notwithstanding the foregoing, nothing herein shall be deemed to be
or interpreted as a representation, guarantee or other undertaking on the part
of the Company that these options are or will be determined to be Incentive
Stock Options within the meaning of Section 422 of the Code or any other Code
Section.




14. Miscellaneous




          In the event that the Plan terminates prior to the expiration date of
the Options granted hereunder, this Option Agreement shall incorporate by
reference all applicable provisions of the Plan until the earlier of (i) the
close of business on the day the Option(s) granted hereunder expire, or (ii)
the date on which all shares available for issuance hereunder shall have been
issued pursuant to the exercise of Options granted hereunder.




          All notices under this Option Agreement shall, unless otherwise
provided herein, be mailed or delivered by hand to the parties at their
respective addresses set forth beneath their





A-5









 







names below or at such other address as may be designated in writing by either
of the parties to the other.




          This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.




          This Option Agreement shall be binding upon and inure to the heirs,
successors and assigns of the Optionee (subject, however, to the limitations
set forth herein with respect to assignment of the Options or rights therein)
and the Company, and shall be construed in a manner that is consistent with
the provisions of the Plan.




	 	 	 	 	 	 	 
	Date of Grant:	 	Global Pharmaceutical Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Optionee	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 






 









 





Exhibit B


GLOBAL PHARMACEUTICAL CORPORATION


NON-STATUTORY STOCK OPTION AGREEMENT


1. Grant of Options


Global Pharmaceutical Corporation, a Delaware corporation (the
“Company”), hereby grants to                      (the “Optionee”),                     
Options (the “Options”), pursuant to the Company’s 1995 Stock
Incentive Plan (the “Plan”), to purchase an aggregate of                     
shares of common stock, $.01 par value per share (“Common Stock”), of
the Company at a price of $                    
per share (the “Exercise Price Per
Share”), purchasable as set forth in and subject to the terms and
conditions of this Option Agreement and the Plan. All undefined
capitalized terms herein shall have the same meaning as set forth in
the Plan.



2. Exercise of Options and Provisions for Termination




          (a) Exercisability of Options. The Options shall become exercisable
and option shares may be purchased based on the number of full years of
service for the Company or a Subsidiary that have expired since the date of
grant (set forth on the signature page hereof), in accordance with the
following schedule:




	 	 	 	 	 
	 	 	Percentage of Option Shares
	Number of Years of Service 	 	Available
	Since Date of Grant	 	for Purchase (Cumulative)
	1
	 	 	25%	 
	2
	 	 	50%	 
	3
	 	 	75%	 
	4
	 	 	100%	 





Notwithstanding the foregoing, the Options shall not be exercisable prior to
the initial public offering of the Company’s Common Stock and unless such
exercise is in compliance with the Securities Act of 1933, as amended (the
“Securities Act”), all other applicable laws and regulations (including state
securities laws) and the requirements of any securities exchange on which the
shares of Common Stock are listed.





	 	(b)	 	Expiration Date. Except as otherwise provided in this Option
Agreement or the Plan, the Options may not be exercised
after the date (hereinafter the “Expiration Date”) that is
the tenth anniversary of the date of grant.





B-1








 











          (c) Effect of Termination of Employment. The Options may not be
exercised by an Optionee unless, at the time of such exercise, the Optionee
is, and continuously since the date of grant of his or her Options has been,
an employee of the Company or a Subsidiary, except that subject to the Options
vesting as of the date of termination of employment:




               (i) If the Optionee ceases to be an employee of the Company
or a Subsidiary for any reason other than death or disability or a discharge
for “cause” (as defined in (iv) below), the right to exercise the Options
shall terminate three months after such cessation;



               (ii) if the Optionee dies while an employee of the Company
or a Subsidiary, or within three months after the Optionee ceases to be such
an employee, the Options may be exercised by the administrator of the
Optionee’s estate, or by the person to whom the Options are transferred by
will or the laws of descent and distribution, within the period of one year
after the date of death.



               (iii) if the Optionee becomes disabled (within the meaning
of the Plan) while an employee of the Company or a Subsidiary, the Options may
be exercised within the period of one year after the date the Optionee ceases
to be an employee of the Company or Subsidiary because of such disability; and



               (iv) if the Optionee, prior to the expiration date of the
Options, ceases his or her services as an employee of the Company or a
Subsidiary, because he or she is discharged for “cause” (as defined below),
the right to exercise the Options shall terminate immediately upon such
cessation of such services. “Cause” shall mean: willful misconduct in
connection with the Optionee’s performance of services for the Company or
willful failure to perform his or her services in the best interest of the
Company, as determined by the Board of Directors, which determination shall be
conclusive;


provided, however, that in no event may the options be exercised after the
expiration date thereof.




