<PAGE>
As filed with the Securities and Exchange Commission on December 5, 1997
Registration No. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
---------
GLOBAL PHARMACEUTICAL CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware 65-0403311
(State or Other Jurisdiction of (I.R.S. Employer Identification
of Incorporation or Organization) Number)
Castor & Kensington Avenues
Philadelphia, Pennsylvania 19124
(Address of Principal Executive Offices) (Zip Code)
GLOBAL PHARMACEUTICAL CORPORATION 1995 STOCK INCENTIVE PLAN
(Full Title of the Plan)
---------
MAX L. MENDELSOHN
GLOBAL PHARMACEUTICAL CORPORATION
Castor & Kensington Avenues
Philadelphia, Pennsylvania 19124
(Name and Address of Agent for Service)
Telephone Number, Including Area Code, of Agent for Service: (215) 289-2220
Copies of all communications, including all communications sent to
the agent for service, should be sent to:
---------
SHELDON G. NUSSBAUM, ESQ.
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
(212) 318-3000
---------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum
Title Of Securities To Be Amount To Be Offering Price Per Aggregate Offering Amount Of
Registered Registered Share(1) Price(1) Registration Fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par 550,000 shares $3.968 $2,182,812.50 $643.93
value
===================================================================================================================================
</TABLE>
(1) The price is estimated in accordance with Rule 457(h)(1) under the
Securities Act of 1933, as amended, solely for the purpose of calculating
the registration fee, based on the average of the high and low prices of
the Common Stock as reported on the Nasdaq SmallCap Market on December 4,
1997.
==============================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE PROSPECTUS
The document(s) containing the information called for in Part I of Form
S-8 will be sent or given to individuals awarded options under the Global
Pharmaceutical Corporation 1995 Stock Incentive Plan adopted by Global
Pharmaceutical Corporation and is not being filed with or included in this
Form S-8 in accordance with the rules and regulations of the Securities and
Exchange Commission.
-1-
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed by Global Pharmaceutical Corporation (the
"Company") are incorporated herein by reference:
(i) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996.
(ii) The Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1997.
(iii) The Company's Quarterly Report on Form 10-QSB for the quarter
ended June 30, 1997.
(iv) The Company's Quarterly Report on Form 10-QSB for the quarter
ended September 30, 1997.
(v) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, as filed with the
Securities and Exchange Commission on December 8, 1995 as
amended on December 14, 1995 and as amended on December 5, 1997.
In addition to the foregoing, all documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, prior to the filing of a post-effective amendment
indicating that all of the securities offered hereunder have been sold or
deregistering all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing of such documents. Any statement contained in a
document incorporated by reference in this Registration Statement shall be
deemed to be modified or superseded for purposes of this Registration
Statement to the extent that a statement contained herein or in any
subsequently filed document that is also incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
II-1
<PAGE>
Item 6. Indemnification of Directors and Officers
The Company is a Delaware corporation, subject to the applicable
indemnification provisions of the General Corporation Law of the State of
Delaware (the "DGCL"). Section 145 of the DGCL empowers a Delaware corporation
to indemnify, subject to the standards therein prescribed, any person in
connection with any action, suit or proceeding brought or threatened by reason
of the fact that such person is or was a director, officer, employee or agent
of the corporation or was serving as such with respect to another corporation
or other entity at the request of such corporation.
In accordance with Section 102(b)(7) of the DGCL, the Company's Restated
Certificate of Incorporation (the "Certificate") provides that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company
or its stockholders, (ii) for acts or omissions not in good faith, (iii)
arising from payment of dividends or approval of a stock purchase in violation
of Section 174 of the DGCL, or (iv) for any transaction from which the
director derived any improper personal benefit. While the Certificate provides
protection from awards for monetary damages for breaches of the duty of care,
it does not eliminate the director's duty of care. Accordingly, the
Certificate will not affect the availability of equitable remedies, such as an
injunction, based on a director's breach of the duty of care. The provisions
of the Certificate described above apply to officers of the Company only if
they are directors of the Company and are acting in their capacity as
directors, and does not apply to officers of the Company who are not
directors.
The Company's By-Laws contain provisions that require the Company to
indemnify its directors and officers to the fullest extent permitted by
Delaware law. Under the DGCL, directors and officers as well as employees and
individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation as a
derivative action) if they act in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, had no reasonable cause to
believe their conduct was unlawful.
The Company has purchased a directors and officers insurance policy under
which each director and certain officers of the Company are insured against
certain liabilities.
Item 7. Exemption from Registration Claimed
Not Applicable.
II-2
<PAGE>
Item 8. Exhibits
4.1 -- Global Pharmaceutical Corporation 1995 Stock Incentive Plan,
as amended
4.2 -- Form of Incentive Stock Option Agreement
4.3 -- Form of Non-Statutory Stock Option Agreement
4.4 -- Form of Non Statutory Stock Option Agreement for Eligible
Directors
4.5 -- Certificate of the Designations, Powers, Preferences and
Rights of the Series A Convertible Preferred Stock of Global
Pharmaceutical Corporation
4.6 -- Certificate of the Designations, Powers, Preferences and
Rights of the Series B Convertible Preferred Stock of Global
Pharmaceutical Corporation
5 -- Opinion of Fulbright & Jaworski L.L.P.
23.1 -- Consent of Price Waterhouse LLP.
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included in Exhibit
5).
24 -- Power of Attorney (included in signature page).
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes to:
(1) File, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement
to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change
in the information in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
II-3
<PAGE>
(iii) Include any additional or changed material
information on the plan of distribution;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3 or Form
S-8, and the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by
the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) For determining liability under the Securities
Act of 1933, treat each post-effective amendment as
a new registration statement of the securities
offered, and the offering of the securities at that
time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain
unsold at the end of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person of the registrant in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Philadelphia, State of Pennsylvania
on the 4th day of December, 1997.
GLOBAL PHARMACEUTICAL
CORPORATION
By: /s/ Max L. Mendelsohn
-----------------------
Max L. Mendelsohn
President and
Chief Executive Officer
-----------------------
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Max L. Mendelsohn and Cornel C.
Spiegler, or either of them, his true and lawful attorney-in-fact and agent
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Max L. Mendelsohn President, Chief Executive December 4, 1997
- --------------------------- Officer (Principal Executive
Max L. Mendelsohn Officer) and Director
</TABLE>
II-5
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Cornel C. Spiegler Vice President -- Administration December 4, 1997
- --------------------------- and Chief Financial Officer
Cornel C. Spiegler (Principal Financial Officer
and Principal Accounting Officer)
/s/ Frederick R. Adler Director December 4, 1997
- ---------------------------
Frederick R. Adler
/s/ Philip R. Chapman Director December 4, 1997
- ---------------------------
Philip R. Chapman
/s/ Gary Escandon Director December 4, 1997
- ---------------------------
Gary Escandon
/s/ George F. Keane Director December 4, 1997
- ---------------------------
George F. Keane
/s/ John W. Rowe, M.D. Director December 4, 1997
- ---------------------------
John W. Rowe, M.D.
/s/ Udi Toledano Director December 4, 1997
- ---------------------------
Udi Toledano
/s/ Richard N. Wiener Director December 4, 1997
- ---------------------------
Richard N. Wiener
</TABLE>
II-6
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
4.1 -- Global Pharmaceutical Corporation 1995 Stock
Incentive Plan, as amended.
4.2 -- Form of Incentive Stock Option Agreement.
4.3 -- Form of Non-Statutory Stock Option Agreement.
4.4 -- Form of Non Statutory Stock Option Agreement
for Eligible Directors.
4.5 -- Certificate of the Designations, Powers,
Preferences and Rights of the Series A
Convertible Preferred Stock of
Global Pharmaceutical Corporation.
4.6 -- Certificate of the Designations, Powers,
Preferences and Rights of the Series B
Convertible Preferred Stock of
Global Pharmaceutical Corporation.
5 -- Opinion of Fulbright & Jaworski L.L.P.
23.1 -- Consent of Price Waterhouse LLP
23.2 -- Consent of Fulbright & Jaworski L.L.P. (included
in Exhibit 5).
24 -- Power of Attorney (included in signature page).
<PAGE>
GLOBAL PHARMACEUTICAL CORPORATION
1995 STOCK INCENTIVE PLAN
1. Purpose
The purpose of this plan (the "Plan") is to secure for Global
Pharmaceutical Corporation (the "Company"), and its stockholders, the benefits
arising from the ownership of stock options by directors and key employees
(including, without limitation, officers) of the Company or Subsidiaries (as
defined in Section 18 hereof) who are expected to contribute to the Company's
future growth and success.
