EXHIBIT 10.6.12

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 4, 2008, by and
between Par Pharmaceutical, Inc., a Delaware corporation (“Par” or “Employer”),
and Stephen Montalto (“Executive”).

R E C I T A L S :

A.

WHEREAS, Executive is presently employed by Employer in the capacity of Senior
Vice President, Human Resources;

B.

WHEREAS, Employer and Executive desire to cancel and replace Executive’s
existing Employment Agreement, dated March 2006, and enter into this Agreement
for Executive to continue to perform the duties associated with his position on
the terms and conditions set forth herein; and

C.

WHEREAS, Executive and Employer agree and acknowledge that the agreement set
forth herein supersedes any prior and contemporaneous written or oral agreements
between the parties, and that upon execution the terms and conditions set forth
in this Agreement govern executive’s employment.

In consideration of the mutual promises herein contained, the parties hereto
hereby agree as follows:

1.

Employment.

                       1.1 General.  Par hereby employs Executive in the
capacity of Senior Vice President, Human Resources.  Executive shall perform and
carry out such duties and responsibilities that are reasonably consistent with
Executive’s position and responsibilities and this Agreement, and as may be
assigned to him by Employer.  Executive shall report to the Chief Executive
Officer of Par.  Executive hereby accepts such employment, subject to the terms
and conditions herein contained.

                       1.2 Time Devoted to Position.  Executive, during the
Employment Term, shall devote substantially all of his business time, attention
and skills to the business and affairs of Employer.  

2.

Compensation and Benefits.

                        2.1 Salary.  At all times Executive is employed
hereunder, Employer shall pay to Executive, and Executive shall accept, as full
compensation for any and all services rendered and to be rendered by him during
such period to Employer in all capacities, including, but not limited to, all
services that may be rendered by him to any of Employer’s subsidiaries, entities
and organizations presently existing or hereafter

  

 

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formed, organized or acquired, directly or indirectly, by Employer (each, a
“Subsidiary” and collectively, the “Subsidiaries”), the following: (i) a Base
Salary at the annual rate of $260,000 (Two Hundred and Sixty Thousand Dollars);
and (ii) any bonus and the benefits set forth in Sections 2.2, 2.3, 2.4, and 2.5
hereof.  The Base Salary shall be payable in accordance with the regular payroll
practices of Employer applicable to senior executives, less such deductions as
shall be required to be withheld by applicable law and regulations.

                      2.2 Bonus.  Subject to Section 3.3 hereof, Executive shall
be entitled to an annual bonus during the Employment Term in such amount (if
any) as determined by the Board, in its sole discretion, based on such
performance criteria as it deems appropriate, including, without limitation,
Executive’s performance and Employer’s earnings, financial condition, rate of
return on equity, and compliance with regulatory requirements.  Although this
section does not guarantee any specific bonus figures, it is understood that
Executive’s bonus target for his first year of employment hereunder shall be
equal to thirty-five (35%) percent of his Base Salary.  At the time the Board
determines the Executive’s eligibility for a bonus, the Board shall set forth
all material terms of the bonus arrangement in a written document.  The Employer
shall pay the bonus by March 1 following the end of the calendar year in which
the bonus is earned.

                     2.3 Equity Awards.  Executive shall be entitled to
participate in long-term incentive plans, including, without limitation, stock
option, restricted stock, and similar equity plans of Employer as may be offered
from time to time.  

                     2.4 Executive Benefits.

                   2.4.1 Expenses.  Employer shall promptly reimburse Executive
for expenses he reasonably incurs in connection with the performance of his
duties (including business travel and entertainment expenses) hereunder, all in
accordance with Employer’s policies with respect thereto as in effect from time
to time.

                    2.4.2 Employer Plans.  Executive shall be entitled to
participate in such employee benefit and welfare plans and programs as Employer
may from time to time generally offer or provide to executive officers of
Employer or its Subsidiaries, including, but not limited to, participation in
life insurance, health and accident, medical plans and programs, and profit
sharing and retirement plans in accordance with the terms and conditions of such
plans and programs.

                    2.4.3 Vacation.  Executive shall be entitled to four (4)
weeks of paid vacation per calendar year, prorated for any partial year.

                   2.4.4 Automobile.  Employer shall provide Executive with an
automobile cash allowance in the amount of $1,050 (gross) per month.

