Document:

exv10w5

EXHIBIT 10.5

IMPAX LABORATORIES, INC.

2001 NON-QUALIFIED EMPLOYEE STOCK PURCHASE PLAN

1. Purpose of Plan.

The purpose of the Impax Laboratories, Inc. 2001 Non-Qualified Employee Stock Purchase Plan (the
“Plan”) is to enhance employee interest in the success and progress of the Company by encouraging
employee ownership of Common Stock, $.01 par value (“Common Stock”), of Impax Laboratories, Inc.
(the “Company”). The Plan provides the opportunity to purchase Impax Laboratories, Inc. Common
Stock at a 15% discount to the Fair Market Value (as defined herein) through payroll deductions or
lump-sum cash investments.

2. Eligible Employees.

Any employee (as determined by the Company in its sole discretion and without reference to any
definition of employee under the Internal Revenue Code or any other statutory or regulatory
definition) of the Company or its subsidiaries designated by the Plan Committee (as defined below)
for participation (except such executive officers of the Company or its subsidiaries as the Plan
Committee may determine) is eligible to participate in the Plan, provided the employee:

(a) has attained the age or 21;

(b) is employed by the Company or any of its subsidiaries on the first day of each Purchase Period
(as defined below);

(c) has been continuously employed by the Company or any of its subsidiaries (or any predecessor)
for one calendar year preceding the effective date of participation; and

(d) has customary employment of a minimum of 20 hours per week during at least five months of the
year.

Employee eligible to participate in the Plan as defined in this Section 2 are referred to as
“Eligible Employees.”

3. Election to Participate.

Participation in the Plan is voluntary. Each employee who is an Employee may participate in the
Plan by completing and delivering to the Company’s payroll department an Enrollment/ Withdrawal
Form. The completed Enrollment/Withdrawal Form must be received by the Payroll department no later
than fourteen days prior to the beginning of a payroll period in order to participate in the Plan
for that payroll period and subsequent payroll periods. Employees who elect to participate in the
plan in accordance with this Section 3 are referred to herein as “Participating Employees.”

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An election to participate in the Plan authorizes the Company to withhold from the Participating
Employee’s paycheck for the next and subsequent payroll periods after timely submission of the
Enrollment/Withdrawal Form. A Participating Employee may at any time increase or decrease his or
her payroll deduction effective with the next payroll period by timely filing a new
Enrollment/Withdrawal Form. So long as the Plan remains in effect, once an employee enrolls in the
Plan, he or she will automatically continue participation on the same basis, unless he or she
elects to change deduction amounts, withdraws from participation in the Plan, or becomes ineligible
to participate in the Plan. Changes in deduction amounts or participation in the Plan must be
communicated in writing to the Company’s payroll department through timely submission of a new
Enrollment/Withdrawal Form

A Participating Employee also may make a lump-sum investment by completing and delivering to the
payroll department an Enrollment/Withdrawal Form accompanied by a check or other monetary
instrument acceptable to the Company at lease fourteen days prior to the next payroll period in
which the investment is to be made.

4. Investing in the Plan.

Elections for Plan Investments must be made in whole dollar amounts and specified on the
Enrollment/Withdrawal Form. The minimum dollar amount for payroll deductions is $10.00 per pay
period for employees that are paid weekly and $20.00 per pay period for employees that are paid
bi-weekly or semimonthly. If a Participating Employee elects to make a lump-sum investment, the
minimum investment is $100.00 per payroll period.

5. Use of Funds; No Interest Paid.

All funds received by the Company under the Plan will be included in the general funds of the
Company and may be used by the Company for any corporate purpose. No separate account or trust fund
will be established to hold funds received under the Plan. No interest will be paid to any
Participating Employee for amounts invested in the Plan.

6. Purchases of Common Stock Under the Plan.

As of each Purchase Date (as defined in Section 7), each Participating Employee will be deemed to
have purchased, without any further action, a number of whole and fractional shares of Common Stock
determined by dividing the amount of his or her payroll deductions and lump-sum investments for the
preceding Purchase Period (as defined below) by eighty-five percent (85%) of the Fair Market Value
of a share of Common Stock as of the Purchase Date. Fractional shares purchased for a Purchase
Period will be combined with purchases for subsequent Purchase Periods to make whole shares.

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Purchase Periods begin on the first day of each of the Company’s accounting months beginning with
the accounting month commencing on or after May 1, 2001, and end on the day immediately preceding
the commencement date of the following Purchase Period, (each, a “Purchase Period”). The Plan
Committee has the power to change the commencement dates or duration of a Purchase Period with
respect to any future Purchase Period if the change is announced at least 14 days prior to the
scheduled beginning of the Purchase Period to be affected.