2. Types of Plan Benefits and Administration
(a) Types of Awards. Under the Plan, the Company may in its soles
discretion grant, with respect to the Company's common stock, par value $.01
per share ("Common Stock"), options ("Options") to key employees (the "Key
Employees"), as authorized by action of the Board of Directors of the Company
(or a committee designated by the Board of Directors), and the company shall,
subject to the terms and conditions hereof, grant to each director of the
Company who is not an employee and who was not a director on or before
September 1, 1995 (an "Eligible Director"), Options in accordance with the
formula set forth in Section 7 hereof. As used in the Plan, an "Award" shall
mean an Option and an "Award Owner" shall mean the owner of an Option. Options
granted pursuant to the Plan to Key Employees may be either incentive stock
options ("Incentive Stock Options") meeting the requirements of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), or non-statutory
options ("Non-Statutory Stock Options"), which are not intended to or do not
meet the requirements of Code Section 422. Options granted to Eligible
Directors pursuant to the Plan shall be only Non-Statutory Stock Options.
(b) Administration. The Plan will be administered by the Board of
Directors of the Company, except to the extent the Board of Directors appoints
from among its members a committee to administer the Plan (in either case, the
group administering the Plan is hereinafter referred to as the "Committee").
The Committee's construction and interpretation of the terms and provisions of
the Plan shall be final and conclusive. The Committee may in its sole
discretion grant Options to purchase shares of the Company's Common Stock to
Key Employees, and issue shares upon exercise of such Options, as provided on
the Plan. The Committee shall grant Options to purchase shares of the
Company's Common Stock to the Eligible Directors, and issue shares upon
exercise of such Options, as provided in the Plan. The Committee shall have
the authority, subject to the express provisions of the Plan, including, but
not limited to Section 7 hereof, to construe the respective Award agreements
and the Plan; to prescribe, amend and rescind rules and regulations relating
to the Plan; to determine the terms and provisions of the respective Award
agreements, which need not be identical; to advance the lapse of any waiting
or installment periods and exercise dates; and to make all other
determinations in the sole judgement of the Committee necessary or desirable
for the administration of the Plan. The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any Award
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and such determination shall be in the
1
<PAGE>
sole and final judgement of the Committee. No director shall be liable for any
action or determination taken or made under or with respect to the Plan or any
Award in good faith.
3. Eligibility
(a) Generally
(i) Except as provided in paragraph (b) of this Section 3
and Section 7 hereof, Awards shall be granted only to persons selected by the
Committee who are, at the time of grant, directors or employees (including,
without limitation, officers) of the Company or any Subsidiary of the Company.
(ii) A Key Employee may be granted Incentive Stock Options
and/or Non-Statutory Stock Options. A Key Employee who has been granted an
Award may, if he or she is otherwise eligible, be granted one or more
additional Awards if the Committee shall so determine.
(b) Incentive Stock Options. No person shall be granted any Incentive
Stock Option under Plan unless, at the time such Option is granted, such
person is an employee of the Company or any Subsidiary of the Company, and
does not own, directly or indirectly, Common Stock of the Company possessing
more than 10% of the total combined voting power of all classes of stock of
the Company or of any Subsidiary (unless the requirements of Section 6(f)(i)
are satisfied).
4. Stock Subject to Plan
Subject to adjustment as provided in Sections 13 and 14 below, the
maximum number of shares of Common Stock of the Company that may be issued and
sold pursuant to Options granted under the Plan is 400,000 shares in the
aggregate (one share per Option). The Company shall reserve for the purposes
of the Plan, out of its authorized but unissued shares of Common Stock or out
of shares held in the Company's treasury, or partly out of each, such number
of shares of Common Stock as shall be determined by the Committee. If Options
granted under the Plan shall expire or terminate for any reason without having
been exercised in full, the shares subject to the unexercised portions of such
Options shall again be available for subsequent Award grants under the Plan.
Common Stock issuable upon exercise of Options may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Committee.
5. Form of Option Agreements
As a condition to the grant of an Option under the Plan, each Key
Employee recipient of an Option shall execute an Option Agreement,
substantially in the form of Exhibit A to the Plan (in the case of Incentive
Stock Options) or Exhibit B to the Plan ( in the case of Non-Statutory Stock
Options) or in such other form not inconsistent with the Plan as shall be
specified by the Committee at the time such Option is granted. Each Eligible
Director, as a condition to the grant
2
<PAGE>
of Options to him or her pursuant to Section 7(a) hereof, shall execute an
Option Agreement, substantially in the form of Exhibit C to the Plan.
6. Grants of Awards to Key Employees
(a) Disinterested Committee. Any Key Employee who is a director or
officer of the Company shall be granted Awards only if such person has been
selected for participation and the terms and provisions of such Awards have
been determined, solely by, and in sole discretion of, a Committee of two or
more directors, each of whom is a "disinterested person." For purposes of the
Plan, a person shall be deemed to be "disinterested" only if such person
qualifies as a "disinterested person" within the meaning of paragraph (c)(2)
of Rule 16b-3 of the Securities and Exchange Commission (the "SEC"). The term
"officer" shall have the same meaning as in paragraph (f) of Rule 16a-1. To
the extent required to comply with the rules under 16b-3, all references to
the Committee in the Plan shall mean and relate to the Committee of two or
more "disinterested persons" described in this Section 6(a). The foregoing
provisions do not apply to any grant which occurs prior to the date the
Company first registers its Common Stock under Section 12 of the Securities
Exchange Act of 1934.
(b) Purchase Price. The purchase price per share of stock issuable
upon the exercise of an Option granted pursuant to this Section 6 shall be (i)
with respect to an Option granted on or after the date of initial public
offering of shares of Common Stock (the "IPO") but prior to the second
anniversary thereof, the greater of (A) the Fair Value (as defined in Section
18 hereof) on the date that such Option is granted or (B) the initial public
offering price of a share of Common Stock (the "IPO Price") or (ii) with
respect to an Option granted prior to the IPO or on or after the second
anniversary of the IPO, the Fair Value on the date that such Option is
granted. Notwithstanding anything to the contrary contained herein, in the
case if an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Value of such stock at the date of grant of such Option, or
less than 110% of such Fair Value in the case of Options described in Section
6(f)(i).
(c) Exercise Period. Each Award to a Key Employee shall expire on
such date as the Committee shall determine on the date such Award is granted,
but in no event after the expiration of ten years from the date on which such
Award is granted, and in all cases each Award shall be subject to earlier
termination as provided in the Plan. In no event may any Option granted
pursuant to this Section 6 be exercised prior to the initial public offering
of the Company's Common Stock.
(d) Vesting of Awards. An Award granted to a Key Employee may be
exercised, and payment shall be made upon exercise of such Award, only to the
extent that such Award has vested. Awards shall vest in accordance with the
schedule of terms set forth in the Award agreement executed by the Award Owner
and a duly authorized officer of the Company. The committee may accelerate the
vesting of any Option granted pursuant to this Section 6. Notwithstanding the
foregoing, unless the Committee specifically authorizes a different vesting
schedule with respect to an Award, an Award to a Key Employee shall become
exercisable based on the number of full years of service that such Award Owner
has completed with the Company
3
<PAGE>
or a Subsidiary since the date of the grant of such Award, in accordance with
the following schedule:
Number of Years of Service Percentage of Award Available
Since Date of Grant for Exercise (Cumulative)
-------------------------- -----------------------------
1 25%
2 50%
3 75%
4 100%
(e) Effect of Termination of Employment. No Award to a Key Employee
may be exercised unless, at the time of such exercise, the Key Employee is
and, continuously since the date of grant of his or her Award has been, an
employee of the Company or a Subsidiary, except that subject to Section 6(d)
and if and to the extent of the Award agreement or instrument so provides:
(i) If the Key Employee ceases to be an employee of the
Company or a Subsidiary for any reason other than death or disability or a
discharge for "cause" (as defined in (iv) below), the right to exercise the
Award shall terminate three months after such cessation (or within such lesser
period as may be specified in the Award agreement or instrument);
(ii) if the Key Employee dies while an employee of the
Company or a Subsidiary, or within three months after the Key Employee ceases
to be such an employee, the Awards may be exercised by the administrator of
the Key Employee's estate, or by the person to whom the options are
transferred by will or the laws of descent and distribution, within the period
of one year after the date of death (or within such lesser period as may be
specified in the Award agreement or instrument);
(iii) if the Key Employee becomes disabled (within the
meaning of Section 22(e)(3) of the Code) while an employee of the Company or a
Subsidiary, the Awards may be exercised within the period of one year after
the date the Key Employee ceases to be an employee of the Company or
Subsidiary because of such disability (or within such lesser period as may be
specified in the Award agreement or instrument); and
(iv) if the Key Employee, prior to the expiration date of an
Award, ceases his or her services as an employee of the Company or a
Subsidiary, because he or she is discharged for "cause" (as defined below),
the right to exercise an Option shall terminate immediately upon such
cessation of such services. "Cause" shall mean: willful misconduct in
connection with the Key Employee's performance of services for the Company or
willful failure to perform his or her services in the best interest of the
Company, as determined by the Committee, which determination shall be
conclusive;
4
<PAGE>
provided, however, that in no event may any Award be exercised after the
expiration date of the Award. Any Award or portion thereof that is not
exercised during the applicable time period specified above (or any shorter
period in the Award agreement or instrument) shall be deemed terminated at the
end of applicable time period for purposes of Section 4 hereof.
