MYLAN LABORATORIES INC.
1997 INCENTIVE STOCK OPTION PLAN
(AS AMENDED THROUGH APRIL 2000)
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MYLAN LABORATORIES INC.
1997 INCENTIVE STOCK OPTION PLAN
1. PLAN NAME
This Plan shall be known as the "MYLAN LABORATORIES INC. 1997 Incentive Stock
Option Plan" (the "Plan").
2. EFFECTIVE DATE
The effective date of the Plan shall be January 23, 1997; provided, however,
that if the shareholders of MYLAN LABORATORIES INC. (the "Corporation") do not
approve the Plan by January 22, 1998, no Options (as defined in paragraph 3)
granted under the Plan shall constitute Incentive Stock Options (as defined in
paragraph 5(c)).
3. PURPOSE
The purpose of this Plan is to provide a means whereby the Corporation may,
through the grant of options to purchase Class A Common Stock, par value $.50
per share ("Common Stock") of the Corporation ("Options") to employees
(including officers and directors who are also employees) and nonemployee
consultants, agents and advisors to attract, retain and motivate these persons
to exert their best efforts on behalf of the Corporation and its subsidiaries.
Collectively, these persons are called "key employees."
4. NUMBER OF SHARES AVAILABLE UNDER PLAN
Options may be granted by the Corporation from time to time to key employees of
the Corporation and its subsidiaries to purchase an aggregate of Ten Million
(10,000,000) shares of Common Stock of the Corporation and Ten Million
(10,000,000) shares of Common Stock shall be reserved for Options granted under
the Plan (subject to adjustment as provided in paragraph 6(i)). Shares issued
upon exercise of Options granted under the Plan may be authorized and unissued
shares or shares held by the Corporation in its treasury. If any Option granted
under the Plan shall terminate, expire or be canceled as to any shares, new
Options may thereafter be granted under the Plan covering those shares, subject
to the limitations imposed under paragraph 5(a)(2).
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5. ADMINISTRATION
The Plan shall be administered under the terms of this Section 5.
(a) STOCK OPTION COMMITTEE. Except as further provided in this paragraph 5(a),
the Plan shall be administered by a Stock Option Committee ("Committee")
consisting of at least two members of the Board of Directors of the Corporation
who shall be appointed by, and serve at the pleasure of, the Board of Directors.
The composition of the Committee shall be controlled by the following provisions
of this paragraph 5(a).
(1) Each member of the Committee must be a "non-employee director" within the
meaning of Rule 16b-3, as that Rule may be amended from time to time ("Rule
16b-3"), under the Securities Exchange Act of 1934, as amended, when the
Committee is acting to grant Options to those key employees who are also
directors or officers. Those actions which require a Committee of non-employee
directors include:
(i) Selecting the directors or officers to whom Options may be granted;
(ii) Deciding or determining the timing, price, number or other terms and
conditions of, or shares subject to, each Option made to a key
employee who is also a director or officer; and
(iii)Interpreting the Plan or Option agreements with regard to Options
granted to a director or officer.
An officer or director who also has an employment status described in clause
(i), (ii) or (iii) of paragraph 5(a)(2), shall also be limited to a maximum
number of Options under the Plan as provided under paragraph 5(a)(3).
(2) Each member of the Committee must be an "outside director" within
the meaning of Regulation ss.1.162-27 (e)(3), as that Regulation may be amended
from time to time (the "Regulation"), under the Internal Revenue Code of 1986,
as amended (the "Code"), when the Committee is acting to grant Options to those
key employees who have the following employment status with the Corporation:
(i) The chief executive officer of the corporation or the individual
acting in that capacity;
(ii) One of the four highest compensated officers (other than the chief
executive officer) of the Corporation; or
(iii)In the judgment of the Board of Directors, is deemed reasonably
likely to become an employee described in clause (i) or (ii) of this
paragraph 5(a)(2) within the exercise period of any contemplated
option.