                   2.5 Life Insurance.  Employer shall obtain a term life
insurance policy  (provided, that Executive qualifies on a non-rated basis), the
premiums of which shall be borne by Employer and the death benefits of which
shall be payable to Executive’s estate, or as otherwise directed by Executive,
in the amount of $1 million throughout the Employment Term.

  

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3.

Employment Term; Termination.

                       3.1 Employment Term.  Executive’s employment hereunder
shall commence on the date of this Agreement and, except as otherwise provided
in Section 3.2 hereof, shall continue until the second (2nd) anniversary of the
date of this Agreement (the “Initial Term”).  Thereafter, this Agreement shall
automatically be renewed for successive one-year periods commencing on the
second (2nd) anniversary of the date of this Agreement (the Initial Term,
together with  any such subsequent employment period(s), being referred to
herein as the “Employment Term”), unless Executive or Employer shall have
provided a written notice of termination in respect of its or his election not
to renew the Employment Term to the other party at least thirty (30) days prior
to the end of the current Employment Term.  Upon non-renewal of the Employment
Term pursuant to this Section 3.1, or termination pursuant to Sections 3.2.1
through 3.2.6 inclusive, Executive shall be released from any duties hereunder
(except as set forth in Section 4) and the obligations of Employer to Executive
shall be as set forth in Section 3.3 hereof only.  

                   3.2 Events of Termination.  The Employment Term shall
terminate upon the occurrence of any one or more of the following events:

                   3.2.1 Death.  In the event of Executive’s death, the
Employment Term shall terminate on the date of his death.

                  3.2.2 Without Cause By Executive.  Executive may terminate the
Employment Term at any time during such Term for any reason or no reason
whatsoever by giving a written notice of termination to Employer.  The date of
termination for this Section 3.2.2 shall be thirty (30) days after the notice of
termination is given.

                 3.2.3 Disability.  In the event of Executive’s Disability (as
hereinafter defined), Employer may terminate the Employment Term by giving a
written notice of termination to Executive.  The notice of termination shall
specify the date of termination, which date shall not be earlier than thirty
(30) days after the notice of termination is given.  For purposes of this
Agreement, “Disability” means disability, as defined in any long-term disability
insurance policy provided by Employer and insuring Executive.

                 3.2.4 For Cause By Employer.  Employer may terminate the
Employment Term for “Cause,” based on factors determined in good faith by
Employer as set forth in a notice of termination to Executive.  For purposes of
this Agreement, “Cause” shall mean (i) Executive’s conviction of, guilty or no
contest plea to, or confession of guilt of, a felony or other crime involving
moral turpitude; (ii) an act or omission by Executive in connection with his
employment that constitutes fraud, criminal misconduct, breach of fiduciary
duty, dishonesty, gross negligence, malfeasance, willful misconduct, or other
conduct that is materially harmful or detrimental to Employer; (iii) a material
breach by Executive of this Agreement; (iv) a continuing or other failure by
Executive to perform such duties as are assigned to Executive by Employer in
accordance with

  

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this Agreement, other than a failure resulting from a Disability; (v)
Executive’s knowingly taking any action on behalf of Employer or any of its
affiliates without appropriate authority to take such action; (vi) Executive’s
knowingly taking any action in conflict of interest with Employer or any of its
affiliates given Executive’s position with Employer; and/or (vii) the commission
of an act of personal dishonesty by Executive in connection with Employer that
involves personal profit.

                  3.2.5 Without Cause By Employer.  Employer may terminate the
Employment Term for any reason or no reason whatsoever (other than for the
reasons set forth elsewhere in this Section 3.2) by giving a notice of
termination to Executive.  The Notice of termination shall specify the date of
termination, which date shall not be earlier than thirty (30) days after the
notice of termination is given or such shorter period if Employer shall pay to
Executive that amount of the Base Salary amount that would have been earned
between the thirty (30) day period and such shorter period in accordance with
Employer’s regular payroll practices.

                 3.2.6 Employer’s Material Breach.  Executive may terminate the
Employment Term upon Employer’s material breach of this Agreement and the
continuation of such breach for more than ten (10) days after written demand for
cure of such breach is given to Employer by Executive (which demand shall
identify the manner in which Employer has materially breached this Agreement).
 Employer’s material breach of this Agreement shall mean (i) the failure of
Employer to make any payment that it is required to make hereunder to Executive
when such payment is due; (ii) the assignment to Executive, without Executive’s
express written consent, of duties materially inconsistent with his position and
responsibilities with Employer, or a significant change in Executive’s reporting
responsibilities, titles or offices (it being agreed that Executive’s change in
reporting to the Chief Executive Officer and President of Par shall not be
deemed a significant change in Executive’s reporting responsibilities); (iii) a
reduction by Employer in Executive’s Base Salary; or (iv) a permanent
reassignment of Executive’s primary work location, without the consent of
Executive, to a location more than thirty-five (35) miles from Employer’s
executive offices in Woodcliff Lake, New Jersey.