(f) Incentive Stock Options. Options granted under Plan that are
intended to be Incentive Stock Options shall be specifically designated as
intending to be Incentive Stock Options and shall be subject to the following
additional terms and conditions.
(i) 10% Stockholder. If any Key Employee to whom an
Incentive Stock Option is to be granted under the Plan is at the time of the
grant such Option the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
Subsidiary, then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual: (x) the exercise price per
share of the Common Stock subject to such Incentive Stock Option shall not be
less than 110% of the Fair Value (as defined in Section 18) of one share of
Common Stock at the time of grant; and (y) the option exercise period shall
not exceed five years from date of grant.
(ii) Dollar Limitation. Common Stock of the Company that is
acquired pursuant to the exercise of an Incentive Stock Option granted to a
Key Employee under the Plan shall be deemed to be acquired pursuant to the
exercise of an Incentive Stock Option under Code Section 422, only to the
extent that the aggregate Fair Value (determined as of the respective dates or
dates of grant) of the Common Stock with respect to which such Incentive Stock
Option, and all other Incentive Stock Options that are granted to such Key
Employee under the Plan (and under any other incentive stock option plans of
the Company or any Subsidiary), are exercisable for the first time by such Key
Employee in any one calendar year, does not exceed $100,000. To effectuate the
provisions of this Section 6(f), the Committee may designate the shares of
Common Stock that are treated as acquired pursuant to the exercise of an
Incentive Stock Option by issuing a separate certificate for such shares an
identifying such certificates as Incentive Stock Option stock in its stock
transfer records.
(iii) If a Key Employee makes a disposition, within meaning
of Section 424(c) of the Code and regulations promulgated thereunder, of any
share or shares of Common Stock issued to such Key Employee pursuant to the
exercise of an Incentive Stock Option within the two-year period commencing on
the day after the date of the grant or within the one-year period commencing
on the day after the date of transfer of such share or shares to the Key
Employee pursuant to such exercise, the Key Employee shall, within ten (10)
days of such disposition, notify the Company thereof, by delivery of written
notice to the Company at its principal executive office.
Except as modified by the preceding provisions of this
Section 6(f), all the provisions of the Plan applicable to Options shall be
applicable to Incentive Stock Options granted hereunder.
5
<PAGE>
(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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<PAGE>
(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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<PAGE>
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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<PAGE>
(b) Compliance With Securities Laws.
(i) Each Award shall be subject to the requirement that, if
at any time counsel to the Company shall determine that the listing,
registration or qualification of such Award or the shares subject to such
Award upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, is necessary as a
condition of, or in connection with the grant or exercise of such Award or the
issuance or purchase of shares thereunder, such Award shall not be effective
or may not be accepted or exercised in whole or in part (as applicable) unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee. Nothing herein
shall be deemed to require the Company to apply for or to obtain such listing,
registration, qualification, consent or approval.
(ii) The Company shall provide each Award Owner with such
information, statements, discussions and analyses with respect to the Company
in such manner and at such times as may be required under state or federal
securities laws.
12. Rights as a Stockholder.
The Award Owner shall have no rights as a stockholder with respect to
any shares covered by the Award until the date upon which the stock
certificates are issued to him or her for such shares. Except as otherwise
expressly provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date on which such
stock certificate is issued.
13. Recapitalization
In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision, an
appropriate and proportionate adjustment shall be made in the number and kind
of shares subject to the Plan and in the number, kind, and per share exercise
price, of shares subject to unexercised Options or portions thereof granted
prior to such adjustment. Any such adjustment to an outstanding Option shall
be made without change in the total price applicable to the unexercised
portion of such Option as of the date of the adjustment. No such adjustment
shall be made with respect to an Incentive Stock Option that would, within
meaning of any applicable provisions of the Code, constitute a modification,
extension or renewal of any Option or a grant of additional benefits to the
holder of an Option.
14. Reorganization
In the event the Company is merged or consolidated with another
entity or person other than an Affiliate, and the Company is not a surviving
entity, or in the event all or substantially all of the assets or more than
20% of the outstanding stock of the Company entitled to vote for directors is
acquired by any other entity or person other than an Affiliate or any entity
or person or any affiliate thereof owning 5% or more of the outstanding voting
stock of the Company prior
9
<PAGE>
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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<PAGE>
(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.
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<PAGE>
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.
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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).
<PAGE>
Exhibit 4.2
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.
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<PAGE>
(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.
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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.
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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
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<PAGE>
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
<PAGE>
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
____________________________________
<PAGE>
Exhibit 4.3
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
Exhibit 4.4
Exhibit C
GLOBAL PHARMACEUTICAL CORPORATION
NON-STATUTORY STOCK OPTION AGREEMENT
FOR ELIGIBLE DIRECTORS
1. Grant of Options
Global Pharmaceutical Corporation, a Delaware corporation (the
"Company"), hereby grants to ________________ (the "Optionee"), _____
Options (the "Options"), pursuant to the Company's 1995 Stock
Incentive Plan (the "Plan"), to purchase an aggregate of ______
shares of common stock, $.01 par value per share ("Common Stock"), of
the Company at a price of $_______ per share (the "Exercise Price Per
Share"), purchasable as set forth in and subject to the terms and
conditions of this Option Agreement and the Plan. All undefined
capitalized terms herein shall have the same meaning as set forth in
the Plan.
2. Exercise of Options and Effect of Termination of Services or Death
(a) Exercisability of Options. The Options shall become exercisable
and option shares may be purchased based on the number of full years of
service for the Company or a Subsidiary that have expired since the date of
grant (set forth on the signature page hereof), in accordance with the
following schedule:
Percentage of Option Shares
Number of Years of Service Available
Since Date of Grant for Purchase (Cumulative)
-------------------------- -------------------------
1 33%
2 66%
3 100%
[; provided, however, one-third of the initial grant (10,000 Options) shall be
vested upon its grant and the remaining two-thirds of the grant (20,000
Options) shall vest according to the foregoing schedule.] Notwithstanding the
foregoing, the Options shall not be exercisable prior to the initial public
offering of the Company's Common Stock and unless such exercise is in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
all other applicable laws and regulations (including state securities laws)
and the requirements of any securities exchange on which the shares of Common
Stock are listed.
(b) Expiration Date. Except as otherwise provided in this Option
Agreement or the Plan, the Options may not be exercised
after the date (hereinafter the "Expiration Date") that is
the tenth anniversary of the date of grant.
C-1
<PAGE>
(c) Effect of Termination of Services or Death . If the Optionee
ceases to serve as a director of the Company or a Subsidiary, the Options that
have been previously granted to the Optionee and that are vested as of the
date of such cessation may be exercised by the Optionee after the date such
Optionee ceases to be a director of the Company or Subsidiary. If the Optionee
dies while a director of the Company or Subsidiary, the Options that have been
previously granted to the Optionee and that are vested as of the date of such
death may be exercised by the administrator of the Optionee's estate, or by
the person to whom such Options are transferred by will or the laws of descent
and distribution. In no event, however, may any Option be exercised after the
Expiration Date of such Option.
(d) Exercise Procedure. Subject to the conditions set forth in this
Agreement and, if applicable, Section 6 of the Plan, the Options shall be
exercised by the Optionee's delivery of written notice of exercise to the
Secretary of the Company, specifying the number of shares to be purchased and
the Exercise Price Per Share to be paid therefor and accompanied by payment in
accordance with Section 3 hereof. The Optionee may purchase less than the
total number of shares covered hereby, provided that no exercise of less than
all the Options may be for less than 100 whole shares.
3. Payment of Purchase Price
Payment of the Exercise Price Per Share for shares purchased upon
exercise of an Option shall be made by delivery to the Company of the purchase
price, payable in cash (by check) or any other method of payment that is
permitted by the Plan.
