EXHIBIT 10.1
 
EMPLOYMENT AGREEMENT
 

EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 4, 2008, by and
between Par Pharmaceutical Companies, Inc., and Par Pharmaceutical, Inc., each a
Delaware corporation (collectively, “Par” or “Employer”), and Patrick LePore
(“Executive”).
 
RECITALS:
 
A.  WHEREAS, Executive is presently employed in the capacity of President and
Chief Executive Office of Par Pharmaceutical Companies, Inc., and as President
and Chief Executive Officer of Par Pharmaceutical, Inc. and Executive and
Employer desire that Executive continue to provide services in these capacities;
and
 
B. WHEREAS, by Agreement dated July 2007 Employer and Executive agreed upon
terms and conditions of Executive’s employment, and, accordingly Employer and
Executive desire to enter into a new Agreement in order for Executive to
continue in the afore-mentioned positions.
 
C. WHEREAS, Executive and Employer agree and acknowledge that the Agreement set
forth herein supersedes any prior and contemporaneous written or oral agreement
between the parties and that upon execution the terms and conditions set forth
herein govern Executive’s employment.
 
In consideration of the mutual promises herein contained, the parties hereto
hereby agree as follows:
 
1. Employment.
 
1.1. General. Employer hereby employs Executive effective September 26, 2007 in
the capacity of President and Chief Executive Officer of Employer at the
compensation rate and benefits set forth in Section 2 hereof for the Employment
Term (as defined in Section 3.1 hereof). Executive hereby accepts such
employment, subject to the terms and conditions herein contained. In all such
capacities, Executive shall perform and carry out such duties and
responsibilities as may be assigned to him from time to time by the Board of
Directors (the “Board”) reasonably consistent with Executive's position and this
Agreement, and shall report to the Board.
 
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.
 
1.3. Certifications. Whenever the Chief Executive Officer of Par is required by
law, rule or regulation or requested by any governmental authority or by Par's
auditors to provide certifications with respect to Par's financial statements or
filings with the Securities and Exchange Commission or any other governmental
authority, Executive shall sign such certifications as may be reasonably
requested by the Board, with such exceptions as Executive deems necessary to
make such certifications accurate and not misleading, and comply with applicable
law.
 
 
 

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2. Compensation and Benefits.
 
2.1. Salary. At all times Executive is employed hereunder, and on a retroactive
basis to June 6, 2007, 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
formed, organized or acquired by Employer, directly or indirectly (each, a
“Subsidiary” and collectively, the “Subsidiaries”), the following: (i) a base
salary at the annual rate of $800,000 (Eight Hundred Thousand Dollars), or at
such increased rate as the Board (through its Compensation and Equity Awards
Committee), in its sole discretion, may hereafter from time to time grant to
Executive (initially and as so increased, the “Base Salary”); and (ii) any
additional bonus and the benefits set forth in Sections 2.2, 2.3 and 2.4 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 or otherwise.
To the extent Executive is eligible for or awarded increased compensation
pursuant to this Section, the increase shall occur in March of each year, or at
such other time as the Compensation Committee deems appropriate.
 
2.2. Bonus.
 
2.2.1. In September, 2007, Executive shall receive a bonus in the amount of
$458,500 (four hundred fifty eight thousand five hundred dollars). For the sake
of clarity, this bonus is in lieu of and not in addition to any other bonus
payment promised to Executive as part of any prior agreement with Employer
including but not limited to any bonus referenced in Section 2.2 of the November
2006 Agreement between Employer and Executive.
 
2.2.2. 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 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.
The target amount of Executive's annual bonus shall be equal to 100% (one
hundred 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. Executive’s bonus eligibility shall be determined in March of each year,
or at such time as the Compensation Committee deems appropriate. Notwithstanding
the foregoing, for the period from September 2007 through March 2008,
Executive’s target bonus amount shall be no greater than four hundred thousand
dollars ($400,000), i.e., one-half of his annual target amount.
 