          (d) Exercise Procedure. Subject to the conditions set forth in this
Agreement and, if applicable, Section 6 of the Plan, the Options shall be
exercised by the Optionee’s delivery of written notice of exercise to the
Secretary of the Company, specifying the number of shares to be purchased and
the Exercise Price Per Share to be paid therefor and accompanied by payment in
accordance with Section 3 hereof. The Optionee may purchase less than the
total number of shares covered hereby, provided that no exercise of less than
all the Options may be for less than 100 whole shares.




3. Payment of Purchase Price




          Payment of the Exercise Price Per Share for shares purchased upon
exercise of an Option shall be made by delivery to the Company of the purchase
price, payable in cash (by check) or any other method of payment that is
permitted by the Plan and specifically authorized by the Committee on or
before the time of exercise.





B-2









 








4. Delivery of Shares




          The Company shall, upon payment of the Exercise Price Per Share for
the number of shares purchased and paid for, make prompt delivery of such
shares to the Optionee. No shares shall be issued and delivered upon exercise
of an Option unless and until, in the opinion of counsel for the Company, any
applicable registration requirements of the Securities Act, any applicable
listing requirements of any national securities exchange on which stock of the
same class is then listed, and any other requirements of law, including state
securities laws, or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.




5. Non-transferability of Options




          Except as provided in Section 3(c)(ii) hereof, the Options are
personal and no rights granted hereunder may be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise), except
by will or the laws of descent and distribution, nor shall any such rights be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of an Option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon any Option or such rights, this Option
Agreement and such rights shall, at the election of the Company, become null
and void.




6. No Special Employment Rights




          Nothing contained in the Plan or this Option Agreement shall be
construed or deemed by any person under any circumstances to bind the Company
to continue the services of the Optionee for the period within which the
Options may be exercised. However, during the period in which the Optionee is
rendering services, the Optionee shall render diligently and faithfully the
services which are assigned to him or her from time to time by the Board of
Directors or by the executive officers of the Company and shall at no time
take any action which directly or indirectly would be inconsistent with the
best interests of the Company.




7. Rights as a Stockholder




          The Optionee shall have no rights as a stockholder with respect to
any shares which may be purchased by exercise of the Options unless and until
a certificate representing such shares is duly issued to the Optionee. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date on
such stock certificate.




8. Recapitalization




          In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision, an
appropriate and proportionate adjustment shall be made in the number and kind





B-3









 







of shares subject to the Plan and in the number, kind and per share exercise
price, of shares subject to unexercised Options or portions thereof granted
prior to such adjustment. Any such adjustment to an outstanding Option shall
be made without change in the total price applicable to the unexercised
portion of such Option as of the date of the adjustment.




9. Reorganization




          In the event the Company is merged or consolidated with another
entity and the Company is not a surviving entity, or in the event all or
substantially all of the assets or more than 20% of the outstanding voting
stock of the Company entitled to vote for directors is acquired by any other
entity or person other than an Affiliate or any entity or person or any
affiliate thereof owning 5% or more of the outstanding voting stock of the
Company prior to the effective date of the initial public offering of the
Company’s Common Stock, or in the event of a reorganization or liquidation of
the Company, prior to the Expiration Date or termination of this Option
Agreement, the Optionee shall, with respect to the Options or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 14 of the Plan.




10. Withholding Taxes




          The Company’s obligation to deliver shares upon the exercise of an
Option shall be subject to the Optionee’s satisfaction of all applicable
federal, state and local income and employment tax withholding requirements
(“Withholding Taxes”) with respect to the Option. The Optionee shall pay the
Withholding Taxes to the Company in cash prior to the issuance, or release
from escrow, of shares of Common Stock. In satisfaction of the Withholding
Taxes, the Committee may, in its discretion and subject to compliance with
applicable securities laws and regulations, withhold a portion of the shares
issuable to the Optionee upon exercise of the Option having an aggregate Fair
Value on the date preceding the date of such issuance equal to the Withholding
Taxes.




11. Optionee Representations; Legend




          (a) Representations. The Optionee represents, warrants and covenants
that he or she has had such opportunity as he or she has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit the Optionee to evaluate the merits and risks of his or her investment
in the Company. The Optionee understands that there may be restrictions on his
or her ability to resell any shares acquired on exercise of an Option,
including insider trading laws and the Company’s insider trading policy, as
well as other restrictions that will apply if the Optionee is an “affiliate”
of the Company. By making payment upon exercise of an Option, the Optionee
shall be deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 11.




          (b) Legend on Stock Certificate. The Optionee understands that, any
shares of Common Stock acquired upon exercise of an Option may not have been
registered under the Securities Act, nor the securities laws of any state.
Accordingly, unless all such registrations are then in effect, all stock
certificates representing shares of Common Stock issued to the Optionee




B-4









 







upon exercise of an Option shall have affixed thereto a legend substantially
in the following form, in addition to any other legends required by applicable
state law:





“THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED, NOR THE SECURITIES LAW OF ANY STATE. CONSEQUENTLY, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION, OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH LAWS.”