7. Purchase Price.

The purchase price for each whole or fractional share of Common Stock purchased under the Plan will
be eighty-five percent (85%) of the Fair Market Value of the whole or fractional share on the first
trading day of the Common Stock after the end of each calendar month (as opposed to accounting
month, if different) on which it is administratively practicable to execute a purchase of shares of
Common Stock (the “Purchase Date”).

“Fair Market Value” of the Common Stock as of a Purchase Date will be determined by the Plan
Committee by any fair and reasonable means, including (a) if the Common Stock is listed for trading
on a national securities exchange or is quoted in the over-the-counter market on the basis of last
sales prices, the average of the high and low sales prices on the exchange or over-the-counter
market on the Purchase Date or (b) if the Common Stock is not listed for trading on a national
securities exchange or quoted in the over-the-counter market on the basis of last sales prices, but
is traded in the over-the-counter market, the average of the bid and asked prices for the Common
Stock at the close of business on the Purchase Date.

8. Investment Accounts.

All shares purchased under the Plan will be maintained by the Company in separate investment
accounts (“Investment Accounts”) for each Participating Employee. Each Investment Account may be in
the name of the employee or if he or she so indicates on the Enrollment/Withdrawal form in the
employee’s name jointly with a member of the employee’s family, with right of survivorship. An
employee who is a resident of a jurisdiction that does not recognize a joint tenancy may have an
Investment Account as tenant in common with a family member, without right of survivorship.

9. Sale or Transfer of Common Stock.

A Participating Employee may sell or transfer any Common Stock in the employee’s Investment Account
at any time after purchase, subject to limitations, if any, imposed by applicable laws and
procedures instituted by the Company. A sale may be made through the Company or outside of the
Company by the employee’s own broker. Any sale or transfer is subject to any commission or other
sales or transfer charges, which must be paid by the Participating Employee.

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10. Limitation of Number of Shares that an Employee May Purchase.

No employee may invest in the Plan more than $25,000 through payroll deductions or lump-sum
investments to purchase Common Stock in one calendar year.

11. Shares Reserved for the Plan.

There will be reserved for issuance and purchase by employees under the Plan an aggregate of
500,000 shares of Common Stock, subject to adjustment as provided in Section 12. Shares subject to
the Plan may be shares authorized but unissued, or shares that were once issued and subsequently
reacquired by the Company (“treasury shares”). If reserved shares are not purchased by a
Participating Employee for any reason or if a right to purchase terminates as provided in the Plan,
the unpurchased shares will again become available for issuance under the Plan unless the Plan has
been terminated, but the unpurchased shares will not increase the aggregate number of shares
reserved for purchase under the Plan.

12. Adjustment in Case of Changes Affecting the Common Stock.

If the outstanding shares of Common Stock are subdivided or split, or a stock dividend is paid
thereon, the number of shares reserved under this Plan will be adjusted proportionately, and the
other provisions of the Plan may be adjusted as the Board of Directors of the Company may deem
necessary or equitable. If any other change affecting the Common Stock occurs, the Board of
Directors may make such adjustments as it deems equitable to give proper effect to such event.

13. Right as a Stockholder.

When at least one whole share of Common Stock is deemed purchased for a Participating Employee’s
account, the employee will have all of the rights or privileges of a stockholder of the Company
with respect to whole or fractional shares purchased under the Plan whether or not certificates
representing full shares are issued. Any cash or stock dividend or other distribution on Common
Stock held in a Participating Employee’s Investment Account will be credited to the account. Proxy
information will be provided for each meeting of the Company’s stockholders so that each
Participating employee may vote his or her shares in accordance with his or her instruction. If no
written instructions are received on a timely basis, the voting of shares in the account will be
governed by the rules and policies of the NASDAQ Stock Market and the Securities and Exchange
Commission.

14. Rights Not Transferable.

The right to participate in the Plan is not transferable by a Participating Employee and is
exercisable during his or her lifetime only by him or her.

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15. Withdrawing from the Plan.

A Participating employee may withdraw from the Plan at any time by properly completing and
delivering an Enrollment/Withdrawal Form to the payroll department at least 14 days prior to the
payroll period in which participation is to end, with the withdrawal being effective as of the end
of that payroll period and thereafter. After a Participant Employee properly withdraws from the
Plan, the Company will deliver to the withdrawing employee the whole shares of Common Stock
credited to the employee’s Investment Account under the Plan and will sell any fractional shares in
the open market and remit the net proceeds by check. A withdrawing employee may not participate in
the Plan again until two Purchase Periods after the one in which the employee withdrew. To rejoin
the Plan, a new Enrollment/Withdrawal Form must be submitted.