4. Delivery of Shares
The Company shall, upon payment of the Exercise Price Per Share for
the number of shares purchased and paid for, make prompt delivery of such
shares to the Optionee. No shares shall be issued and delivered upon exercise
of an Option unless and until, in the opinion of counsel for the Company, any
applicable registration requirements of the Securities Act, any applicable
listing requirements of any national securities exchange on which stock of the
same class is then listed, and any other requirements of law, including state
securities laws, or of any regulatory bodies having jurisdiction over such
issuance and delivery, shall have been fully complied with.
5. Non-transferability of Options
Except as provided in the Plan, the Options are personal and no
rights granted hereunder may be transferred, assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise), except by will or the
laws of descent and distribution, nor shall any such rights be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of an Option or of such
rights contrary to the provisions hereof, or upon the levy of any attachment
or similar process upon any Option or such rights, this Option Agreement and
such rights shall, at the election of the Company, become null and void.
C-2
<PAGE>
6. No Special Employment Rights
Nothing contained in the Plan or this Option Agreement shall
constitute evidence of any agreement or understanding, express or implied,
that the Optionee has a right to continue as a director for any period of
time.
7. Rights as a Stockholder
The Optionee shall have no rights as a stockholder with respect to
any shares which may be purchased by exercise of the Options unless and until
a certificate representing such shares is duly issued to the Optionee. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date is prior to the date on
such stock certificate.
8. Recapitalization
In the event that the outstanding shares of Common Stock of the
Company are changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of any recapitalization,
reclassification, stock split, stock dividend, combination or subdivision, an
appropriate and proportionate adjustment shall be made in the number and kind
of shares subject to the Plan and in the number, kind and per share exercise
price, of shares subject to unexercised Options or portions thereof granted
prior to such adjustment. Any such adjustment to an outstanding Option shall
be made without change in the total price applicable to the unexercised
portion of such Option as of the date of the adjustment.
9. Reorganization
In the event the Company is merged or consolidated with another
entity and the Company is not a surviving entity, or in the event all or
substantially all of the assets or more than 20% of the outstanding voting
stock of the Company entitled to vote for directors is acquired by any other
entity or person other than an Affiliate or any entity or person or any
affiliate thereof owning 5% or more of the outstanding voting stock of the
Company prior to the effective date of the initial public offering of the
Company's Common Stock, or in the event of a reorganization or liquidation of
the Company, prior to the Expiration Date or termination of this Option
Agreement, the Optionee shall, with respect to the options or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Section 14 of the Plan.
10. Withholding Taxes
The Company's obligation to deliver shares upon the exercise of an
Option shall be subject to the Optionee's satisfaction of all applicable
federal, state and local income and employment tax withholding requirements,
if any.
C-3
<PAGE>
11. Optionee Representations; Legend
(a) Representations. The Optionee represents, warrants and covenants
that he or she has had such opportunity as he or she has deemed adequate to
obtain from representatives of the Company such information as is necessary to
permit the Optionee to evaluate the merits and risks of his or her investment
in the Company. The Optionee understands that there may be restrictions on his
or her ability to resell any shares acquired on exercise of an Option,
including insider trading laws and the Company's insider trading policy, as
well as other restrictions that will apply if the Optionee is an "affiliate"
of the Company. By making payment upon exercise of an Option, the Optionee
shall be deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 11.
(b) Legend on Stock Certificate. The Optionee understands that, any
shares of Common Stock acquired upon exercise of an Option may not have been
registered under the Securities Act, nor the securities laws of any state.
Accordingly, unless all such registrations are then in effect, all stock
certificates representing shares of Common Stock issued to the Optionee upon
exercise of an Option shall have affixed thereto a legend substantially in the
following form, in addition to any other legends required by applicable state
law:
"THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993, AS
AMENDED, NOR THE SECURITIES LAW OF ANY STATE. CONSEQUENTLY, THE SHARES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION, OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH LAWS."
12. Miscellaneous
In the event that the Plan terminates prior to the expiration date of
the Options granted hereunder, this Option Agreement shall incorporate by
reference all applicable provisions of the Plan until the earlier of (i) the
close of business on the day the Option(s) granted hereunder expire, or (ii)
the date on which all shares available for issuance hereunder shall have been
issued pursuant to the exercise of Options granted hereunder.
Except as provided herein or in Plan, this Option Agreement may not
be amended or otherwise modified unless evidenced in writing and signed by the
Company and the Optionee.
All notices under this Option Agreement shall, unless otherwise
provided herein, be mailed or delivered by hand to the parties at their
respective addresses set forth beneath their names below or at such other
address as may be designated in writing by either of the parties to the other.
This Option Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
C-4
<PAGE>
This Option Agreement shall be binding upon and inure to the heirs,
successors and assigns of the Optionee (subject, however, to the limitations
set forth herein with respect to assignment of the Options or rights therein)
and the Company, and shall be construed in a manner that is consistent with
the provisions of the Plan.
Date of Grant: Global Pharmaceutical Corporation
By: ________________________________
Name:
Title:
Optionee
____________________________________
C-5
<PAGE>
Exhibit 4.5
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES A CONVERTIBLE PREFERRED STOCK
(Par Value $.01 Per Share)
of
GLOBAL PHARMACEUTICAL CORPORATION
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------------
Global Pharmaceutical Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), by its President and Secretary,
DOES HEREBY CERTIFY:
FIRST: That, pursuant to authority expressly vested in the Board of
Directors of said corporation by the provisions of its Certificate of
Incorporation, as amended, the said Board of Directors duly adopted the
following resolution providing for the designation and issuance of sixty
thousand (60,000) shares of Series A Convertible Preferred Stock, $.01 par
value:
RESOLVED, that this Board of Directors, pursuant to authority
expressly vested in it by the provisions of the Certificate of Incorporation
of the Corporation, hereby authorizes the issue from time to time of a series
of Preferred Stock of the Corporation and hereby fixes the designation,
preferences and the relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, in addition to those set
forth in said Certificate of Incorporation, to be in their entirety as
follows:
Section 1. Number of Shares and Designation. Sixty thousand (60,000)
shares of the preferred stock, $.01 par value, of the Corporation are hereby
constituted as a series of preferred stock of the Corporation designated as
"Series A Convertible Preferred Stock" (the "Series A Preferred Stock").
Section 2. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of each share of Series A Preferred Stock outstanding
on the date of such liquidation, dissolution or winding up of the affairs of
the Corporation shall be entitled
<PAGE>
to receive, prior to and in preference to any distribution of any of the
assets or surplus funds of the Corporation to the holders of the Common Stock
of the Corporation, par value $.01 per share (the "Common Stock"), or any
other class of Preferred Stock of the Corporation, by reason of their
ownership thereof, an amount equal to one hundred dollars ($100.00) per share
(the "Liquidation Value") of each share of Series A Preferred Stock held by
the holders (subject to adjustment for stock splits, combinations,
reclassifications or similar events affecting such shares).
All of the preferential amounts to be paid to the holders of
the Series A Preferred Stock under this Section 2 shall be paid or set apart
for payment before the payment or setting apart for payment of any amount for,
or the distribution of any assets of the Corporation to, the holders of the
Common Stock or any other class of Preferred Stock in connection with such
liquidation, dissolution or winding up. After the payment or the setting apart
for payment to the holders of the Series A Preferred Stock of the preferential
amounts so payable to them and the preferential amounts payable to any other
classes of Preferred Stock, the holders of the Series A Preferred Stock shall
be entitled to receive, pro rata with the Common Stock, as if the Series A
Preferred Stock is converted into the number of shares of Common Stock into
which the Series A Preferred Stock is then convertible pursuant to Section
4(a), all remaining assets of the Corporation. If the assets or surplus funds
to be distributed to the holders of the Series A Preferred Stock are
insufficient to permit the payment to such holders of their full preferential
amount, the assets and surplus funds legally available for distribution shall
be distributed ratably among the holders of the Series A Preferred Stock in
proportion to the full preferential amount each such holder is otherwise
entitled to receive.
Section 3. Merger, Consolidation, Sale of Assets. Any merger or
consolidation of the Corporation with or into another corporation in which the
Corporation shall not survive, or the sale or transfer of all or substantially
all of the assets of the Corporation to another entity, or a merger or
consolidation in which the Corporation is the survivor but its Common Stock is
exchanged for stock, securities or property of another entity shall be treated
as a liquidation, dissolution or winding up of the Corporation and shall
entitle the holder of Series A Preferred Stock to receive at the closing, in
cash, securities or other property, amounts as specified in Section 2.
