Document:

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

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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

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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

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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;

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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.

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          (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.

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          (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.

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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.

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          (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

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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.

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          (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.

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          (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.

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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.

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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.

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          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-5exv10w4

EXHIBIT 10.4

1999 Equity Incentive Plan

IMPAX LABORATORIES, INC.

1999 EQUITY INCENTIVE PLAN

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. In addition, Non-Employee Directors shall receive automatic grants of Nonstatutory
Stock Options under the Plan.

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

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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 11, the aggregate number of shares of
Common Stock that may be issued pursuant to the Plan is 2,400,000 shares. 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 11, 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 employee may not exceed 300,000 shares.

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. Non-Employee Directors shall receive automatic grants
of Nonstatutory Stock Options pursuant to Section 8 of the Plan. The Company may also, from time to
time, assume

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outstanding awards granted by another company, whether in connection with an 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
and 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 (i) the exercise price of an Incentive Stock Option shall not be less
than the Fair Market Value of the Common Stock on the date the Option is granted, and (ii) 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. Except as otherwise provided herein, 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.

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. In the event the Company elects to

3

 

grant a new Option rather than assuming an existing option, such new Option need not be granted at
Fair Market Value on the date of grant and may instead be granted with a similarly adjusted
exercise price.

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 to eligible personnel 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 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

4

 

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. Non-Employee Director Stock Option Awards. Subject to the provisions hereof and without further
action by the Board, during the term of the Plan, (i) each Non-Employee Director then in service
shall be granted a Nonstatutory Stock Option to purchase 2,000 shares of Common Stock on the
trading day following the Effective Date, and (ii) each Non-Employee Director then in service shall
be granted a Nonstatutory Stock Option to purchase 2,000 shares of Common Stock on the trading day
following each annual meeting of the Company’s stockholders that occurs at least one year after his
or her commencement of service as a Non-Employee Director. Unless otherwise determined by the
Board, each Option granted pursuant to this Section 8 shall be subject to the following terms and
conditions:

8.1. Exercise Price. The purchase price per share shall be equal to the Fair Market Value of the
Common Stock on the date the Option is granted.

8.2. Vesting Conditions. Each Option shall vest and become exercisable in annual one-third
increments on the first, second and third anniversaries of the date the Option is granted, provided
that the Participant remains in the continuous service on the Board through each applicable
anniversary date.

8.3. Effect of Termination of Service. If a Non-Employee Director’s service terminates for any
reason (other than death or Disability) or no reason, then any Option held by the Non-Employee
Director, to the extent not then exercisable, shall thereupon terminate. Any Option held by the
Non-Employee Director which is exercisable at the time of such termination of service shall remain
exercisable during the ninety (90) day period following such termination or, if sooner, until the
expiration of the stated term of the Option and, to the extent not exercised within such period,
shall thereupon terminate. The provisions of Section 9.1.1 shall apply in the event a Non-Employee
Director’s service terminates due to his or her death or Disability.

8.4. Capital Transactions; Change in Control. The provisions of Section 11 shall apply.

8.5. Expiration. Except as otherwise provided herein, if not previously exercised, each Option
shall expire on the tenth anniversary of the date the Option is granted.

5

 

9. Termination of Employment or Service. Except as specifically provided in
Section 8, and 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 (other
than Awards covered by Section 8) at the time of his or her termination of employment or other
service with the Company and its Affiliates.

9.1. Stock Options and Stock Appreciation Rights.

9.1.1. 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 which is not then exercised
shall terminate, and
(ii) any such Option or Stock Appreciation Right may be exercised, to the extent otherwise
exercisable on the date his or her employment or service terminates, 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.

9.1.2. 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 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
(i) 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.

9.1.3. 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.

9.2. 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.

10. Miscellaneous.

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10.1. 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.

10.2. 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.

10.3. 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 10.3 by electing to
have the Company withhold shares of Common Stock (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).

11. Adjustments Upon Changes in Common Stock.

11.1. 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.

11.2. 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.

11.3. 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

7

 

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 11.3 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.

12. 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 11, 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 would adversely affect the rights of the Participant may not be
made without the consent of the Participant.

13. Effective Date of Plan. The Plan shall become effective at the Effective Time.

14. Definitions.

14.1. “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.

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

14.3. “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.

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

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

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

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

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

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

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14.10. “Effective Time” means the “Effective Time” as defined in the Agreement and Plan of Merger
by and between Global Pharmaceuticals Corporation and Impax Pharmaceuticals, Inc. dated July 26,
1999.

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

14.12. “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
NASDAQ National Market System or the NASDAQ SmallCap 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 last market trading day prior to the day of determination,
as reported in The Wall Street Journal or such other source as the Board deems reliable; and (ii)
in the absence of such markets for the Common Stock, the Fair Market Value shall be determined in
good faith by the Board.

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

14.14. “Non-Employee Director” means a member of the Board who is not also an employee of, or
consultant to, the Company or its Affiliates.

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

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

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

14.18. “Plan” means this Impax Laboratories, Inc. 1999 Equity Incentive Plan.

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

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

14.21. “Stock Bonus” means a stock bonus granted pursuant to Section 7 of the Plan.

14.22. “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.

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