16. Death, Retirement or Termination of Employment.

If a Participating Employee dies or retires or if his or her employment is terminated for any
reason, the Participating Employee’s participation in the Plan will end effective immediately and
the amount of the employee’s uninvested payroll deductions and lump-sum investments will be
refunded to the employee, or in the case of death to his or her estate. The Company also will
deliver to the employee or his or her estate the whole shares of Common Stock credited to the
employee’s Investment Account under the Plan and will sell any fractional shares in the open market
and remit the net proceeds by check.

17. Administration of the Plan.

The Plan will be administered, at the Company’s expense, by the Compensation Committee of the Board
of Directors or any successor committee appointed by the Board of Directors (the “Plan Committee”).
Subject to the express provisions of the Plan, the Plan Committee will have authority to interpret
the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all
other determinations necessary or advisable in administering the Plan, all of which determinations
will be final and binding upon all persons unless determined otherwise by the Board of Directors.
The Plan Committee may delegate the day-to-day administration of the Plan and may request advice or
assistance or employ such other persons as are necessary for proper administration of the Plan.

18. Amendment of the Plan.

The Board of Directors may at any time, or from time to time, amend the Plan in any respect, except
that no amendment shall by made (a) decreasing the number of shares to be reserved under the Plan
(other than as provided in Section 12), or
(b) permitting person other than employees (as determined by the Company in its sole discretion) to
participate in the Plan.

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19. Termination of the Plan.

The Plan and all rights of employees under the Plan will terminate: (a) on the Purchase Date that
Participating Employees become entitled to purchase a number of shares greater than the number of
reserved shares remaining available for purchase (and no such additional shares shall then be
purchased); or (b) at any time, at the discretion of the Board of Directors, after the completion
of any Purchase Period. If the Plan terminates under clause (a), reserved shares remaining as of
the termination date will be sold to Participating Employees on a pro rata basis.

20. Effective Date of Plan.

The Plan is effective as of May 1, 2001.

21. Laws and Regulations.

The laws of the Commonwealth of Pennsylvania shall govern all matters relating to this Plan, except
to the extent it is superseded by the laws of the United States. The Plan and all rights and
obligation of the Company and Participating Employees under the Plan are subject to all applicable
federal, state and foreign laws, rules and regulations, and to such approvals by and regulatory or
governmental agency as may, in the opinion of counsel for the Company, be required. Restrictions
may apply to the sale of shares of Common Stock by certain officers of the Company and those having
similar responsibilities whom are subject to federal insider trading and short-swing profit rules.

22. Rules for Officers of the Company.

Because the federal securities laws and the Company’s Insider Trading Policy impose certain
restriction on the ability of officers of the Company and its subsidiaries to purchase Common Stock
other than during certain “window periods”, these officers will be allowed to only make lump-sum
investments in the Plan, and the Plan will purchase Common Stock on their behalf, as follows:

(a) Officers of the Company or its subsidiaries designated by the Plan Committee (“Designated
Officer”) will be entitled to make lump-sum investments to the Plan at any time during a “window
period”, as determined by the Plan Committee. An appropriate Enrollment/Withdrawal Form must be
submitted to the Corporate Secretary.

(b) The Plan will purchase Common Stock for those Designated Officers making a lump-sum investment
during a “window period” as soon as practicable after receipt of a check or other monetary
instruments acceptable to the Company.

(c) Designated Officers may not make investments in the Plan other than as permitted in Section 22.

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(d) Designated Officers may not sell or otherwise transfer any of the Common Stock purchased on
their behalf except in full compliance with applicable securities laws and the Company’s Insider
Trading Policy.

(e) Except as otherwise described in this Section 22, the other provisions of the Plan will apply
to purchases of Common Stock under the Plan by Designated Officers.

23. Limitations Arising from Compliance with Nasdaq Stock Market Requirements.

The Company has represented to the Nasdaq Stock Market that (i) at least a majority of the shares
of Common Stock purchased under the Plan, during the shorter of the three-year period commencing on
the effective date of the Plan, will be purchased by employees who are not officers of the Company,
and (ii) if the term of the Plan is greater than three years, the Company will administer the Plan
so that in each subsequent year a majority of the shares of Common Stock purchased under the Plan
are purchased by employees who are not officers of the Company. The Company will monitor purchases
made under the Plan for purposes of making certain that the Company is in compliance with its
representations to the Nasdaq Stock Market. The Company may limit purchases by officers of the
Company under the Plan if the Company determines that purchases need to be limited to assure that
the Company maintains compliance with its representations to the Nasdaq Stock Market.