 
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2.3. Equity Awards. Executive shall be entitled to participate in long-term
incentive plans commensurate with his titles and positions, including, without
limitation, stock option, restricted stock, and similar equity plans of Employer
as may be offered from time to time. In connection herewith, Executive has been
granted eighty thousand (80,000) shares of restricted stock of Par, and options
to purchase one hundred and twenty thousand (120,000) shares of common stock of
Par on the terms and conditions set forth in the 2004 Performance Equity Plan,
as amended (the “2004 Plan”) and Executive’s Stock Option Agreement and Award
Agreement. Executive will also be eligible for one-half of his discretionary
equity grant in the first quarter of 2008, and shall be eligible for equity
grants in accordance with Employer’s regular practices thereafter, with all
grants being subject to the sole discretion of the Board.
 
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.
 
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. Life Insurance. Employer shall obtain (provided, that Executives
qualifies on a non-rated basis) a term life insurance policy, 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.
 
2.4.5. Automobile. Employer shall provide Executive with an automobile cash
allowance of one thousand and fifty dollars ($1,050) (gross) per month.
 
3. Employment Term; Termination.
 
3.1. Employment Term.  Executive's employment hereunder shall commence on the
date hereof and, except as otherwise provided in Section 3.2 hereof, shall
continue until the third (3rd) 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 third (3rd) 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 Notice of Termination (as defined in
Section 3.4.2 hereof) in respect of its or his election not to renew the
Employment Term to the other party at least ninety (90) days prior to the end of
the current Employment Term. Upon nonrenewal of the Employment Term pursuant to
this Section 3.1 or termination pursuant to Sections 3.2.1 through 3.2.6 hereof,
inclusive, Executive shall be released from any duties hereunder (except as set
forth in Section 4 hereof) and the obligations of Employer to Executive shall be
as set forth in Section 3.3 hereof only.
 
 
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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 whatsoever by giving a Notice of
Termination to Employer. The Date of Termination pursuant to 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, at its option, terminate the Employment Term 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. For purposes of this Agreement, “Disability”
means disability as defined in any long-term disability insurance policy
provided by Employer and insuring Executive, or, in the absence of any such
policy, the inability of Executive for 180 days in any consecutive twelve (12)
month period to substantially perform his duties hereunder as a result of a
physical or mental illness, all as determined in good faith by the Board.
 
3.2.4. For Cause By Employer. Employer may terminate the Employment Term for
“Cause” as determined in good faith by a majority of the Board as set forth in a
Notice of Termination to Executive specifying the reasons for termination and
the failure of the Executive to cure the same within ten (10) days after the
Executive’s receipt of the Employer Notice of Termination; provided, however,
that in the event the Board in good faith determines that the underlying reasons
giving rise to such determination cannot be cured, then the ten (10) day period
shall not apply and the Employment Term shall terminate on the date the Notice
of Termination is given. 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,
or willful misconduct, regardless of harm to the Employer or any of its
Subsidiaries or affiliates, or other conduct that is materially harmful or
detrimental to Employer or any of its Subsidiaries or affiliates; (iii) is a
material breach by Executive of this Agreement; (iv) Executive’s continuing
failure to perform such duties as are assigned to Executive by Employer in
accordance with 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 Subsidiaries or 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 Subsidiaries or affiliates given Executive's
position with Employer; and/or (vii) the commission of an act of personal
dishonesty by Executive that involves personal profit in connection with
Employer or any of its Subsidiaries or affiliates.
 
 
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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 the 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 so long as Executive has provided written notice to Employer of a
material breach (which notice shall identify the manner in which Employer has
materially breached this Agreement) within ninety (90) days of the initial
existence of the breach, and afforded Employer no less than thirty (30) days for
cure of such breach. Employer is not required to pay severance under Section
3.3.3 when Employer cures the material breach identified in Executive’s notice
within thirty (30) days of Employer’s receipt of the notice. 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 inconsistent with his positions, responsibilities and status
with Employer, or a change in Executive's reporting responsibilities, titles or
offices or any plan, act, scheme or design to constructively terminate the
Executive, or any removal of Executive from his positions with Employer, except
in connection with the termination of the Employment Term by Employer for Cause,
without Cause or Disability or as a result of Executive's death or voluntary
resignation or by Executive other than pursuant to this Section 3.2.6; (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. In connection
with Executive’s receipt of any or all monies and benefits to be received
pursuant to this Section 3.3, Executive shall not have a duty to seek subsequent
employment during the period in which he is receiving such monies and benefits
payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall not
be reduced solely as a result of Executive’s subsequent employment by an entity
other than Employer. 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 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.
 