Those actions which require a Committee of outside directors include
the same actions as is described in the immediately preceding paragraph except
that the employment relationships described in clauses (i), (ii) and (iii) of
this paragraph 5(a)(2) shall be substituted for the references to director or
officer. In addition, the provisions of paragraph 5(a)(3) shall apply.
If an individual who is being considered for a grant of Options is an
officer or director and also has an employment status described in clause (i),
(ii) or (iii) of this paragraph 5(a)(2), the members of the Committee shall
consist of whichever of the following director categories is the more
restrictive, non-employee directors as defined in Section 5(a)(1), or of outside
directors as defined in this Section 5(a)(2).
(3) In addition to any other limitation, the Committee shall not award
to any employee described in clause (i), (ii) or (iii) of paragraph 5(a)(2)
Options in any calendar year to purchase more than three hundred thousand
(300,000) shares of Common Stock, plus any amount of shares that were available
within this limit in any prior year for which Options were not granted. Further,
any Options awarded to such an employee which are thereafter canceled shall
continue to count against the maximum number of Options which may be awarded to
that employee, and any Option of such an employee which is later repriced shall
be deemed to be the cancellation of the original Option and the grant of a new
Option for purposes determining the number of Options awarded to that employee.
(b) COMMITTEE ACTION. A majority of the members of the Committee shall
constitute a quorum, and the action (1) of a majority of the members present at
a meeting at which a quorum is present or (2) authorized in writing by all
members, shall be the action of the Committee. A member participating in a
meeting by telephone or similar communications equipment shall be deemed present
for this purpose if the member or members who are present in person can hear him
and he can hear them.
(c) AUTHORITY OF THE COMMITTEE. The Committee shall have the power: (1)
to determine and designate in its absolute discretion from time to time those
employees of the Corporation, its subsidiaries, independent agents, consultants
and attorneys who by reason of the nature of their duties, their present and
potential contributions to the success of the Corporation and other factors, who
are eligible to participate in the Plan and to whom Options are to be granted;
provided, however, no Option shall be granted after January 23, 2007, the tenth
(10th) anniversary of the original adoption date of the Plan; (2) to authorize
the granting of (i) Options which qualify as Incentive Stock Options within the
meaning of Code Section 422 ("Incentive Stock Option"); provided that only
employees of the Corporation may be granted Incentive Stock Options, (ii)
Options which do not qualify under Code Section 422 ("Nonqualified Stock
Option"); provided that only Nonqualified Stock Options may be granted to
persons who are not employees, but who are otherwise eligible for grant of
options; (3) to determine the number of shares subject to each Option, subject
to paragraph 5(a); (4) to determine the time or times and the manner when each
Option shall be exercisable and the duration of the exercise period.
The Committee may interpret the Plan, prescribe, amend and rescind any
rules and regulations necessary or appropriate for the administration of the
Plan and make other determinations and take other action as it deems necessary
or advisable. Without limiting the generality of the foregoing sentence the
Committee may, in its discretion, treat all or any portion of any period during
which an Optionee is on military or an approved leave of absence from the
Corporation as a period of employment of the Optionee by the Corporation, as the
case may be, for the purpose of accrual of rights under an Option. An
interpretation, determination or other action made or taken by the Committee
shall be final, binding and conclusive.
(d) INDEMNIFICATION OF COMMITTEE. In addition to other rights that they
may have as Directors or as members of the Committee, the members of the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorney's fees actually and reasonably incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any Option granted thereunder, and against all amounts paid by them in
settlement thereof or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which it shall
be adjudged in the action, suit or proceeding that the Committee member's action
or failure to act constituted self-dealing, willful misconduct or recklessness;
provided that within sixty (60) days after institution of any action, suit or
proceeding a Committee member shall in writing offer the Corporation the
opportunity, at its own expense, to handle and defend the same.