24. Tax Status of Plan.

The purchase of shares of Common Stock under the Plan will be made with “after-tax” dollars of
Participating Employees. the amount deducted from a Participating Employee’s paycheck or invested
in a lump-sum will have been subject previously to withholding of applicable income and employment
taxes.

The Plan is not a qualified plan under the Internal Revenue Code. Consequently, Participating
Employees will realize income equal to the amount of the difference between the Fair Market Value
of the Common Stock on the Purchase Date and the purchase price. Participating employees also may
realize a gain or loss on the sale of any Common Stock purchased under the Plan. Each employee is
advised to consult with his or her own tax advisers prior to participation in the Plan.

The Company may make such provisions as it deems appropriate for withholding by the Company
pursuant to federal or state tax laws of such amounts as the company determines it is required to
withhold in connection with the purchase or sale by a Participating Employee of any Common Stock
acquired pursuant to the Plan. The Company may require a Participating Employee to satisfy any
relevant tax requirements before authorizing any issuance of Common Stock to the Participating
Employee.

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25. ERISA.

The Plan is not subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).

26. No Continued Employment.

The Plan does not confer any rights of continued employment upon any employee of the Company or any
of its subsidiaries and it shall not be deemed to interfere in any way with the Company’s or its
subsidiaries’ right to terminate, or otherwise modify, an employee’s employment at any time.

27. Effect of Plan.

The provisions of this Plan shall, in accordance with its terms, be binding upon, and inure to the
benefit of, all successors of each employee participating in the Plan, including, without
limitation, such employee’s estate and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of creditors of such employee.exv10w6

EXHIBIT 10.6

IMPAX LABORATORIES, INC.

AMENDED AND RESTATED 2002 EQUITY INCENTIVE PLAN (CORRECTED)

     1. Purpose. The purpose of the Plan is to attract, retain and motivate key personnel by
providing a means whereby the Company may grant (i) Incentive Stock Options, (ii) Nonstatutory
Stock Options, (iii) Stock Appreciation Rights and/or (iv) Stock Bonuses to officers, employees,
directors and consultants of the Company and its Affiliates.

     2. Administration

          2.1 Administration by Board. The Board shall administer the Plan unless and to the extent
that the Board delegates its power and authority to a Committee as provided in Section 2.3.

          2.2 Power of Board. Subject to the provisions of the Plan, the Board, acting in its sole
discretion, shall have the following power and authority:

               2.2.1 to determine to which of the eligible individuals, and the times at which, Awards shall
be granted;

               2.2.2 to determine the number of shares of Common Stock subject to Awards granted under the
Plan and, where applicable, the price to be paid for the shares of Common Stock subject to each
Award;

               2.2.3 to determine the terms and conditions of each Award (which need not be identical);

               2.2.4 to interpret the terms of the Plan and Awards granted under it, and to establish, amend
and revoke rules and regulations for its administration (and, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a manner
and to the extent it deemed necessary or desirable);

               2.2.5 to accelerate the terms of the Plan or any Award;

               2.2.6 to amend the terms of the Plan or any Award;

               2.2.7 to adopt forms of Award Agreements for use under the Plan;

               2.2.8 to allow Participants to satisfy the minimum withholding tax obligations by electing to
have the Company withhold from the shares covered by an Award that number of shares having a Fair
Market Value equal to the amount required to be withheld; and

               2.2.9 to make all determinations deemed necessary or advisable for the administration of the
Plan.

          2.3 Delegation. Except with regard to Awards to Non-Employee Directors, the Board may
delegate any or all of its powers and authority relating to the administration of the Plan (but not
the power to amend or terminate the Plan) to a Committee of two (2) or more

 

 

members of the Board. If and to the extent that administrative responsibility is delegated to
a Committee, the Committee shall have, in connection with the administration of the Plan, the
powers and authority theretofore possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is authorized to exercise (and, as
appropriate, references in the Plan to the Board shall be deemed to be the Committee or
subcommittee). If a Committee is appointed, then, unless the Board determines otherwise, its
members shall consist solely of individuals who qualify as “non-employee directors” under Rule
16b-3 promulgated under Section 16 of the Exchange Act and as “outside directors” under Section
162(m) of the Code. If for any reason the Committee does not satisfy the “non-employee director”
requirements of Rule 16b-3 or the “outside director” requirements of Section 162(m) of the Code,
such non-compliance shall not affect the validity of the awards, interpretations or other actions
of the Committee. The Board may delegate nondiscretionary administrative duties to such employees
of the Company as it deems proper.

          2.4 Indemnification. The Company shall indemnify and hold harmless to the fullest extent
permitted by law each member of the Board and the Committee and any employee or director of the
Company to whom any duty or power relating to the administration or interpretation of the Plan is
delegated from and against any loss, cost, liability (including any sum paid in settlement of a
claim with the approval of the Board), damage and expense (including legal and other expenses
incident thereto) arising out of or incurred in connection with the Plan, unless and except to the
extent attributable to such person’s fraud or willful misconduct.