Section 4. Conversion into Common Stock. The holder of any shares of
the Series A Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall
be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the Corporation or any
transfer agent for the Series A Preferred Stock, into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing the
Liquidation Value by the Conversion Price, determined as hereinafter provided,
with respect to such shares. The Conversion Price shall be the lower of (a)
$5.00 per share (subject to adjustment pursuant to Section 7.2 of that certain
Series A Convertible Preferred Stock Purchase Agreement, dated August 12, 1997
(the "Purchase Agreement"), by and among the Corporation and the Purchasers
named therein) or (b) the average closing sale price (or if such price is
expressed as a
<PAGE>
bid and ask price, the closing bid price) of the Common Stock for the five
trading days immediately preceding the day on which the holder elects to
convert the Series A Preferred Stock; provided, however, that in no event
shall the Conversion Price be less than $3.00 per share. Notwithstanding the
foregoing, in the event that the Corporation, within eighteen months from the
Initial Closing (as such term is defined in the Purchase Agreement), issues
and sells not less than an aggregate of $1 million of additional shares of
Common Stock (or securities convertible into Common Stock) other than Excluded
Stock (as hereinafter defined) to financial investors (whether individual or
institutional) for a consideration per share of Common Stock of less than
$3.00, then and in such event, the Conversion Price in effect with respect to
the Series A Preferred Stock shall be reduced, concurrently with such issue,
to a price (calculated to the nearest cent) equal to the consideration per
share for which such additional shares are issued and sold. As used in this
Section 4(a), "Excluded Stock" shall mean (i) shares of Common Stock (or
securities convertible into Common Stock) or options for the purchase of
Common Stock issued, sold or granted by the Corporation to any of its
employees, directors or consultants pursuant to a bona fide employee stock
purchase, option or similar benefit plan or incentive program or other
compensation arrangement approved by the Board of Directors of the Corporation
or (ii) shares of Common Stock (or securities convertible into Common Stock)
issued, sold or granted to joint venturers, partnering entities or other
companies with which the Corporation has a relationship involving or
pertaining to product development, or the manufacturing, development,
marketing or repackaging of products or any analogous relationship. The
Conversion Price at which shares of Common Stock shall be deliverable upon
conversion of Series A Preferred Stock without the payment of any additional
consideration by the holder thereof, shall be subject to adjustment, in order
to adjust the number of shares of Common Stock into which the Series A
Preferred Stock is convertible, as provided in this Section 4.
(b) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Series A Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then fair
market value of the Common Stock as determined by the Board of Directors in
good faith. Before any holder of Series A Preferred Stock shall be entitled to
receive certificates representing shares of Common Stock issuable upon
conversion of the Series A Preferred Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series A Preferred Stock, and
shall give written notice to the Corporation at such office in the manner
specified in the Purchase Agreement (which notice shall be irrevocable once
tendered) that such holder elects to convert the same, and shall state therein
such holder's name or the name or names of such holder's nominees in which
such holder wishes the certificate or certificates for shares of Common Stock
to be issued. The Corporation shall, as soon as practicable after receipt of
the certificate(s) representing Series A Preferred Stock, issue and deliver at
such office to such holder of Series A Preferred Stock, or to such holder's
nominee or nominees, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid, together
with cash in lieu of any fraction of a share, and a certificate or
certificates for such shares of Series A Preferred Stock as were represented
by the certificates surrendered and not converted. Conversions pursuant to
Section 4(a) shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares
<PAGE>
of Series A Preferred Stock to be converted, and the person or persons
entitled to receive the shares of Common Stock issuable upon conversion shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock on such date.
(c) Adjustment to Conversion Price for Stock Splits, Combinations,
Dividends and Distributions.
(i) Stock Splits and Combinations. In the event the
Corporation shall at any time or from time to time effect a
subdivision of the outstanding Common Stock, the Conversion Price
then in effect immediately before that subdivision shall be
proportionately decreased, and, conversely, in the event the
Corporation shall at any time or from time to time combine the
outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately
increased. Any adjustment pursuant to this Section 4(c)(i) shall
become effective at the close of business on the date the
subdivision or combination becomes effective.
(ii) Dividends and Distributions of Common Stock. In the
event the Corporation at any time or from time to time shall make or
issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such
event the Conversion Price then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall
have been fixed, as of the close of business on such record date, by
multiplying the Conversion Price then in effect by a fraction:
(x) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close
of business on such record date, and
(y) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close
of business on such record date plus the number of shares of
Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record date shall have been fixed and
such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Conversion Price shall be
recomputed accordingly as of the close of business on such record
date and thereafter the Conversion Price shall be adjusted pursuant
to this Section 4(c)(ii) as of the time of actual payment of such
dividends or distributions.
(iii) Other Dividends and Distributions. In the event the
Corporation at any time or from time to time shall make or issue, or
fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in
securities of the
<PAGE>
Corporation other than shares of Common Stock, then and in each such
event provision shall be made so that the holders of the Series A
Preferred Stock shall receive upon conversion thereof, in addition
to the number of shares of Common Stock receivable thereupon, the
amount of securities of the Corporation that they would have
received had their Series A Preferred Stock been converted into
Common Stock on the date of such event and had thereafter, during
the period from the date of such event to and including the
conversion date, retained such securities receivable by them as
aforesaid during such period giving application to all adjustments
called for during such period under this Section 4 with respect to
the rights of holders of the Series A Preferred Stock.
(d) Adjustment for Reclassification, Exchange or Substitution. If
the Common Stock issuable upon the conversion of the Series A Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for in Section 4(c), or a reorganization, merger, consolidation or
sale of assets provided for in Section 3, then and in each such event the
holder of each share of Series A Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of
Common Stock into which such shares of Series A Preferred Stock might have
been converted immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided in this Section 4.
(e) No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed under this Section 4 by the
Corporation but shall at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of
the holders of the Series A Preferred Stock that by its terms is convertible
against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series A Preferred
Stock pursuant to this Section 4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of the Series A Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of such
Series A Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii)
the Conversion Price at the time in effect, and (iii) the number of shares of
Common Stock and the amount, if any, of other property which at the time would
be received upon the conversion of the Series A Preferred Stock.
<PAGE>
(g) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the Corporation shall mail to
each holder of Series A Preferred Stock, at least ten (10) days prior to the
date specified herein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of the Series A Preferred Stock. If the Conversion Price of the
Series A Preferred Stock is at any time less than the par value of the Common
Stock, the Corporation shall cause to be taken such action (whether by
lowering the par value of the Common Stock, by converting the Common Stock
from par value to no par value, or otherwise) as will permit the conversion of
the Series A Preferred Stock without any additional payment by the holder
thereof and the issuance of the Common Stock, which Common Stock, upon
issuance, will be fully paid and nonassessable.
Section 5. Redemption.
(a) Redemption at the Option of the Corporation. The Corporation, at
the option of the Board of Directors, may, at any time and from time to time
upon written notice (which notice shall specify the date and place of
redemption and the number of shares and the certificate numbers thereof which
are to be redeemed) given not less than twenty (20) nor more than ninety (90)
days prior to the date fixed for redemption, redeem all or any part of the
outstanding shares of the Series A Preferred Stock by paying therefor in cash
the Liquidation Value for each share, provided that the closing sale price (or
if such price is expressed as a bid and ask price, the closing bid price) of
the Common Stock for a consecutive twenty (20)-day trading period ending not
more than ten (10) days prior to the date of such notice is twelve dollars
($12.00) or more. At least two business days prior to the redemption date
specified in such notice, each holder of the Series A Preferred Stock may give
the Corporation written instructions with respect to the application of funds
legally available for redemption of such holder's shares of the Series A
Preferred Stock.
(b) Redemption at the Option of the Holder. In the event that the
Corporation breaches or fails to comply with its obligations under this
Certificate of Designations or the Purchase Agreement, which breach or failure
is material or has a material adverse effect on the business or prospects of
the Corporation, and such breach or failure of compliance continues for a
period of thirty (30) days after notice thereof has been given to the
Corporation, then each holder of shares of the Series A Preferred Stock shall
be entitled to compel the Corporation to redeem any or all of such holder's
shares of the Series A Preferred Stock; provided that such redeeming holder
shall have given written notice thereof to the Corporation at least forty-five
(45) days prior to the requested date of redemption. Such notice shall state
the number of shares of the Series A Preferred Stock to be redeemed. On or
after the redemption date, as specified in such notice, the holder requesting
redemption shall surrender such holder's certificate for the number of shares
to be redeemed as stated in the notice to the Corporation. On such redemption
date, to the extent the Corporation shall have funds
<PAGE>
legally available therefor, the Corporation shall redeem the shares of the
Series A Preferred Stock requested to be redeemed at the Liquidation Value. To
the extent there are insufficient funds legally available for redemption of
all shares of the Series A Preferred Stock requested to be redeemed, legally
available funds shall be applied to each holder's shares of the Series A
Preferred Stock pro rata in accordance with the number of shares requested to
be redeemed by each holder of shares of the Series A Preferred Stock, and each
holder's shares shall be redeemed in accordance with the instructions received
from such holder or, if no instructions are received from a holder, such
holder's shares of the Series A Preferred Stock shall be redeemed pro rata in
accordance with the number of shares of the Series A Preferred Stock held by
such holder. As soon as practicable, the Corporation shall give written notice
to each holder of shares of the Series A Preferred Stock redeemed or to be
redeemed indicating the number of shares redeemed or to be redeemed and the
certificate numbers thereof. If less than all of the shares of the Series A
Preferred Stock requested to be redeemed are redeemed, all unredeemed shares
shall remain outstanding and shall be entitled to all the rights and
preferences of outstanding shares of the Series A Preferred Stock hereunder.