12. Miscellaneous




          In the event that the Plan terminates prior to the expiration date of
the Options granted hereunder, this Option Agreement shall incorporate by
reference all applicable provisions of the Plan until the earlier of (i) the
close of business on the day the Option(s) granted hereunder expire, or (ii)
the date on which all shares available for issuance hereunder shall have been
issued pursuant to the exercise of Options granted hereunder.




          Except as provided herein or in Plan, this Option Agreement may not
be amended or otherwise modified unless evidenced in writing and signed by the
Company and the Optionee.




          All notices under this Option Agreement shall, unless otherwise
provided herein, be mailed or delivered by hand to the parties at their
respective addresses set forth beneath their names below or at such other
address as may be designated in writing by either of the parties to the other.




          This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.




          This Option Agreement shall be binding upon and inure to the heirs,
successors and assigns of the Optionee (subject, however, to the limitations
set forth herein with respect to assignment of the Options or rights therein)
and the Company, and shall be construed in a manner that is consistent with
the provisions of the Plan.




	 	 	 	 	 	 	 
	Date of Grant:	 	Global Pharmaceutical Corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Name:
	 	 
	 

	 	 	 	Title:	 	 
	 
	 	 	 	 	 	 
	 	 	Optionee	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 







B-5












 




Exhibit C


GLOBAL PHARMACEUTICAL CORPORATION


NON-STATUTORY STOCK OPTION AGREEMENT

FOR ELIGIBLE DIRECTORS


1. Grant of Options


Global Pharmaceutical Corporation, a Delaware corporation (the
“Company”), hereby grants to                                          (the “Optionee”),                     
Options (the “Options”), pursuant to the Company’s 1995 Stock
Incentive Plan (the “Plan”), to purchase an aggregate of                     
shares of common stock, $.01 par value per share (“Common Stock”), of
the Company at a price of $                     per share (the “Exercise Price Per
Share”), purchasable as set forth in and subject to the terms and
conditions of this Option Agreement and the Plan. All undefined
capitalized terms herein shall have the same meaning as set forth in
the Plan.



2. Exercise of Options and Effect of Termination of Services or Death




          (a) Exercisability of Options. The Options shall become exercisable
and option shares may be purchased based on the number of full years of
service for the Company or a Subsidiary that have expired since the date of
grant (set forth on the signature page hereof), in accordance with the
following schedule:




	 	 	 
	 	 	Percentage of Option Shares
	Number of Years of Service	 	Available
	Since Date of Grant	 	for Purchase (Cumulative)
	1
	 	33%
	2
	 	66%
	3
	 	100%





[; provided, however, one-third of the initial grant (10,000 Options) shall be
vested upon its grant and the remaining two-thirds of the grant (20,000
Options) shall vest according to the foregoing schedule.] Notwithstanding the
foregoing, the Options shall not be exercisable prior to the initial public
offering of the Company’s Common Stock and unless such exercise is in
compliance with the Securities Act of 1933, as amended (the “Securities Act”),
all other applicable laws and regulations (including state securities laws)
and the requirements of any securities exchange on which the shares of Common
Stock are listed.





	 	(b)	 	Expiration Date. Except as otherwise provided in this Option
Agreement or the Plan, the Options may not be exercised
after the date (hereinafter the “Expiration Date”) that is
the tenth anniversary of the date of grant.





 C-1









 






          (c) Effect of Termination of Services or Death . If the Optionee
ceases to serve as a director of the Company or a Subsidiary, the Options that
have been previously granted to the Optionee and that are vested as of the
date of such cessation may be exercised by the Optionee after the date such
Optionee ceases to be a director of the Company or Subsidiary. If the Optionee
dies while a director of the Company or Subsidiary, the Options that have been
previously granted to the Optionee and that are vested as of the date of such
death may be exercised by the administrator of the Optionee’s estate, or by
the person to whom such Options are transferred by will or the laws of descent
and distribution. In no event, however, may any Option be exercised after the
Expiration Date of such Option.




          (d) Exercise Procedure. Subject to the conditions set forth in this
Agreement and, if applicable, Section 6 of the Plan, the Options shall be
exercised by the Optionee’s delivery of written notice of exercise to the
Secretary of the Company, specifying the number of shares to be purchased and
the Exercise Price Per Share to be paid therefor and accompanied by payment in
accordance with Section 3 hereof. The Optionee may purchase less than the
total number of shares covered hereby, provided that no exercise of less than
all the Options may be for less than 100 whole shares.




3. Payment of Purchase Price




          Payment of the Exercise Price Per Share for shares purchased upon
exercise of an Option shall be made by delivery to the Company of the purchase
price, payable in cash (by check) or any other method of payment that is
permitted by the Plan.