          2.5 Decisions. All decisions, determinations and interpretations of the Board shall be final,
binding and conclusive on all persons.

     3. Share Reserve. Subject to adjustment pursuant to Section 10, the aggregate number of
shares of Common Stock that may be issued pursuant to the Plan is 6,500,000 shares, all of which
may be issued pursuant to Incentive Stock Options. If any Option or Stock Appreciation Right
expires or is terminated without being exercised in whole or in part, the unexercised or released
shares from such Option or Stock Appreciation Right shall be available for future issuance under
the Plan. Shares that are subject to an Award that is forfeited or cancelled or that are withheld
in order to pay the purchase price for shares of Common Stock covered by any Award or to satisfy
the tax withholding obligations associated with any Award under the Plan shall be available for
future issuance under the Plan. Shares of Common Stock available for issuance under the Plan may be
authorized and unissued, held by the Company in its treasury or otherwise acquired for purposes of
the Plan. No fractional shares of Common Stock shall be issued under the Plan. Subject to
adjustment pursuant to Section 10, the maximum number of shares of Common Stock with respect to
which Options or Stock Appreciation Rights may be granted during any calendar year to any director,
officer, employee or consultant may not exceed 50% of the total number of shares of Common Stock
authorized for issuance under this Plan.

     4. Eligibility. Awards may be granted under the Plan to officers, employees, directors and
consultants of the Company or its Affiliates. Incentive Stock Options may be granted only to
employees of the Company or its Affiliates. The Company may also, from time to time, assume
outstanding awards granted by another company, whether in connection with an

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acquisition of such other company or otherwise, by either (i) granting an Award under the Plan
in replacement of the award assumed by the Company, or (ii) treating the assumed award as if it had
been granted under the Plan.

     5. Options.

          5.1 Option Grant. Subject to the provisions hereof, the Board may grant Incentive Stock
Options or Nonstatutory Stock Options to eligible personnel on such terms and conditions as the
Board deems appropriate.

          5.2 Exercise Price. The exercise price of an Option shall not be less than the par value of
the Common Stock, provided that the exercise price of an Option shall not be less than the Fair
Market Value of the Common Stock on the date the Option is granted. Notwithstanding the foregoing,
the exercise price of an Incentive Stock Option granted to a Ten Percent Stockholder shall not be
less than 110% of the Fair Market Value of the Common Stock on the date the Option is granted.

          5.3 Option Term. No Option granted under the Plan may be exercisable (if at all) more than
ten (10) years after the date the Option is granted (or, in the case of an Incentive Stock Option
granted to a Ten Percent Stockholder, five (5) years.)

          5.4 Vesting and Exercise of Options. The Board may establish such vesting and other
conditions and restrictions on the exercise of an Option and/or upon the issuance of Common Stock
in connection with the exercise of an Option as it deems appropriate. Subject to satisfaction of
applicable withholding requirements, once vested and exercisable, an Option may be exercised by
transmitting to the Company: (i) a notice specifying the number of shares to be purchased and (ii)
payment of the exercise price. The exercise price of an Option may be paid in cash and/or such
other form of payment as the Company may permit.

          5.5 Rights as a Stockholder. No shares of Common Stock shall be issued in respect of the
exercise of an Option until full payment of the exercise price and the applicable tax withholding
obligations with respect to such exercise has been made or provided for. The holder of an Option
shall have no rights as a stockholder with respect to any shares covered by an Option until the
date such shares are issued. No adjustments shall be made for dividend distribution or other
rights for which the record date is prior to the date such shares are issued.

          5.6 Buy Out and Settlement. The Board, on behalf of the Company, may at any time offer to buy
out any Option on such terms and conditions as the Board shall establish.

          5.7 Options Non-Transferable. Options granted under the Plan shall not be transferable or
assignable by a Participant, and may not be made subject to execution, attachment or similar
process, otherwise then by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of a Participant only by the Participant. Notwithstanding the
foregoing, the Board may determine at the time of grant or thereafter that a Nonstatutory Stock
Option is transferable in whole or in part to such persons, under such circumstances, and subject
to such conditions as the Board may prescribe; provided that, such conditions are consistent with
the conditions that would permit the registration of the underlying shares on Form S-8 or a
successor form.

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          5.8 Assumed Options. In the event the Company assumes an option granted by another company,
the exercise price and the number and nature of shares issuable upon exercise of such assumed
option shall be adjusted appropriately as determined by the Board.