                3.3 Certain Obligations of Employer Following Termination of the
Employment Term.  Following termination of the Employment Term under the
circumstances described below, Employer shall pay to Executive or his estate, as
the case may be, the following compensation and provide the following benefits.
 All lump-sum payments owed by Employer shall be made to Executive within
forty-five (45) days of the date of termination in accordance with Employer’s
regular payroll practices.  The Executive must execute within thirty (30) days
after the date of termination Employer’s standard form of Release Agreement
attached as Exhibit A hereto.

                3.3.1 For Cause.  In the event that the Employment Term is
terminated by Employer for Cause, Employer shall pay to Executive in a single
lump-sum within forty-five (45) days of the date of termination and in
accordance with Employer’s regular payroll practices an amount

  

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equal to any unpaid but earned Base Salary through the date of termination.  The
Employer shall also pay any annual bonus earned but unpaid as of the date of
termination for any previously completed fiscal year in accordance with the
terms of the bonus, and such employee benefits as to which Executive may be
entitled under the employee benefit plans of Employer.

              3.3.2 Without Cause by Employer; Material Breach by Employer;
Non-Renewal by Employer.  In the event that the Employment Term is terminated by
Employer pursuant to Section 3.2.5 hereof or by Executive pursuant to Section
3.2.6 hereof, or is not renewed by Employer pursuant to Section 3.1 hereof,
Employer shall pay to Executive severance in an amount equal to the product of
one and a half (1.5) multiplied by the sum of Executive’s Base Salary in effect
on the date of termination, and if Executive’s termination is not a result of,
in whole or in part, Executive’s performance in respect of his duties hereunder,
the amount of Executive’s last annual cash bonus pursuant to Section 2.2 hereof
(the “Severance Amount I”).  If a termination described in the prior sentence
occurs within two (2) years after a Change of Control (as defined in Section
3.3.7(d) hereof), the Employer shall pay to Executive severance in an amount
equal to the product of two (2) multiplied by the sum of Executive’s Base Salary
in effect on the date of termination, and if Executive’s termination is not a
result of, in whole or in part, Executive’s performance in respect of his duties
hereunder, the amount of Executive’s last annual cash bonus pursuant to Section
2.2 hereof (the “Severance Amount II”).  The Employer shall pay the Severance
Amount I in installments, and shall first determine the amount of each
installment if the Severance Amount I were paid in equal semimonthly
installments for eighteen (18) months (the “Installment Payment I”) commencing
on the forty-fifth (45th) day after the date of termination.  The Employer shall
pay the Severance Amount II in installments, and shall first determine the
amount of each installment if the Severance Amount II were paid in equal
semimonthly installments for two (2) years (the “Installment Payment II”)
commencing on the forty-fifth (45th) day after the date of termination.  The
Employer shall then withhold and accumulate the Installment Payments I and the
Installment Payments II payable beginning on the forty-fifth (45th) day after
the date of termination through the end of the sixth (6th) month after the date
of termination (the time period, the “Severance Holdback Period”) (the withheld
payments, the “Severance Holdback Amounts”).  The Employer shall pay the
Severance Holdback Amounts in a single lump sum on the first (1st) day of the
seventh (7th) month after the date of termination (the “Severance Delayed
Payment Date”).  The Severance Holdback Amounts paid to the Executive on the
Severance Delayed Payment Date are to accrue interest from the date each
Severance Holdback Amount would have been paid during the Severance Holdback
Period absent the holdback requirement until the Severance Delayed Payment Date.
 The interest rate is the prime rate as published in The Wall Street Journal
seven (7) days prior to the Severance Delayed Payment Date.  The Employer shall
pay the accrued interest on the Severance Delayed Payment Date.  From the
Severance Delayed Payment Date through the end of eighteen (18) months after the
forty-fifth (45th) day after the date of termination, the Employer shall pay the
Installment Payments I semimonthly.  From the Severance Delayed Payment Date
through the end of two (2) years after the forty-fifth day after the date of
termination, the Employer shall pay the Installment Payments II semimonthly.
 Payment of each applicable Severance Amount is subject to Executive’s continued
compliance with the terms of Section 4.  The Employer shall also pay any annual
bonus earned but unpaid as of the Date of

  

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Termination for any previously completed fiscal year in accordance with the
terms of the bonus, and such employee benefits as to which Executive may be
entitled under the employee benefit plans of the Employer.