In case less than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
(c) Legally Available Funds. For the purpose of determining whether
funds are legally available for redemption of shares of the Series A Preferred
Stock as provided herein, the Corporation shall value its assets at the
highest amount permissible under applicable law. If on any redemption date
funds of the Corporation legally available therefor shall be insufficient to
redeem all the shares of the Series A Preferred Stock required to be redeemed
as provided herein, funds to the extent legally available shall be used for
such purpose and the Corporation shall apply such funds to each holder's
shares of the Series A Preferred Stock pro rata according to the number of
shares held by each holder of the Series A Preferred Stock and each holder's
shares shall be redeemed in accordance with the instructions received from
such holder or, if no instructions are received from a holder, such holder's
shares of the Series A Preferred Stock shall be redeemed pro rata in
accordance with the number of shares of the Series A Preferred Stock held by
such holder.
(d) Failure to Redeem. In the event the Corporation fails to redeem
any shares of the Series A Preferred Stock pursuant to Section 5(a) because it
does not have funds legally available for such redemption, the shares for
which redemption is required but which are not redeemed shall remain
outstanding, and shall be entitled to all the rights and preferences of
outstanding shares of the Series A Preferred Stock hereunder. In such event,
the Corporation shall use its best efforts to effect the required redemption
and the Corporation's redemption obligation shall be discharged as soon as the
Corporation is able to discharge such obligation.
(e) Termination of Conversion. In the event the Corporation has
mailed written notice of redemption to the holders of record of shares of the
Series A Preferred Stock in accordance with the terms of Section 5(a) hereof,
the holder's right to convert such shares called for redemption shall cease at
the close of business on the redemption date, unless the Corporation defaults
in the payment of the redemption price.
<PAGE>
Section 6. Voting Rights. In addition to the voting rights required
by the laws of the State of Delaware and by Section 7, the holders of shares
of Series A Preferred Stock shall vote, as a single class with all other
stockholders of the Corporation, on all matters voted on by the stockholders
of the Corporation, with each such holder of Series A Preferred Stock entitled
to the number of votes equal to the number of shares of Common Stock into
which such holder's shares would then be convertible. Except as set forth
herein, or as otherwise provided by law, holders of Series A Preferred Stock
shall have no special voting rights and their consent shall not be required
for taking any corporate action.
Section 7. Covenants. So long as any of the shares of Series A
Preferred Stock authorized hereby shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of not
less than a majority of such outstanding shares of Series A Preferred Stock:
(a) amend or repeal any provision of, or add any provision
to, the Corporation's Certificate of Incorporation or By-laws if such action
would alter or change the preferences, rights, privileges or powers of, or
the restrictions provided for the benefit of, the Series A Preferred Stock;
(b) reclassify any Common Stock into shares having any
preference or priority as to assets superior to or on a parity with any such
preference or priority of the Series A Preferred Stock; or
(c) create or issue any securities of the Corporation which
have equity features and which rank on a parity with or senior to the Series
A Preferred Stock upon liquidation or other distribution of assets.
Section 8. Status of Converted or Reacquired Stock. Any shares of
Series A Preferred Stock purchased, redeemed or otherwise acquired by the
Corporation in any manner whatsoever, and any shares of Series A Preferred
Stock converted pursuant to Section 4 hereof shall be retired and cancelled
promptly after the acquisition or conversion thereof. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject
to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
SECOND: That said determination of the designation, preferences and
the relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, relating to said Series A Convertible
Preferred Stock, was duly made by the Board of Directors pursuant to the
provisions of the Certificate of Incorporation of the Corporation, as amended,
and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, as amended.
IN WITNESS WHEREOF, Global Pharmaceutical Corporation has caused
this Certificate of Designations to be executed this 12th day of August, 1997.
<PAGE>
Attest: Global Pharmaceutical Corporation
By: /s/ Cornel C. Spiegler By: /s/ Max L. Medelsohn
- -------------------------------- ----------------------------------------
Name: Cornel C. Spiegler Name: Max L. Medelsohn
- -------------------------------- ----------------------------------------
Title: Secretary Title: President/Chief Executive Officer
- -------------------------------- ----------------------------------------
<PAGE>
EXHIBIT 4.6
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES B CONVERTIBLE PREFERRED STOCK
(Par Value $.01 Per Share)
of
GLOBAL PHARMACEUTICAL CORPORATION
----------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------------------------
Global Pharmaceutical Corporation, a corporation organized and
existing under the General Corporation Law of the State of Delaware (the
"Corporation"), by its President and Secretary,
DOES HEREBY CERTIFY:
FIRST: That, pursuant to authority expressly vested in the Board of
Directors of said corporation by the provisions of its Certificate of
Incorporation, as amended, the said Board of Directors duly adopted the
following resolution providing for the designation and issuance of fifty
thousand (50,000) shares of Series B Convertible Preferred Stock, $.01 par
value:
RESOLVED, that this Board of Directors, pursuant to authority
expressly vested in it by the provisions of the Certificate of Incorporation
of the Corporation, hereby authorizes the issue from time to time of a series
of Preferred Stock of the Corporation and hereby fixes the designation,
preferences and the relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, in addition to those set
forth in said Certificate of Incorporation, to be in their entirety as
follows:
Section 1. Number of Shares and Designation. Fifty thousand (50,000)
shares of the preferred stock, $.01 par value, of the Corporation are hereby
constituted as a series of preferred stock of the Corporation designated as
"Series B Convertible Preferred Stock" (the "Series B Preferred Stock").
Section 2. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, the holders of each share of Series B Preferred Stock outstanding
on the date of such liquidation, dissolution or winding up of the affairs of
the Corporation shall be entitled to receive, prior to and in preference to
any distribution of any of the assets or surplus
<PAGE>
funds of the Corporation to the holders of the Common Stock of the
Corporation, par value $.01 per share (the "Common Stock"), or any other class
of Preferred Stock of the Corporation, except for the Corporation's Series A
Convertible Preferred Stock (the "Series A Preferred Stock"), whose
liquidation rights shall be pari passu with those of the Series B Preferred
Stock, by reason of their ownership thereof, an amount equal to one hundred
dollars ($100.00) per share (the "Liquidation Value") of each share of Series
B Preferred Stock held by the holders (subject to adjustment for stock splits,
combinations, reclassifications or similar events affecting such shares).
All of the preferential amounts to be paid to the holders of the
Series B Preferred Stock under this Section 2 shall be paid or set apart for
payment before the payment or setting apart for payment of any amount for, or
the distribution of any assets of the Corporation to, the holders of the
Common Stock or any other class of Preferred Stock (except for the Series A
Preferred Stock, whose liquidation rights shall be pari passu, with those of
the Series B Preferred Stock) in connection with such liquidation, dissolution
or winding up. After the payment or the setting apart for payment to the
holders of the Series B Preferred Stock of the preferential amounts so payable
to them and, the preferential amounts payable to any other classes of
Preferred Stock, the holders of the Series B Preferred Stock, together with
the holders of the Series A Preferred Stock, sha11 be entitled to receive, pro
rata with the Common Stock, as if the Series B Preferred Stock and the Series
A Preferred Stock are converted into the number of shares of Common Stock into
which the Series B Preferred Stock and the Series A Preferred Stock are then
convertible pursuant to Section 4(a), all remaining assets of the Corporation.