          5.9 Replacement Options. Without in any way limiting the authority of the Board to make or
not to make grants of Options, the Board shall have the authority (but not an obligation) to
include as part of any Award Agreement a provision entitling the Participant to a replacement
Option in the event the Participant exercises the Option evidenced by the Award Agreement, in whole
or in part, by surrendering other shares of Common Stock in accordance with the Plan and the terms
and conditions of the Award Agreement.

     6. Stock Appreciation Rights.

          6.1 Stock Appreciation Right Grant. Subject to the provisions hereof, the Board may award
Stock Appreciation Rights upon such terms and conditions as it deems appropriate. A Stock
Appreciation Right is an Award entitling the Participant, upon exercise, to receive an amount, in
cash or shares of Common Stock or a combination thereof, as determined by the Board in its sole
discretion, determined with reference to the appreciation, if any, in the fair market value of
Common Stock during the period beginning on the date the Stock Appreciation Right is granted and
ending on the date the Stock Appreciation Right is exercised.

          6.2 Types of Stock Appreciation Rights. Stock Appreciation Rights may be awarded under the
Plan in conjunction with an Option (“tandem SARs”) or independent of any Option (“stand-alone
SARs”). Tandem SARs awarded in conjunction with a Nonstatutory Stock Option may be awarded either
at or after the time the Nonstatutory Stock Option is granted. Tandem SARs awarded in conjunction
with an Incentive Stock Option may only be awarded at the time the Incentive Stock Option is
granted.

          6.3 Exercisability. Except as otherwise provided herein, a tandem SAR shall be exercisable
only at the time and to the same extent and subject to the same conditions as the related Option is
exercisable. The exercise of a tandem SAR shall cancel the related Option to the extent of the
shares of Common Stock with respect to which the Stock Appreciation Right is exercised, and vice
versa. Tandem SARs may be exercised only when the Fair Market Value of the Common Stock to which
it relates exceeds the Option exercise price. The Board may impose such additional service or
vesting conditions upon the exercise of a Stock Appreciation Right (tandem or stand-alone) as it
deems appropriate.

          6.4 Exercise. A Stock Appreciation Right may be exercised by giving written notice to the
Company identifying the Stock Appreciation Right that is being exercised, specifying the number of
shares covered by the exercise and containing such other information or statements as the Board may
require. The Board may establish such rules and procedures as it deems appropriate for the
exercise of Stock Appreciation Rights under the Plan. Upon the exercise of a Stock Appreciation
Right, the Participant shall be entitled to receive an amount (in cash and/or shares of Common
Stock as determined by the Board) equal to the product of (i) the number of shares with respect to
which the Stock Appreciation Right is being exercised and (ii) the difference between the Fair
Market Value of a share of the Common Stock on the date the

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Stock Appreciation Right is exercised and the Fair Market Value of a share of Common Stock on
the date the Stock Appreciation Right is granted.

          6.5 SARs Non-Transferable. Stock Appreciation Rights shall not be transferable by a
Participant other than upon the Participant’s death to a beneficiary designated by the Participant
in a manner acceptable to the Board, or, if no designated beneficiary shall survive the
Participant, pursuant to the Participant’s will or by the laws of descent and distribution. All
Stock Appreciation Rights shall be transferable, to the extent permitted above, only with the
underlying option.

     7. Stock Bonus Awards. Subject to the provisions hereof, the Board may grant Stock Bonus
Awards to eligible personnel upon such terms and conditions as the Board deems appropriate. The
terms and conditions of Stock Bonus Awards may change from time to time, and the terms and
conditions of each Award Agreement need not be identical.

          7.1 Consideration. A Stock Bonus Award shall be awarded in consideration for part or future
services rendered to the Company or its Affiliates.

          7.2 Vesting. Shares of Common Stock awarded pursuant to a Stock Bonus may, but need not, be
subject to a vesting schedule determined by the Board.

          7.3 Transferability. Shares of Common Stock received pursuant to a Stock Bonus Award shall be
transferable by the Participant only upon such terms and conditions as are set forth in the Award
Agreement, as the Board shall determine in its discretion, so long as shares remain subject to the
terms of the Award Agreement.

     8. Termination of Employment or Service. Unless otherwise determined by the Board at grant
or, if no rights of the Participant are thereby reduced, thereafter, and subject to earlier
termination in accordance with the provisions hereof, the following rules apply with regard to
Awards held by a Participant at the time of his or her termination of employment or other service
with the Company and its Affiliates.