              3.3.3 Without Cause By Executive.  In the event that the
Employment Term is terminated by Executive pursuant to Section 3.2.2 hereof,
Employer shall pay to Executive in a single lump-sum within forty-five (45) days
of the date of termination an amount equal to any unpaid but earned Base Salary
through the date of termination in accordance with Employer’s regular payroll
practices.  The Employer shall also pay any annual bonus earned but unpaid as of
the date of termination for any previously completed fiscal year in accordance
with the terms of the bonus, and such employee benefits as to which Executive
may be entitled under the employee benefit plans of the Employer.

              3.3.4 Without Cause by Executive During Window Period.  If a
Change of Control (as defined in Section 3.3.7(d) hereof) occurs, and the
Executive continues employment for six (6) months after the date of the Change
of Control (as defined in Section 3.3.7(d) hereof) (the “Stay Period”), the
Executive may terminate the Employment Term (the “Resignation”) during the
ninety (90) days following the Stay Period (the “Window Period”).  The Executive
must provide the Resignation in a notice of termination to the Employer during
the Window Period.  Upon the Resignation, the provisions of Sections 3.3.2 and
3.3.6 shall apply as if the Resignation were a termination of the Employment
Term without Cause by the Employer under Section 3.2.5.

              3.3.5 Death, Disability.  In the event that the Employment Term is
terminated by reason of Executive’s death pursuant to Section 3.2.1 hereof or by
Employer by reason of Executive’s Disability pursuant to Section 3.2.3 hereof,
Employer shall pay to Executive, subject to, in the case of Disability,
Executive’s continued compliance with Section 4 hereof, the applicable Severance
Amount set forth in Section 3.3.2 hereof, and Executive shall retain all vested
rights granted pursuant to Section 2.3.  In the case of death, the Employer
shall pay the applicable Severance Amount commencing on the thirtieth (30th) day
after the Executive’s date of death, and otherwise in accordance with the
payment provisions of Section 3.3.2 hereof without the holdback requirement.  In
the case of Disability, the Employer shall pay the applicable Severance Amount
in accordance with the payment provisions of Section 3.3.2 hereof.  The Employer
shall also pay any annual bonus earned but unpaid as of the date of termination
for any previously completed fiscal year in accordance with the terms of the
bonus, and such employee benefits as to which Executive may be entitled under
the employee benefit plans of the Employer.

              3.3.6 Post-Employment Term Benefits.  In the event Executive is
terminated, pursuant to Sections 3.2.1 through 3.2.6 inclusive, or either
Employer or Executive elects not to renew this Agreement pursuant to Section
3.1, Employer shall reimburse Executive for any unpaid expenses pursuant to
Section 2.4.1 hereof, and Executive will have the opportunity and responsibility
to elect COBRA continuation coverage pursuant to the terms of that law and will
thus be responsible for the execution of the continuation of coverage forms upon
termination of his

  

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insurance coverage.  Except as provided immediately below, Executive will be
responsible for all COBRA premiums.  If Executive is terminated pursuant to
Sections 3.2.3, 3.2.5, 3.2.6, or Employer elects not to renew this Agreement
pursuant to Section 3.1, Executive shall be entitled to participate, at
Employer’s expense, in all medical and health plans and programs of Employer in
accordance with COBRA for up to eighteen (18) months (the “Benefits Period”),
subject to Executive’s continued compliance with the terms of Section 4 hereof;
provided, however, that Executive’s continued participation is permissible under
the terms and provisions of such plans and programs; and provided, further, that
if Executive becomes entitled to equal or comparable benefits from a subsequent
employer during the Benefits Period, Employer’s obligations under this Section
3.3.6 shall end as of such date.  The Employer shall commence payment of COBRA
premiums on the forty-fifth (45th) after the date of termination.