6. TERMS AND CONDITIONS
Each Option granted under the Plan shall be evidenced by an agreement, in a form
approved by the Committee, which shall be subject to the following expressed
terms and conditions and to other terms and conditions as the Committee may deem
appropriate, including those imposed by Section 8 following amendment of the
Plan requiring shareholder approval.
(a) OPTION PERIOD. Each Option agreement shall specify the period for
which the Option hereunder is granted (which in no event shall exceed ten (10)
years from the date of the grant of the Option) and shall provide that the
Option shall expire at the end of that period.
(b) OPTION PRICE. The Option price per share shall be determined by the
Committee at the time any Option is granted, and shall not be less than the fair
market value (but in no event less than the par value if any) of the Common
Stock of the Corporation on the date the Option is granted, as determined by the
Committee.
(c) AGGREGATE OWNERSHIP AND EXERCISE LIMITATIONS. The aggregate fair
market value (determined at the time the Option is granted) of the stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Optionee during any calendar year (under all plans of the Corporation and its
subsidiaries and parents) shall not exceed $100,000.
(d) EXERCISE OF OPTION. Subject in each case to the provisions of
paragraphs (a), (b), (c), (e) and (f) of this Section 6, any Option may be
exercised, to the extent exercisable by its terms, at the time or times as may
be determined by the Committee at the time of grant; subject, however, to the
following limitations. No portion of an Option granted to an employee of the
Corporation or its subsidiaries shall be exercisable unless the Optionee has
been employed by the Corporation or its subsidiaries until the second
anniversary of the date of the grant of the Option. Between the second
anniversary and the third anniversary of the date of the grant of the Option, if
the Optionee is still employed by the Corporation or its subsidiaries, the
Optionee may exercise up to twenty-five percent (25%) of the Option. Between the
third anniversary and the fourth anniversary of the date of the grant of the
Option, if the Optionee is still employed by the Corporation or its
subsidiaries, the Optionee may exercise cumulatively up to fifty percent (50%)
of the Option. On and after the fourth anniversary of the date of the grant of
the Option (but in no event longer than the period provided in paragraph 6(a)),
if the Optionee is still employed by the Corporation or its subsidiaries, the
Optionee may exercise cumulatively up to one hundred percent (100%) of the
Option. The Committee, in its sole discretion, however, may reduce or eliminate
the limitations provided in the preceding four sentences ("Vesting Limitations")
for Options granted to any employee having at least two years of continuous
service with the Corporation or its subsidiaries. Notwithstanding the Vesting
Limitations, if an Optionee's employment is terminated due to death, Permanent
Disability (as defined in paragraph 6(f)), or retirement as determined in the
sole and absolute discretion of the Committee ("Retirement"), one hundred
percent (100%) of the Optionee's Option may be exercised in accordance with the
provisions of paragraph 6(f). Vesting provisions substantially similar to the
Vesting Limitations may be imposed upon any Option granted to a nonemployee
Optionee at the sole and absolute discretion of the Committee.
(e) PAYMENT OF PURCHASE PRICE AND TAXES UPON EXERCISE. The purchase
price of Common Stock as to which an Option shall be exercised and any
employment taxes arising therefrom shall be paid to the Corporation at the time
of exercise in cash or, at the discretion of the Committee, in stock of the
Corporation; payment in stock of the Corporation shall include the right of an
Optionee to elect to receive the shares of Common Stock issuable upon exercise
of an Option reduced by that number of shares of Common Stock necessary to
satisfy the purchase price and/or the minimum statutory withholding requirements
for employment taxes (hereinafter "Net Exercise").