          8.1 Stock Options and Stock Appreciation Rights.

               8.1.1 If a Participant’s employment or service terminates due to his or her death or
Disability, then (i) any Option or Stock Appreciation Right held by the Participant, to the extent
not then exercisable, shall thereupon terminate, and (ii) any Option or Stock Appreciation Right
held by the Participant which is exercisable at the time of such termination of employment or
service due to his or her death or Disability shall remain exercisable by the Participant (or in
the event of death, his or her legal representative) at any time within one year from the date his
or her employment or service terminates, but in no event after expiration of the stated term, and,
to the extent not exercised within such time period, shall thereupon terminate.

               8.1.2 If a Participant’s employment or service is terminated by the Company or its Affiliates
for Cause or if, at the time of a Participant’s termination, grounds for termination for Cause
exist, then notwithstanding anything to the contrary contained herein, any Option or Stock
Appreciation Right held by the Participant (whether or not otherwise vested) shall immediately
terminate and cease to be exercisable. “Cause” means (i) in the case where

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there is no employment or consulting agreement between the Participant and the Company or its
Affiliates or where such an agreement exists but does not define “Cause” (or words of like import),
a termination classified by the Company as a termination due to the Participant’s dishonesty,
fraud, insubordination, willful misconduct, refusal to perform services or materially
unsatisfactory performance of his or her duties, or (ii) in the case where there is an employment
or consulting agreement between the Participant and the Company or its Affiliates, a termination
that is or would be deemed for “cause” (or words of like import) under such agreement.

               8.1.3 If a Participant’s employment or service terminates for any reason (other than death,
Disability or Cause at a time when Cause exists) or no reason, then any Option or Stock
Appreciation Right held by the Participant, to the extent not then exercisable, shall thereupon
terminate. Any Option or Stock Appreciation Right held by the Participant which is exercisable at
the time of such termination of employment or service shall remain exercisable during the thirty
(30) days period following such termination of employment or service or, if sooner, until the
expiration of the stated term of the Option or Stock Appreciation Right and, to the extent not
exercised within such period, shall thereupon terminate.

          8.2 Stock Bonuses. If a Participant’s employment or service terminates, then any shares of
Common Stock held by the Participant which have not vested as of the date of termination under the
terms of the Award Agreement shall be forfeited.

     9. Miscellaneous.

          9.1 No Employment or other Service Rights. Nothing in the Plan or any instrument executed or
Award granted pursuant thereto shall confer upon any Participant or other holder of Awards any
right to continue to be employed by or serve the Company or an Affiliate in the capacity in effect
at the time the Award was granted or shall affect the right of the Company or an Affiliate to
terminate such employment or service.

          9.2 Investment Assurance. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate
in order to reflect conditions imposed under an Award or to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the stock.

          9.3 Withholding Obligations. As a condition to the exercise of any Award or the delivery of
any shares of Common Stock pursuant to any Award or the lapse of restrictions on any Award, or in
connection with any other event that gives rise to a federal or other governmental tax withholding
obligation on the part of the Company relating to an Award, (i) the Company may deduct or withhold
(or cause to be deducted or withheld) from any payment or distribution to a Participant whether or
not pursuant to the Plan or (ii) the Company shall be entitled to require that the Participant
remit cash to the Company (through payroll deduction or otherwise), in each case in an amount
sufficient in the opinion of the Company to satisfy such withholding obligation. If the event
giving rise to the withholding obligation involves a transfer of shares of Common Stock, then,
unless the applicable Award Agreement provides otherwise, at the discretion of the Board, the
Participant may satisfy the withholding obligation described under this Section 9.3 by electing to
have the Company withhold shares of Common Stock

6

 

(which withholding shall be at a rate not in excess of the statutory minimum rate) or by
tendering previously owned shares of Common Stock, in each case having a Fair Market Value equal to
the amount of tax to be withheld (or by another mechanism as may be required or appropriate to
conform with local tax and other rules).

     10. Adjustments Upon Changes in Common Stock.

          10.1 Capitalization Adjustments. If any change is made in the Common Stock subject to the
Plan, or subject to any Award, without the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Plan shall be appropriately adjusted in the class(es) and
maximum number of securities subject to the Plan and the maximum number of securities that may be
awarded to any employee, and the outstanding Awards shall be appropriately adjusted in the
class(es) and number of securities and price per share of stock subject to such outstanding Awards.
The Board, the determination of which shall be final, binding and conclusive, shall make such
adjustments. The conversion of any convertible securities of the Company shall not be treated as a
transaction “without receipt of consideration” by the Company.

          10.2 Change in Control — Dissolution or Liquidation. In the event of a dissolution or
liquidation of the Company, then Awards outstanding under the Plan shall terminate if not exercised
(if applicable) immediately prior to, or simultaneous with, such event.