              3.3.7 Equity Awards.

            (a) If, within two (2) years following a Change of Control (as
defined in Section 3.3.7(d) hereof) of Employer, the Employment Term is
terminated other than for Cause, then Executive (or his estate) shall have
twenty-four (24) months from the date of termination to exercise any vested
equity awards; provided, however, that the relevant equity award plan remains in
effect and such equity awards shall not have otherwise expired in accordance
with the terms thereof.  In connection therewith, Employer agrees to use
commercially reasonable efforts to amend Executive’s Equity Award Agreements if
necessary to effectuate the provisions of this Section 3.3.7(a).

            (b) In the event the Employment Term is terminated (i) by Employer
pursuant to Section 3.2.5 hereof and the reason for such termination is not
related to the performance of Executive in his duties with respect to Employer,
or (ii) by Executive pursuant to Section 3.2.6 hereof, then all equity awards
theretofore granted to Executive shall thereupon vest and Executive shall have
twenty-four (24) months from such date to exercise such options; provided,
however, that the relevant equity award plan remains in effect and such equity
awards shall not have otherwise expired in accordance with the terms thereof. In
connection therewith, Employer agrees to use commercially reasonable efforts to
amend Executive’s Equity award Agreements if necessary to effectuate the
provisions of this Section 3.3.7(b).

            (c) For grants of time-based restricted stock made during calendar
year 2008 (the “2008 Grants”) under the 2008 Long Term Incentive Program (the
“2008 Program”), (i)(A) if after a Change of Control (as defined in Section
3.3.7(d) hereof) the Employer or its successor requires the Executive to remain
employed for the Stay Period, (B) the Executive continues employment for the
Stay Period, and (C) the Change of Control (as defined in Section 3.3.7(d)
hereof) occurs within two (2) years after the date of grant of the 2008 Grants,
all 2008 Grants shall vest on the last day of the Stay Period; or (ii) if there
is a termination of the Employment Term under Section 3.2.5 or 3.2.6 after the
date of a Change of Control (as defined in Section 3.3.7(d) hereof), all 2008
Grants shall vest on the date of termination; or (iii) if a Change of Control
(as defined in Section 3.3.7(d) hereof) occurs two (2) or more years after the
date of grant of the 2008 Grants, all 2008 Grants shall

  

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vest on the date of the Change of Control (as defined in Section 3.3.7(d)
hereof); provided, however, that the 2008 Program remains in effect and the 2008
Grants shall not have otherwise expired in accordance with the terms thereof.
 In connection therewith, Employer agrees to use commercially reasonable efforts
to amend Executive’s 2008 Grant Agreements if necessary to effectuate the
provisions of this Section 3.3.7(c).

           (d) To the extent not determined by this Agreement, the terms and
conditions of all equity awards, including without limitation awards of
performance contingent restricted stock under the 2008 Program, shall be
determined by the Executive’s Equity Award Agreements, Grant Agreements,
Certificates of Performance Shares, and the terms of the plans and award
documents pursuant to which the equity awards were made.

           (e) “Change of Control” Defined.  A “Change of Control” of the
Employer means any of the following events, unless otherwise defined in an Award
Agreement or Grant Agreement:

                 (i) Any individual, firm, corporation or other entity, or any
group (as defined in Section 13(d)(3) of Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) becomes, directly or indirectly, the beneficial
owner (as defined in the General Rules and Regulations of the Securities and
Exchange Commission with respect to Sections 13(d) and 13(g) of the Exchange
Act) of more than twenty (20%) percent of the then outstanding shares entitled
to vote generally in the election of directors of the Employer;

                 (ii) The commencement of, or the first public announcement of
the intention of any individual, firm, corporation or other entity or of any
group (as defined in Section 13(d)(3) of the Exchange Act) to commence, a tender
or exchange offer subject to Section 14(d)(1) of the Exchange Act for any class
of the Employer’s capital stock; or

                 (iii) The stockholders of the Employer approve (A) a definitive
agreement for the merger or other business combination of the Employer with or
into another corporation pursuant to which the stockholders of the Employer do
not own, immediately after the transaction, more than fifty (50%) percent of the
voting power of the corporation that survives and is a publicly owned
corporation and not a subsidiary of another corporation, (B) a definitive
agreement for the sale, exchange or other disposition of all or substantially
all of the assets of the Employer, or (C) any plan or proposal for the
liquidation or dissolution of the Employer.

Provided, however, that a Change of Control shall not be deemed to have taken
place if beneficial ownership is acquired by, or a tender or exchange offer is
commenced or announced by, the Employer, any profit-sharing, employee ownership
or other employee benefit plan of the Employer, any trustee of or fiduciary with
respect to any such plan when acting in such capacity, or any group comprised
solely of such capacity, or any group comprised solely of such entities.