If the assets or surplus funds to be distributed to the holders of the Series
B Preferred Stock and the Series A Preferred Stock are insufficient to permit
the payment to such holders of their full preferential amount, the assets and
surplus funds legally available for distribution shall be distributed ratably
among the holders of the Series B Preferred Stock and the Series A Preferred
Stock in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
Section 3. Merger, Consolidation, Sale of Assets. Any merger or
consolidation of the Corporation with or into another corporation in which the
Corporation shall not survive, or the sale or transfer of all or
substantially all of the assets of the Corporation to another entity, or a
merger or consolidation in which the Corporation is the survivor but its
Common Stock is exchanged for stock, securities or property of another entity
shall be treated as a liquidation, dissolution or winding up of the
Corporation and shall entitle the holder of Series B Preferred Stock to
receive at the closing, in cash, securities or other property, amounts as
specified in Section 2.
Section 4. Conversion into Common Stock. The holder of any shares of
the Series B Preferred Stock shall have conversion rights as follows (the
"Conversion Rights");
(a) Right to Convert. Each share of Series B Preferred Stock shall be
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the Corporation or any transfer agent
for the Series B Preferred Stock, into such number of fully paid and
nonassessable shares of Common Stock as is determined by dividing the
Liquidation Value by the Conversion Price, determined as
<PAGE>
hereinafter provided, with respect to such shares. The Conversion Price shall
be the lower of (a) $2.75 per share (subject to adjustment pursuant to Section
7.2 of that certain Series B Convertible Preferred Stock Purchase Agreement,
to be executed on or about December 1, 1997 (the "Purchase Agreement), by and
among the Corporation and the Purchasers named therein) or (b) the average
closing sale price (or if such price is expressed as a bid and ask price, the
closing bid price) of the Common Stock for the five trading days immediately
preceding the day on which the holder elects to convert the Series B Preferred
Stock; provided, however, that in no event shall the Conversion Price be less
than $2.00 per share. Notwithstanding the foregoing, in the event that the
Corporation, within eighteen months from the Initial Closing (as such term is
defined in the Purchase Agreement), issues and sells not less than an
aggregate of $1 million of additional shares of Common Stock (or securities
convertible into Common Stock) other than Excluded Stock (as hereinafter
defined) to financial investors (whether individual or institutional) for a
consideration per share of Common Stock of less than $2.75, then and in such
event, the Conversion Price in effect with respect to the Series B Preferred
Stock shall be reduced, concurrently with such issue, to a price (calculated
to the nearest cent) equal to the consideration per share for which such
additional shares are issued and sold. As used in this Section 4(a), "Excluded
Stock" shall mean (i) shares of Common Stock (or securities convertible into
Common Stock) or options for the purchase of Common Stock issued, sold or
granted by the Corporation to any of its employees, directors or consultants
pursuant to a bona fide employee stock purchase, option or similar benefit
plan or incentive program or other compensation arrangement approved by the
Board of Directors of the Corporation or (ii) shares of Common Stock (or
securities convertible into Common Stock) issued, sold or granted to joint
venturers, partnering entities or other companies with which the Corporation
has a relationship involving or pertaining to product development, or the
manufacturing, development, marketing or repackaging of products or any
analogous relationship. The Conversion Price at which shares of Common Stock
shall be deliverable upon conversion of Series B Preferred Stock without the
payment of any additional consideration by the holder thereof, shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which the Series B Preferred Stock is convertible, as provided in this
Section 4.
(b) Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of the Series B Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then fair
market value of the Common Stock as determined by the Board of Directors in
good faith. Before any holder of Series B Preferred Stock shall be entitled to
receive certificates representing shares of Common Stock issuable upon
conversion of the Series B Preferred Stock, such holder shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Series B Preferred Stock, and
shall give written notice to the, Corporation at such office in the manner
specified in the Purchase Agreement (which notice shall be irrevocable once
tendered) that such holder elects to convert the same, and shall state therein
such holder's name or the name or names of such holder's nominees in which
such holder wishes the certificate or certificates for shares of Common Stock
to be issued. The Corporation shall, as soon as practicable after receipt of
the certificate(s) representing Series B Preferred Stock, issue and deliver at
such office to such holder of Series B Preferred Stock, or to such holder's
nominee or nominees, a certificate or certificates for the number of shares of
Common Stock to
<PAGE>
which such holder shall be entitled as aforesaid, together with cash in lieu
of any fraction of a share, and a certificate or certificates for such shares
of Series B Preferred Stock as were represented by the certificates
surrendered and not converted. Conversions pursuant to Section 4(a) shall be
deemed to have been made immediately prior to the close of business on the
date of such surrender of the shares of Series B Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.
(c) Adjustment to Conversion Price for Stock Splits, Combinations,
Dividends and Distributions.
(i) Stock Splits and Combinations. In the event the
Corporation shall at any time or from time to time effect a
subdivision of the outstanding Common Stock, the Conversion Price
then in effect immediately before that subdivision shall be
proportionately decreased, and, conversely, in the event the
Corporation shall at any time or from time to time combine the
outstanding shares of Common Stock, the Conversion Price then in
effect immediately before the combination shall be proportionately
increased. Any adjustment pursuant to this Section 4(c)(i) shall
become effective at the close of business on the date the subdivision
or combination becomes effective.
(ii) Dividends and Distributions of Common Stock. In the
event the Corporation at any time or from time to time shall make or
issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution
payable in additional shares of Common Stock, then and in each such
event the Conversion Price then in effect shall be decreased as of
the time of such issuance or, in the event such a record date shall
have been fixed, as of the close of business on such record date, by
multiplying the Conversion Price then line effect by a fraction:
(x) the numerator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close
of business on such record date, and
(y) the denominator of which shall be the total
number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close
of business on such record date plus the number of shares
of Common Stock issuable in payment of such dividend or
distribution;
provided, however, if such record date shall have been fixed and such
dividend is not fully paid or if such distribution is not fully made
on the date fixed therefor, the Conversion Price shall be recomputed
accordingly as of the close of business on such record date and
thereafter the Conversion Price shall be adjusted pursuant to this
Section 4(c)(ii) as of the time of actual payment of such dividends
or distributions.
<PAGE>
(iii) Other Dividends and Distributions. In the event the
Corporation at any time or from time to time shall make or issue, or
fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then
and in each such event provision shall be made so that the holders of
the Series B Preferred Stock shall receive upon conversion thereof,
in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Corporation that they
would have received had their Series B Preferred Stock been converted
into Common Stock on the date of such event and had thereafter,
during the period from the date of such event, to and including the
conversion date, retained such securities receivable by them as
aforesaid during such period giving application to all adjustments
called for during such period under this Section 4 with respect to
the rights of holders of the Series B Preferred Stock.
(d) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the conversion of the Series B Preferred Stock
shall be changed into the same or a different number of shares of any class or
classes of stock, whether by capital reorganization, reclassification, or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for in Section 4(c), or a reorganization, merger, consolidation or
sale of assets provided for in Section 3, then and in each such event the
holder of each share of Series B Preferred Stock shall have the right
thereafter to convert such share into the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification, or other change, by holders of the number of shares of
Common Stock into which such shares of Series B Preferred Stock might have
been converted immediately prior to such reorganization, reclassification, or
change, all subject to further adjustment as provided in this Section 4.
(e) No Impairment. The Corporation shall not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed under this Section 4 by the
Corporation but shall at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as
may be necessary or appropriate in order to protect the conversion rights of
the holders of the Series B Preferred Stock that by its terms is convertible
against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of the Series B Preferred
Stock pursuant to this Section 4, the Corporation at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each holder of the Series B Preferred Stock a
certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of such
Series B Preferred Stock, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of
Common Stock
<PAGE>
and the amount, if any, of other property which at the time would be received
upon the conversion of the Series B Preferred Stock.
(g) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid
in previous quarters) or other distribution, the Corporation shall mail to
each holder of Series B Preferred Stock, at least ten (10) days prior to the
date specified herein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of the Series B Preferred Stock. If the Conversion Price of the
Series B Preferred Stock is at any time less than the par value of the Common
Stock, the Corporation shall cause to be taken such action (whether by
lowering the par value of the Common Stock, by converting the Common Stock
from par value to no par value, or otherwise) as will permit the conversion of
the Series B Preferred Stock without any additional payment by the holder
thereof and the issuance of the Common Stock, which Common Stock, upon
issuance, will be fully paid and nonassessable.
Section 5. Redemption.
(a) Redemption at the Option of the Corporation. The Corporation, at
the option of the Board of Directors, may, at any time and from time to time
upon written notice (which notice shall specify the date and place of
redemption and the number of shares and the certificate numbers thereof which
are to be redeemed) given not less than twenty (20) nor more than ninety (90)
days prior to the date fixed for redemption, redeem all or any part of the
outstanding shares of the Series B Preferred Stock by paying therefor in cash
the Liquidation Value for each share, provided that the closing sale price (or
if such price is expressed as a bid and ask price, the closing bid price)
of the Common Stock for a consecutive twenty (20)-day trading period ending not
more than ten (10) days prior to the date of such notice is ten dollars
($10.00) or more. At least two business days prior to the redemption date
specified in such notice, each holder of the Series B Preferred Stock may give
the Corporation written instructions with respect to the application of funds
legally available for redemption of such holder's shares of the Series B
Preferred Stock.