 
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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 two (2) times his Base
Amount. For purposes hereof, “Base Amount” shall mean the sum of the 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”). The Executive shall retain all vested
benefits granted pursuant to Sections 2.3 and 2.4 hereof. The Employer shall pay
the Severance Amount in installments, and shall first determine the amount of
each installment payment if the Severance Amount were paid in equal semimonthly
installments for two (2) years (the “Installment Payment”) commencing on the
forty-fifth (45th) day after the Date of Termination. The Employer shall then
withhold and accumulate the Installment Payments 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 two (2) years after
the forty-fifth (45th) day after the Date of Termination, the Employer shall pay
the Installment Payments semimonthly. Payment of the 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 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; Non- Renewal by Executive. In the event that
the Employment Term is terminated by Executive pursuant to Section 3.2.2 hereof
or Executive elects not to renew this Agreement pursuant to Section 3.1 hereof,
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 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 plan of the Employer. In
the event Executive has elected non-renewal or has elected to separate from
Employer after a Change in Control, the Compensation and Equity Awards Committee
may choose also to consider Executive’s performance and accomplishments to the
Date of Termination, as well as the Employer’s earnings, financial condition,
rate of return on equity and compliance with regulatory requirements, as well as
the existence of an approved successor plan, in considering whether to award
Executive additional compensation upon his separation. The Executive does not
have a legal right to and is not vested in this additional compensation at any
time prior to the Date of Termination under Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”).
 
 
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3.3.4. Without Cause by Executive During Window Period. If a Change of Control
(as defined in Section 3.4.1 hereof) occurs, and the Executive continues
employment for six (6) months after the date of the Change of Control (as
defined in Section 3.4.1 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 Severance Amount, less any life
insurance and/or disability insurance received by Executive or his estate
pursuant to insurance policies provided by Employer (including without
limitation pursuant to Section 2.4.4 hereof), and Executive shall retain all
vested benefits granted pursuant to Section 2.3 hereof. In the case of death,
the Employer shall pay the 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 Severance Amount in
accordance with the payment provisions of Section 3.3.2 hereof. The Employer
shall also pay an 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 hereof, inclusive, or either Employer
or Executive elects not to renew this Agreement pursuant to Section 3.1 hereof,
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 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 hereof, 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 a period of up to eighteen (18) months
(the “Benefits Period”), subject to Executive's continued compliance with
Section 4; 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 the COBRA premiums on the forty-fifth (45th) day after
the Date of Termination.
 
 
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3.3.7. Equity Awards.
 
(a) If, within twelve (12) months following a Change of Control (as defined in
Section 3.4.1 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 have 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, as set forth in the
Notice of Termination, is not related to the Executive’s 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 3.4.1
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 3.4.1 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 3.4.1 hereof), all 2008 Grants shall vest on the
Date of Termination; or (iii) if a Change of Control (as defined in Section
3.4.1 hereof) occurs two (2) or more years after the date of grant of the 2008
Grants, all 2008 Grants shall vest on the date of the Change of Control (as
defined in Section 3.4.1 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).
 
 
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(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.
 
3.4. Definitions.
 
3.4.1. “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:
 
(a) 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;
 
(b) 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
 
(c) The stockholders of the Employer approve (i) 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, (ii) a definitive agreement for the
sale, exchange or other disposition of all or substantially all of the assets of
the Employer, or (iii) 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.
 