              

  

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                (iv) In determining whether a Change of Control of the Employer
has occurred, “Employer” means Par Pharmaceutical, Inc. or Par Pharmaceutical
Companies, Inc.

4.

Confidentiality/ Non-Solicitation/Non-Compete.

                       4.1 “Confidential Information” Defined.  “Confidential
Information” means any and all information (oral or written) relating to
Employer or any Subsidiary or any person controlling, controlled by, or under
common control with Employer or any Subsidiary or any of their respective
activities, including, but not limited to, information relating to:  technology;
research, test procedures and results; business strategies and plans; machinery
and equipment; manufacturing processes; financial information; products;
identity and description of materials and services used; purchasing; costs;
pricing; customers and prospects; advertising, promotion and marketing; and
selling, servicing and information pertaining to any governmental investigation,
except such information which becomes public, other than as a result of a breach
of the provisions of Section 4.2 hereof.

                      4.2 Non-disclosure of Confidential Information.  Executive
shall not at any time (other than as may be required or appropriate in
connection with the performance by him of his duties hereunder), directly or
indirectly, use, exploit, communicate, disclose or disseminate any Confidential
Information in any manner whatsoever (except as may be required under legal
process by subpoena or other court order).

                      4.3 Non-solicitation.  Executive shall not, while employed
by Employer and for a period of one (1) year following the date of termination,
directly or indirectly, hire, offer to hire, entice away or in any other manner
persuade or attempt to persuade any officer, employee, agent, lessor, lessee,
licensor, licensee, customer, prospective customer or supplier of Employer or
any of its Subsidiaries to discontinue or alter his or its relationship with
Employer or any of its Subsidiaries.

                     4.4 Injunctive Relief.  The parties hereby acknowledge and
agree that (a) Employer will be irreparably injured in the event of a breach by
Executive of any of his obligations under this Section 4; (b) monetary damages
will not be an adequate remedy for any such breach; (c) Employer will be
entitled to injunctive relief, in addition to any other remedy which it may
have, in the event of any such breach; and (d) the existence of any claims that
Executive may have against Employer, whether under this Agreement or otherwise,
will not be a defense to the enforcement by Employer of any of its rights under
this Section 4.

                     4.5 Non-exclusivity and Survival.  The covenants of
Executive contained in this Section 4 are in addition to, and not in lieu of,
any obligations that Executive may have with respect to the subject matter
hereof, whether by contract, as a matter of law or otherwise, and such covenants
and their enforceability shall survive any expiration or termination of the
Employment Term by either party and any investigation made with respect to the
breach thereof by Employer at any time.

 

  

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5.    Miscellaneous Provisions.

                  5.1 Severability.  If, in any jurisdiction, any term or
provision hereof is determined to be invalid or unenforceable, (a) the remaining
terms and provisions hereof shall be unimpaired; (b) any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction; and (c) the invalid or
unenforceable term or provision shall, for purposes of such jurisdiction, be
deemed replaced by a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or unenforceable term
or provision.

                 5.2 Execution in Counterparts.  This Agreement may be executed
in one or more counterparts, and by the two parties hereto in separate
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement (and all signatures
need not appear on any one counterpart), and this Agreement shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.

                5.3 Notices.  All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given upon
receipt when delivered by hand, overnight delivery or telecopy (with confirmed
delivery), or three (3) business days after posting, when delivered by
registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:

If to Employer, to:

Par Pharmaceutical, Inc.

300 Tice Boulevard

Woodcliff Lake, New Jersey 07677

Attention:

Chairman

Telecopy No.  201-802-4620

If to Executive, to:

Stephen Montalto

c/o Par Pharmaceutical, Inc.

300 Tice Boulevard

Woodcliff Lake, New Jersey 07677

or to such other address(es) as a party hereto shall have designated by like
notice to the other parties hereto.

               5.4 Amendment.  No provision of this Agreement may be modified,
amended, waived or discharged in any manner except by a written instrument
executed by both Par and Executive.

 

  

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              5.5 Entire Agreement.  This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof, and
supersedes all prior agreements and understandings of the parties hereto, oral
or written, with respect to the subject matter hereof, including but not limited
to the Employment Agreement dated March 2006.  Executive and Employer hereby
agree that the Employment Agreement dated March 2006 is hereby superseded and of
no further force and effect, and that this Agreement shall be effective as of
the date hereof.