(b) Redemption at the Option of the Holder. In the event that the
Corporation breaches or fails to comply with its obligations under this
Certificate of Designations or the Purchase Agreement, which breach or
failure is material or has a material adverse effect on the business or
prospects of the Corporation, and such breach or failure of compliance
continues for a period of thirty (30) days after notice thereof has been
given to the Corporation, then each holder of shares of the Series B Preferred
Stock shall be entitled to compel the Corporation to redeem any or all of such
holder's shares of the Series B Preferred Stock; provided that such redeeming
holder shall have given written notice thereof to the Corporation at least
forty-five (45) days prior to the requested date of redemption. Such notice
shall state the number of shares of the Series B Preferred Stock to be
redeemed. On or after the redemption date, as specified
<PAGE>
in such notice, the holder requesting redemption shall surrender such holder's
certificate for the number of shares to be redeemed as stated in the notice to
the Corporation. On such redemption date, to the extent the Corporation shall
have funds legally available therefor, the Corporation shall redeem the shares
of the Series B Preferred Stock requested to be redeemed at the Liquidation
Value. To the extent there are insufficient funds legally available for
redemption of all shares of the Series B Preferred Stock and the Series A
Preferred Stock, if any, requested to be redeemed, legally available funds
shall be applied to each holder's shares of the Series B Preferred Stock pro
rata in accordance with the number of shares requested to be redeemed by each
holder of shares of the Series B Preferred Stock and the Series A Preferred
Stock, if any, and each holder's shares shall be redeemed in accordance with
the instructions received from such holder or, if no instructions are received
from a holder, such holder's shares of the Series B Preferred Stock shall be
redeemed pro rata in accordance with the number of shares of the Series B
Preferred Stock and the Series A Preferred Stock, if any, held by such holder.
As soon as practicable, the Corporation shall give written notice to each
holder of shares of the Series B Preferred Stock redeemed or to be redeemed
indicating the number of shares redeemed or to be redeemed and the certificate
numbers thereof. If less than all of the shares of the Series B Preferred Stock
requested to be redeemed are redeemed, all unredeemed shares shall remain
outstanding and shall be entitled to all the rights and preferences of
outstanding shares of the Series B Preferred Stock hereunder. In case less
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
(c) Legally Available Funds. For the purpose of determining whether
funds are legally available for redemption of shares of the Series B Preferred
Stock as provided herein, the Corporation shall value its assets at the
highest amount permissible under applicable law. If on any redemption date
funds of the Corporation legally available therefor shall be insufficient to
redeem all the shares of the Series B Preferred Stock and the Series A
Preferred Stock required to be redeemed as provided herein, funds to the
extent legally available shall be used for such purpose and the Corporation
shall apply such funds to each holder's shares of the Series B Preferred Stock
pro rata according to the number of shares held by each holder of the Series B
Preferred Stock and the Series A Preferred Stock, and, each holder's shares
shall be redeemed in accordance with the instructions received from such
holder or, if no instructions are received from a holder, such holder's shares
of the Series B Preferred Stock shall be redeemed pro rata in accordance with
the number of shares of the Series B Preferred Stock and the Series A
Preferred Stock held by such holder.
(d) Failure to Redeem. In the event the Corporation fails to redeem
any shares of the Series B Preferred Stock pursuant to Section 5(a) because it
does not have funds legally available for such redemption, the shares for
which redemption is required but which are not redeemed shall remain
outstanding, and shall be entitled to all the rights and preferences of
outstanding shares of the Series B Preferred Stock hereunder. In such event,
the Corporation shall use its best efforts to effect the required redemption
and the Corporation's redemption obligation shall be discharged as soon as
Corporation is able to discharge such obligation.
(e) Termination of Conversion. In the event the Corporation has
mailed written notice of redemption to the holders of record of shares of the
Series B Preferred
<PAGE>
Stock in accordance with the terms of Section 5(a) hereof, the holder's right
to convert such shares called for redemption shall cease at the close of
business on the redemption date, unless the Corporation defaults in the
payment of the redemption price.
Section 6. Voting Rights. In addition to the voting rights required
by the laws of the State of Delaware and by Section 7, the holders of shares
of Series B Preferred Stock shall vote, as a single class with all other
stockholders of the Corporation, on all matters voted on by the stockholders
of the Corporation, with each such holder of Series B Preferred Stock entitled
to the number of votes equal to the number of shares of Common Stock into
which such holder's shares would then be convertible, Except as set forth
herein or in the Purchase Agreement, or as otherwise provided by law, holders
of Series B Preferred Stock shall have no special voting rights and their
consent shall not be required for taking any corporate action.
Section 7. Covenants. So long as any of the shares of Series B
Preferred Stock authorized hereby shall be outstanding, the Corporation shall
not, without first obtaining the affirmative vote or written consent of not
less than, a majority of such outstanding shares of Series B Preferred Stock:
(a) amend or repeal any provision of, or add any provision
to, the Corporation's Certificate of Incorporation or By-laws if such
action would alter or change the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the
Series B Preferred Stock;
(b) reclassify any Common Stock into shares having any
preference or priority as to assets superior to or on a parity with
any such preference or priority of the Series B Preferred Stock; or
(c) create or issue any securities of the Corporation which
have equity features and which rank on a parity with or senior to the
Series B Preferred Stock upon liquidation or other distribution of
assets.
Section 8. Status of Converted or Reacquired Stock. Any shares of
Series B Preferred Stock purchased, redeemed or otherwise acquired by the
Corporation in any manner whatsoever, and any shares of Series B Preferred
Stock converted pursuant to Section 4 hereof shall be retired and cancelled
promptly after the acquisition or conversion thereof. All such shares shall
upon their cancellation become authorized but unissued shares of Preferred
Stock and may be reissued as part of a new series of Preferred Stock subject
to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.
SECOND: That said determination of the designation, preferences and
the relative, participating, optional or other rights, and the qualifications,
limitations or restrictions thereof, relating to said Series B Convertible
Preferred Stock, was duly made by the Board of Directors pursuant to the
provisions of the Certificate of Incorporation of the Corporation, as amended,
and in accordance with the provisions of Section 151 of the General
Corporation Law of the State of Delaware, as amended.
<PAGE>
IN WITNESS WHEREOF, Global Pharmaceutical Corporation has caused this
Certificate of Designations to be executed this 26th day of November, 1997.
Attest: Global Pharmaceutical Corporation
BY: /s/ Cornel C. Spiegler BY: /s/ Max L. Mendelsohn
----------------------- ------------------------------------
Name: Cornel C. Spiegler Name: Max L. Mendelsohn
--------------------- ----------------------------------
Title:Secretary Title: President/Chief Executive Officer
--------------------- ----------------------------------
<PAGE>
EXHIBIT 5
[FULBRIGHT & JAWORSKI LETTERHEAD]
December 5, 1997
Global Pharmaceutical Corporation
Castor & Kensington Avenues
Philadelphia, Pennsylvania 19124
Dear Sir or Madam:
We refer to the Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), on behalf of Global
Pharmaceutical Corporation, a Delaware corporation (the "Company"), relating
to 550,000 shares of the Company's Common Stock, $0.01 par value (the "Common
Stock"), to be issued under the Global Pbarmaceutical Corporation 1995 Stock
Incentive Plan, as amended (the "Plan").
As counsel to the Company, we have examined such corporate records,
other documents and such questions of law as we have deemed necessary or
appropriate for the purposes of this opinion and, upon the basis of such
examinations, advise you that in our opinion all necessary corporate
proceedings by the Company have been duly taken to authorize the issuance of
the Common Stock pursuant to the Plan and the Common Stock being registered
pursuant to the Registration Statement, when issued and paid for in accordance
with the terms of the Plan, will be duly authorized, validly issued, fully
paid and non-assessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. This consent is not to be construed as an admission
that we are a person whose consent is required to be filed with the
Registration Statement under the provisions of the Act.
Very truly yours,
/s/ Fulbright & Jaworski L.L.P.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of our report dated April 11, 1997, appearing on page
F-2 of Global Pharmaceutical Corporation's Annual Report on Form 10-K for the
year ended December 31, 1996.
/s/ Price Waterhouse LLP
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PRICE WATERHOUSE LLP
Philadelphia, Pennsylvania
December 3, 1997