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(f) EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF EMPLOYMENT. (1) If
any Optionee who is an employee of the Corporation or its subsidiaries shall die
(i) while an employee of the Corporation or its subsidiaries or (ii) within
three (3) months after termination of the Optionee's employment with the
Corporation or its subsidiaries because the Optionee is permanently and totally
disabled (within the meaning of Code Section 22(e)(3)) ("Permanent Disability")
or because of Retirement, any Option of the Optionee may be exercised by the
person or persons to whom the Optionee's rights under the Option pass by will or
applicable law or if no person has that right, by the Optionee's executors or
administrators, at any time, or from time to time, within one (1) year after the
date of the death, but in no event later than the expiration date specified in
paragraph (a) of this Section 6. (2) If an Optionee's employment by the
Corporation or its subsidiaries shall terminate because of Permanent Disability,
the Optionee may exercise any Option of the Optionee at any time, or from time
to time, within one (1) year of the date of the termination of employment, but
in no event later than the expiration date specified in paragraph (a) of this
Section 6. (3) If an Optionee's employment by the Corporation or its
subsidiaries shall terminate because of indefinite lay-off, the Optionee may
exercise any Option of the Optionee to the extent that the Optionee may be
entitled to do so at the date of the indefinite lay-off, at any time, or from
time to time, within three (3) months of the date of the termination of
employment, but in no event later than the expiration date specified in
paragraph (a) of this Section 6. (4) If an Optionee's employment by the
Corporation or its subsidiaries shall terminate because of Retirement, any
Option of the Optionee may be exercised by the Optionee at any time, or from
time to time, within three (3) months of the date of the termination of
employment, but in no event later than the expiration date specified in
paragraph (a) of this Section 6. (5) Except as provided by (1) through (4) of
this paragraph (f) of Section 6, if an Optionee's employment shall cease by
reason of a voluntary or involuntary termination, either with or without cause,
any Option of the Optionee shall terminate immediately. (6) If an Optionee is
not an employee of the Corporation or its subsidiaries when the Optionee is
granted an Option, that Option shall terminate one (1) year after the date of
the Optionee's death, but in no event later than the expiration date specified
in paragraph (a) of this Section 6. If such an Optionee dies, any Option of the
Optionee may be exercised by the person to whom the Optionee's rights under the
Option pass by will or applicable law or if no person has that right, by the
Optionee's executors or administrators, at any time, or from time to time within
one (1) year after the date of the death, but in no event later than the
expiration date specified in paragraph (a) of this Section 6. Notwithstanding
the foregoing, for Options granted on or after January 26, 2000, the Options, to
the extent that the Options have vested on the date of any termination of the
employment of the Optionee by the Corporation, shall be exercisable at any time,
or from time to time, but in no event later than the expiration date specified
in paragraph (a) of Section 4, so long as the employment of the Optionee by the
Corporation has not been voluntarily terminated by the Optionee and so long as
that employment was not terminated by the Corporation for cause. Options held by
Optionees who voluntarily terminate employment or whose employment is terminated
for cause shall in any event expire on the Optionee's last day of employment.
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(g) PERMITTED TRANSFERS. Options granted under the Plan shall be
transferrable by will or by the laws of descent and distribution. In addition,
Nonqualified Stock Options granted under the Plan can be transferred during the
lifetime of the Optionee only if all of the following conditions are satisfied:
(1) the Stock Option Committee has approved the proposed transfer in writing;
(2) the proposed transfer is to be made without consideration; (3) the proposed
transferee is a member or members of the Optionee's immediate family (i.e., a
child, or children, a grandchild or grandchildren, or the Optionee's spouse)
and/or to a trust established for the benefit of an immediate family member or
members, or a family limited partnership which includes the Optionee and/or
members of the Optionee's immediate family, or a trust established for the
benefit of the Optionee, and/or an immediate family member or members and a
charity exempt from taxation under Internal Revenue Code 501(c)(3); and (4)
after transfer, each option transferred by the Optionee shall remain subject to
the provisions of the Plan under which it was granted.