             5.6 Applicable Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of New Jersey applicable to
contracts made and to be wholly performed therein.

             5.7 Headings.  The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.

             5.8 Binding Effect; Successors and Assigns.  Executive may not
delegate any of his duties or assign any of his rights hereunder.  This
Agreement shall inure to the benefit of, and be binding upon, the parties hereto
and their respective heirs, legal representatives and beneficiaries, successors
and permitted assigns.  Employer shall require any successor (whether direct or
indirect and whether by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer, by an agreement in
form and substance reasonably satisfactory to Executive, to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
Employer would be required to perform if no such transaction had taken place.

            5.9 Waiver.  The failure of either of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect the
validity of this Agreement or any provision hereof or the right of either of the
parties hereto thereafter to enforce each and every provision of this Agreement.
 No waiver of any breach of any such breach shall be construed or deemed to be a
waiver of any other or subsequent breach.

            5.10 Representations and Warranties.

            5.10.1 Capacity.  Each of Executive and Employer hereby represents
and warrants to the other that, as the case may be:  (a) he or it has full
power, authority and capacity to execute and deliver this Agreement, and to
perform his or its obligations hereunder; (b) such execution, delivery and
performance shall not (and with the giving of notice or lapse of time or both
would not) result in the breach of any agreements or other obligations to which
he or it is a party or he or it is otherwise bound or violate the law; and (c)
this Agreement is his or its valid and binding obligation enforceable in
accordance with its terms.

            5.11 Enforcement; Jurisdiction.  If any party institutes legal
action to enforce or interpret the terms and conditions of Section 4 of this
Agreement, the applicable court shall award the prevailing party reasonable
attorneys’ fees at all trial and appellate levels, and the expenses

  

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and costs incurred by such prevailing party in connection therewith, subject to
the requirements of Treas. Reg. §1.409A-3(i)(1)(iv).  Subject to Section 5.12
hereof, any legal action, suit or proceeding, in equity or at law, arising out
of or relating to this Agreement shall be instituted exclusively in the State or
Federal courts in New Jersey and each party agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that such party is not subject personally to the jurisdiction of any such
court, that the action, suit or proceeding is brought in an inconvenient forum,
that the venue of the action, suit or proceeding is improper or should be
transferred, or that this Agreement or the subject matter hereof may not be
enforced in or by any such court.  Each party further irrevocably submits to the
jurisdiction of any such court in any such action, suit or proceeding.  Any and
all service of process and any other notice in any such action, suit or
proceeding shall be effective against any party if given personally or by
registered or certified mail, return receipt requested or by any other means of
mail that requires a signed receipt, postage prepaid, mailed to such party as
herein provided.  Nothing herein contained shall be deemed to affect or limit
the right of any party to serve process in any other manner permitted by
applicable law.

            5.12 Arbitration.

           (a) Any dispute under Section 3 hereof, including, but not limited
to, a termination for Cause pursuant to Section 3.2.4 hereof, or in respect of
the breach of this Agreement, except Section 4 hereof, shall be settled by
arbitration.  The arbitration shall be accomplished in the following manner.
 Either party may serve upon the other party written demand that the dispute,
specifying the nature thereof, shall be submitted to arbitration.  Within ten
(10) days after such demand is given in accordance with Section 5.3 hereof, each
of the parties shall designate an arbitrator and provide written notice of such
appointment upon the other party.  If either party fails within the specified
time to appoint such arbitrator, the other party shall be entitled to appoint
both arbitrators.  The two (2) arbitrators so appointed shall appoint a third
arbitrator.  If the two arbitrators appointed fail to agree upon a third
arbitrator within ten (10) days after their appointment, then an application may
be made by either party hereto, upon written notice to the other party, to the
American Arbitration Association (the “AAA”), or any successor thereto,  for the
appointment of a third arbitrator, and any such appointment so made shall be
binding upon both parties hereto.

          (b) The decision of the arbitrators shall be final and binding upon
the parties.  The arbitration shall be conducted, to the extent consistent with
this Section 5.12, in accordance with the then prevailing rules of commercial
arbitration of the AAA or its successor.  The arbitrators shall have the right
to retain and consult experts and competent authorities skilled in the matters
under arbitration, but all consultations shall be made in the presence of both
parties, who shall have the full right to cross-examine the experts and
authorities.  The arbitrators shall render their award, upon the concurrence of
at least two of their number.  The decision and award shall be in writing, and
counterpart copies shall be delivered to each of the parties.  In rendering an
award, the arbitrators shall have no power to modify any of the provisions of
this Agreement, and the jurisdiction of the arbitrators is expressly limited
accordingly.  Judgment may be entered on the award of the arbitrators and may be
enforced in any court of competent jurisdiction.