4. Delivery of Shares




          The Company shall, upon payment of the Exercise Price Per Share for
the number of shares purchased and paid for, make prompt delivery of such
shares to the Optionee. No shares shall be issued and delivered upon exercise
of an Option unless and until, in the opinion of counsel for the Company, any
applicable registration requirements of the Securities Act, any applicable
listing requirements of any national securities exchange on which stock of the
same class is then listed, and any other requirements of law, including state
securities laws, or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.




5. Non-transferability of Options




          Except as provided in the Plan, the Options are personal and no
rights granted hereunder may be transferred, assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise), except by will or the
laws of descent and distribution, nor shall any such rights be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of an Option or of such
rights contrary to the provisions hereof, or upon the levy of any attachment
or similar process upon any Option or such rights, this Option Agreement and
such rights shall, at the election of the Company, become null and void.




 C-2









 





6. No Special Employment Rights




          Nothing contained in the Plan or this Option Agreement shall
constitute evidence of any agreement or understanding, express or implied,
that the Optionee has a right to continue as a director for any period of
time.




7. Rights as a Stockholder




          The Optionee shall have no rights as a stockholder with respect to
any shares which may be purchased by exercise of the Options unless and until
a certificate representing such shares is duly issued to the Optionee. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date on
such stock certificate.




8. Recapitalization




          In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision, an
appropriate and proportionate adjustment shall be made in the number and kind
of shares subject to the Plan and in the number, kind and per share exercise
price, of shares subject to unexercised Options or portions thereof granted
prior to such adjustment. Any such adjustment to an outstanding Option shall
be made without change in the total price applicable to the unexercised
portion of such Option as of the date of the adjustment.




9. Reorganization




          In the event the Company is merged or consolidated with another
entity and the Company is not a surviving entity, or in the event all or
substantially all of the assets or more than 20% of the outstanding voting
stock of the Company entitled to vote for directors is acquired by any other
entity or person other than an Affiliate or any entity or person or any
affiliate thereof owning 5% or more of the outstanding voting stock of the
Company prior to the effective date of the initial public offering of the
Company’s Common Stock, or in the event of a reorganization or liquidation of
the Company, prior to the Expiration Date or termination of this Option
Agreement, the Optionee shall, with respect to the options or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 14 of the Plan.




10. Withholding Taxes




          The Company’s obligation to deliver shares upon the exercise of an
Option shall be subject to the Optionee’s satisfaction of all applicable
federal, state and local income and employment tax withholding requirements,
if any.




 C-3









 





11. Optionee Representations; Legend




          (a) Representations. The Optionee represents, warrants and covenants
that he or she has had such opportunity as he or she has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit the Optionee to evaluate the merits and risks of his or her investment
in the Company. The Optionee understands that there may be restrictions on his
or her ability to resell any shares acquired on exercise of an Option,
including insider trading laws and the Company’s insider trading policy, as
well as other restrictions that will apply if the Optionee is an “affiliate”
of the Company. By making payment upon exercise of an Option, the Optionee
shall be deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 11.




          (b) Legend on Stock Certificate. The Optionee understands that, any
shares of Common Stock acquired upon exercise of an Option may not have been
registered under the Securities Act, nor the securities laws of any state.
Accordingly, unless all such registrations are then in effect, all stock
certificates representing shares of Common Stock issued to the Optionee upon
exercise of an Option shall have affixed thereto a legend substantially in the
following form, in addition to any other legends required by applicable state
law:





“THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED, NOR THE SECURITIES LAW OF ANY STATE. CONSEQUENTLY, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION, OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH LAWS.”



12. Miscellaneous




          In the event that the Plan terminates prior to the expiration date of
the Options granted hereunder, this Option Agreement shall incorporate by
reference all applicable provisions of the Plan until the earlier of (i) the
close of business on the day the Option(s) granted hereunder expire, or (ii)
the date on which all shares available for issuance hereunder shall have been
issued pursuant to the exercise of Options granted hereunder.




          Except as provided herein or in Plan, this Option Agreement may not
be amended or otherwise modified unless evidenced in writing and signed by the

Company and the Optionee.




          All notices under this Option Agreement shall, unless otherwise
provided herein, be mailed or delivered by hand to the parties at their
respective addresses set forth beneath their names below or at such other
address as may be designated in writing by either of the parties to the other.




          This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.




 C-4









 





          This Option Agreement shall be binding upon and inure to the heirs,
successors and assigns of the Optionee (subject, however, to the limitations
set forth herein with respect to assignment of the Options or rights therein)
and the Company, and shall be construed in a manner that is consistent with
the provisions of the Plan.




	 	 	 	 	 
	Date of Grant: 	Global Pharmaceutical Corporation

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 
	 	Optionee


 
	 




 C-5