(h) INVESTMENT REPRESENTATION. Each Option agreement shall provide that
upon demand by the Committee, the Optionee (or any person acting under paragraph
6(f)) shall deliver a written representation to the Committee at the time of any
exercise of an Option that the shares to be acquired upon the exercise are to be
acquired for investment and not for resale or with a view to the distribution
thereof. Upon demand, delivery of the representation prior to the delivery of
any shares to be issued upon exercise of an Option and prior to the expiration
of the Option period shall be a condition precedent to the right of the Optionee
or other person to purchase any shares.
(i) ADJUSTMENTS. In the event of any change in the Common Stock of the
Corporation by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination, or exchange of shares, or rights
offering to purchase Common Stock at a price substantially below fair market
value, or any similar change affecting the Common Stock, the number and kind of
shares which thereafter may be optioned and sold under the Plan and the number
and kind of shares subject to option in outstanding Option agreements and the
purchase price per share thereof shall be appropriately adjusted consistent with
the change in a manner as the Committee may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or available for,
participants in the Plan.
(j) INCENTIVE STOCK OPTIONS. Each Option agreement which provides for
the grant of an Incentive Stock Option to an employee shall contain terms and
provisions as the Committee may determine to be necessary or desirable in order
to qualify the Option as an Incentive Stock Option within the meaning of Code
Section 422, or successor thereto and to meet the requirement of Rule 16b-3.
(k) NO RIGHTS AS SHAREHOLDERS. No Optionee shall have any rights
as a shareholder with respect to any shares subject to an Option prior to the
date of issuance to the Optionee of a certificate or certificates for the
shares.
(l) NO RIGHTS TO CONTINUED EMPLOYMENT. The Plan and any Option granted
under the Plan shall not confer upon any Optionee any right with respect to
continuance of employment by the Corporation or any subsidiary of the
Corporation, nor shall they interfere in any way with the right of the
Corporation to terminate the Optionee's employment at any time.
7. COMPLIANCE WITH OTHER LAWS AND REGULATIONS
The Plan, the grant and exercise of Options thereunder, and the obligation of
the Corporation to sell and deliver shares under Options, shall be subject to
all applicable Federal and state laws, rules and regulations and to required
approvals of any government or regulatory agency. The Corporation shall not be
required to issue or deliver any certificates for shares of Common Stock prior
to the completion of any registration or qualification of the shares under any
Federal or state law, or any ruling or regulation of any government body which
the Corporation shall, in its sole discretion, determine to be necessary or
advisable.
8. AMENDMENT AND DISCONTINUANCE
The Board of Directors of the Corporation may from time to time amend, suspend
or discontinue the Plan; provided, however, that subject to the provisions of
paragraph 6(i) or the approval of the Corporation's shareholders no action of
the Board of Directors or of the Committee may: (a) extend the period during
which Options may be granted as provided in paragraph 4(c); (b) increase the
number of shares reserved for Options pursuant to Section 4; (c) permit the
granting of any Option at an Option price less than that determined in
accordance with paragraph 6(b); (d) permit the granting of Options which expire
beyond the period provided for in paragraph 6(a); (e) materially increase the
benefits accruing to participants in the Plan; (f) materially modify the
requirements for eligibility for participation in the Plan; or (g) otherwise
cause Rule 16b-3 or the requirements for Incentive Stock Options to become
inapplicable. Without the written consent of an Optionee, no amendment or
suspension of the Plan shall diminish or impair any Option previously granted to
the Optionee under the Plan. Notwithstanding any other provision of the Plan, if
an amendment to the Plan requires the approval of the Corporation's
shareholders, every Option granted after that amendment and before approval of
the shareholders (and the Optionee's or other person's rights in every share
issued upon an exercise of an Option granted during that time) shall be
conditional and contingent upon the approval of the Corporation's shareholders.
Further, those Options (and shares issued under those options) shall not be
subject to sale or transfer unless and until shareholder approval is obtained.
The Committee shall implement procedures for compliance with these restrictions
when applicable.