  

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         5.13 Specified Employee.  Notwithstanding any other provision of this
Agreement, if the Executive is a specified employee under Treas. Reg. §1.409A-1
as of the date of termination, all payments to which the Executive would
otherwise be entitled during the first six months following the date of
termination shall be accumulated and paid on the first day of the seventh month
following the date of termination, or if earlier within thirty (30) days of the
Executive’s date of death following the date of termination.  This provision
shall not apply to all payments on separation from service that satisfy the
short-term deferral rule of Treas. Reg. §1.409A-1(b)(4), or to the portion of
the payments on separation from service that satisfy the requirements for
separation pay due to an involuntary separation from service under Treas. Reg.
§1.409A-1(b)(9)(iii), or to any payments that are otherwise exempt from the six
month delay requirement of the Treasury Regulations under Code Section 409A.

[SIGNATURE PAGE FOLLOWS]

  

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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.

PAR PHARMACEUTICAL, INC.

By:  /s/ Thomas J. Haughey

        Name: Thomas J. Haughey

        Title:   EVP, General Counsel

/s/ Stephen Montalto

Stephen Montalto

  

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AMENDMENT

TO

EMPLOYMENT AGREEMENT

March 4, 2009

Par Pharmaceutical, Inc. (“Employer”) and Stephen Montalto (“Executive”) are
parties to an Employment Agreement, dated March 4, 2008 (the “Employment
Agreement”).  Employer and Executive wish to amend the Employment Agreement, as
set forth herein (the “Amendment”) and effective as of the date set forth above
(the “Amendment Date”).  Capitalized terms used but not otherwise defined in
this Amendment shall have the same meanings as in the Employment Agreement.

NOW, THEREFORE, for good and valuable consideration and intending to be legally
bound hereby, the parties amend the Employment Agreement as follows:

1.

Section 3.3.7 of the Agreement is amended by deleting the last sentence of each
of subsections (a), (b) and (c) of Section 3.3.7 and adding a new subsection (e)
to read as follows:

(e)

Notwithstanding the provisions of Section 3.3.7(b) above, with respect to any
equity awards granted to Executive after December 31, 2008, in the event the
Employment Term is terminated (i) by Employer pursuant to Section 3.2.5 hereof
and such termination is not related to “Poor Performance” (as defined below), or
(ii) by Executive pursuant to Section 3.2.6 hereof, then all equity awards
theretofore granted to Executive shall thereupon vest and, with respect to any
outstanding option awards, Executive shall have three (3) months from such date
(or such longer period of time as may be provided in the applicable Equity Award
Agreement) to exercise any vested options; provided, however, that the relevant
equity award plan remains in effect and such equity awards shall not have
otherwise expired in accordance with the terms thereof.  For purposes of this
Agreement, “Poor Performance” shall mean Executive’s consistent failure to meet
reasonable performance expectations and goals which are established by Employer
and communicated to Executive (other than any such failure resulting from
incapacity due to physical or mental illness); provided, however, that
termination for Poor Performance shall not be effective unless at least 30 days
prior to such termination Executive shall have received written notice from the
Chief Executive Officer or the Board which specifically identifies the manner in
which Executive has not met the prescribed performance expectations and goals
and Executive shall not have corrected such failure or made substantial and
material progress in correcting such failure to the satisfaction of the Chief
Executive Officer or the Board.

  

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* * * * *

Except as expressly amended hereby, the Employment Agreement remains in full
force and effect in accordance with its terms.  Notwithstanding the foregoing,
to the extent that there is any inconsistency between the provisions of the
Employment Agreement and this Amendment, the provisions of this Amendment shall
control.  This Amendment shall be governed by and construed in accordance with
the laws of the State of New Jersey applicable to contracts made and to be
wholly performed therein.

IN WITNESS WHEREOF, the parties have executed this Amendment on March 4, 2009.

PAR PHARMACEUTICAL, INC.

By:  /s/ Thomas J. Haughey

        Name: Thomas J. Haughey

        Title:   EVP, General Counsel

EXECUTIVE

/s/ Stephen Montalto

Stephen Montalto

  

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