**Exhibit 10.1**

 

THIRD AMENDMENT TO THE2001 INCENTIVE AWARD PLAN OFWATSON PHARMACEUTICALS, INC.

 

This ThirdAmendment (this “Amendment”) to the 2001 Incentive Award Plan of WatsonPharmaceuticals, Inc., as amended (the “Plan”), is hereby adopted by Watson Pharmaceuticals,Inc., a Nevada corporation (the “Company”), effective as of August 4,2003.

 

RECITALS

 

I.                                         ThePlan was originally adopted by the Board of Directors of the Company onFebruary 2, 2001 and approved by the stockholders of the Company onMay 7, 2001.

 

II.                                     ThePlan was amended by the First Amendment to the Plan as of May 16, 2001 andthe Second Amendment as of May 19, 2003.

 

III.                                 OnAugust 4, 2003, the following Amendments were adopted by the Board ofDirectors of the Company.

 

THE AMENDMENTS

 

A.                                   OptionPrice.  Subsection 5.1(d) ofthe Plan is hereby amended to read in its entirety as follows:

 

(d)                                 Inthe case of Non-Qualified Stock Options, such price shall not be less than 100%of the Fair Market Value of a share of Common Stock on the date the Option isgranted.

 

B.                                     Mannerof Exercise.  Subsection 6.2(d)of the Plan is hereby amended to read in its entirety as follows:

 

(d)                                 Fullcash payment to the Secretary of the Company for the shares with respect towhich the Option, or portion thereof, is exercised.  However, the Administrator may, in its discretion (i) allowpayment, in whole or in part, through the delivery of shares of Common Stockwhich have been owned by the Holder for at least six months, duly endorsed fortransfer to the Company with a Fair Market Value on the date of delivery equalto the aggregate exercise price of the Option or exercised portion thereof;(ii) allow payment, in whole or in part, through the surrender of shares ofCommon Stock then issuable upon exercise of the Option having a Fair MarketValue on the date of Option exercise equal to the aggregate exercise price ofthe Option or exercised portion thereof; (iii) allow payment, in whole or inpart, through the delivery of property of any kind which constitutes good and valuableconsideration; (iv) allow payment, in whole or in part, through the delivery ofa notice that the Holder has placed a market sell order with a broker withrespect to shares of Common Stock then issuable upon exercise of the Option,and that the broker has been directed to pay a sufficient portion of the netproceeds of the sale to the Company in satisfaction of the

 

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Optionexercise price, provided that payment of such proceeds is then made to theCompany upon settlement of such sale; or (v) allow payment through anycombination of the consideration provided in the foregoing paragraphs (i),(ii), (iii) and (iv); provided, however, that the payment in the mannerprescribed in the preceding paragraphs shall not be permitted to the extentthat the Administrator determines that payment in such manner shall result inan extension or maintenance of credit, an arrangement for the extension ofcredit, or a renewal or an extension of credit in the form of a personal loanto or for any Director or executive officer of the Company that is prohibitedby Section 13(k) of the Exchange Act or other applicable law.

 

C.                                     Repricingof Options.  Section 8.6 of thePlan is hereby amended to read in its entirety as follows:

 

8.6  Repricing.  Subject to Section 8.3, the Administratorshall not, without the approval of the stockholders of the Company, authorizethe amendment of any outstanding Award to reduce its price per share.  Furthermore, no Award shall be canceled andreplaced with the grant of an Award having a lesser price per share without thefurther approval of stockholders of the Company.

 

* * * * *

 

Theundersigned, David A. Buchen, Senior Vice President, General Counsel andSecretary of the Company, hereby certifies that the Board of Directors approvedthis Amendment.

 

Executed atCorona, California, this 30th day of September, 2003.

 
|   | WATSON  PHARMACEUTICALS, INC.                          |
|--------|--------------------------------------------------------|
|   | a Nevada  corporation                                  |
|   |
|   |
|   | By:                                                    | /s/ David A. Buchen |   |
|   | David A.  Buchen                                       |
|   | Senior Vice  President, General Counsel  and Secretary |

 

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