          10.3 Change in Control — Asset Sale, Merger, Consolidation or Reverse Merger. In the event of
(i) a sale of all or substantially all of the assets of the Company, (ii) a merger in which the
Company is not the surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately preceding the merger
are converted by virtue of the merger into other property, whether in the form of securities, cash
or otherwise, then any surviving corporation or acquiring corporation shall assume any Awards
outstanding under the Plan or shall substitute similar awards (including an award to acquire the
same consideration paid to the stockholders in the transaction described in this Section 10.3 for
those Awards outstanding under the Plan). In the event any surviving corporation or acquiring
corporation refuses to assume such Awards or to substitute similar awards for those Awards
outstanding under the Plan, then the vesting of all outstanding Awards (and, if applicable, the
time during which such Awards may be exercised) shall be accelerated in full, and the Awards shall
terminate if not exercised (if applicable) at or prior to such event.

     11. Amendment and Termination. The Board may amend or terminate the Plan, provided, however,
that no such action may adversely affect the rights of a Participant under any outstanding Award
without the consent of the Participant. Except as otherwise provided in Section 10, any amendment
which would increase the number of shares of Common Stock for which Awards may be granted under the
Plan (in the aggregate or on an individual basis) or modify the class of employees eligible to
receive Awards under the Plan shall be subject to the approval of the stockholders of the Company.
The Board may amend the terms of any Award Agreement at any time and from time to time, provided,
however, that any amendment which

7

 

would adversely affect the rights of the Participant may not be made without the consent of
the Participant.

     12. Effective Date of Plan. The Plan shall become effective on the date of its adoption by the
Company’s Board of Directors, subject however to approval by the holders of the Company’s Common
Stock in the manner as prescribed in the Code and the resolutions thereunder. Options may be
granted under this Plan prior to obtaining shareholder approval, provided such options shall not be
exercisable before such shareholder approval is obtained. No grants of Bonus Stock may be made
under the Plan prior to the receipt of shareholder approval.

     13. Definitions.

          13.1 “Affiliate” means any parent corporation or subsidiary corporation of the Company,
whether now or hereafter existing, as those terms are defined in Section 424(e) and (f),
respectively, of the Code.

          13.2 “Award” means any Option, Stock Appreciation Right or Stock Bonus granted under the Plan.

          13.3 “Award Agreement” means a written agreement or other instrument between the Company and a
holder of an Award evidencing the terms and conditions of an individual Award.

          13.4 “Board” means the Board of Directors of the Company.

          13.5 “Code” means the Internal Revenue Service Code of 1986, as amended.

          13.6 “Committee” means a committee appointed by the Board in accordance with Section 2.3.

          13.7 “Common Stock” means the common stock, par value $.01, of the Company.

          13.8 “Company” means Impax Laboratories, Inc., a Delaware corporation.

          13.9 “Disability” means the dates and permanent disability of a person within the meaning of
Section 22(e) of the Code.

          13.10 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          13.11 “Fair Market Value” means, as of any date, the value of the Common Stock determined as
follows: (i) if the Common Stock is listed on any established stock exchange or traded on the
over-the-counter market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of trading in the Common
Stock) on the date of grant, as reported in The Wall Street Journal or such other source as the
Board deems reliable; and (ii) in the absence of trading on such markets, the Fair Market Value
shall be determined in good faith by the Board.

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          13.12 “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.

          13.13 “Non-Employee Director” means a member of the Board who (i) is not currently an officer
(as defined in Rule 16a-1(f) of the Securities Act or any successor regulation) of the Company or a
parent or subsidiary of the Company, or otherwise currently employed by the Company or a parent or
subsidiary of the Company; (ii) does not receive compensation, either directly or indirectly, from
the Company or a parent or subsidiary of the Company, for services rendered as a consultant or in
any capacity other than as a director, except for an amount that does not exceed the dollar amount
for which disclosure would be required pursuant to Item 404(a) of Regulation S-K; and (iii) does
not possess an interest in any other transaction for which disclosure would be required pursuant to
Item 404(a) of Regulation S-K.

          13.14 “Nonstatutory Stock Option” means an Option that does not qualify as an Incentive Stock
Option.

          13.15 “Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant
to the Plan.

          13.16 “Participant” means a person to whom an Award is granted pursuant to the Plan or, if
applicable, such other person who holds an Award.

          13.17 “Plan” means this Impax Laboratories, Inc. Amended and Restated 2002 Equity Incentive
Plan.

          13.18 “Securities Act” means the Securities Act of 1933, as amended.

          13.19 “Stock Appreciation Right” means a stock appreciation right granted pursuant to Section
6 of the Plan.

          13.20 “Stock Bonus” means a grant of restricted stock pursuant to Section 7 of the Plan.

          13.21 “Ten Percent Stockholder” means a person who owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any of its Affiliates.

9

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