(d) In determining whether a Change of Control of the Employer has occurred,
“Employer” means Par Pharmaceutical, Inc. or Par Pharmaceutical Companies, Inc.
 
 
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3.4.2. “Notice of Termination” Defined. “Notice of Termination” means a written
notice that indicates the specific termination provision relied upon by Employer
or Executive and, except in the case of termination pursuant to Sections 3.2.1,
3.2.2 or 3.2.5 (other than as required under Section 3.3.2 or 3.3.6), that sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Employment Term under the termination provision so
indicated.
 
3.4.3. “Date of Termination” Defined. “Date of Termination” means such date as
the Employment Term is expired if not renewed or terminated in accordance with
Sections 3.1 or 3.2 hereof.
 
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 or entity 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, 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, communicate,
disclose or disseminate any Confidential Information in any manner whatsoever
for the benefit of any person or entity other than Employer (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. Non-Competition. Executive shall not, while employed by Employer and for a
period of one (1) year following the Date of Termination, directly or indirectly
provide any services (whether in the management, sales, marketing, public
relations, finance, research, development, general office, administrative, or
other areas) as an employee, agent, stockholder, officer, director, consultant,
advisor, investor, or other representative of Employer's competitors in the
branded or generic pharmaceutical industry in any state or country in which
Employer does or seeks to do business. Employer's competitors include any
entity, individual, or affiliate of such company or individual that develops,
sells, markets, or distributes any products that compete with or are the same or
similar to those of Employer. However, the restrictions of this Section 4.4
shall not apply if the Employment Term is terminated by Employer pursuant to
Section 3.2.5 hereof or by Executive properly pursuant to Section 3.2.6 hereof;
nor shall this Section 4.4 prohibit Executive from being a passive owner of not
more than one (1%) percent of any publicly-traded class of capital stock of any
entity engaged in a competing business.
 
 
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4.5. Injunctive Relief. The parties hereby acknowledge and agree that (a) the
type, scope and periods of restrictions imposed in Section 4 are necessary, fair
and reasonable to protect Employer's legitimate business interests and to
prevent the inevitable disclosure of Employer's Confidential Information; (b)
Employer will be irreparably injured in the event of a breach by Executive of
any of his obligations under this Section 4; (c) monetary damages will not be an
adequate remedy for any such breach; (d) 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 (e) 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.
 
4.6. 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 termination of the Employment Term by either party and any
investigation made with respect to the breach thereof by Employer at any time.
 
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 different parties hereto in separate counterparts, each
of which shall be deemed to be an original but 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:
 
 
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If to Employer, to:
 
Par Pharmaceutical, Inc.
300 Tice Boulevard
Woodcliff Lake, New Jersey 07677
Attention: Chairman
Telecopy No. 201-802-4620
 
Copy to:
 
Christine A. Amalfe, Esq.
Gibbons, P.C.
One Gateway Center
Newark, New Jersey 07102-5310
Telecopy No.: (973) 639-6230
 
If to Executive, to:
 
Patrick LePore
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.
 
5.5. Entire Agreement. This Agreement and, with respect to Section 3.3.7,
Executive's Equity Award Agreements and governing equity award plans constitute
the entire agreement of the parties hereto with respect to the subject matter
hereof, and supersede all prior agreements and understandings of the parties
hereto, oral or written, including, but not limited to, the parties' Employment
Agreements dated March 16, 2006 and July 2007. Executive and Employer hereby
agree that the Employment Agreements dated March 16, 2006 and July 2007, are
hereby superseded and of no further force and effect, and that this Agreement
shall be effective as of the date hereof. In the event of any conflict between
Section 3.3.7 hereof and Executive's Equity Award Agreements and the governing
equity award plans, Section 3.3.7 shall control.
 
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.
 
 
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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 his rights hereunder. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
legal representatives, 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, etc. 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 of the provisions of this Agreement shall be
effective unless set forth in a written instrument executed by the party against
whom or which enforcement of such waiver is sought, and no waiver of any such
breach shall be construed or deemed to be a waiver of any other or subsequent
breach.
 
5.10. Capacity, etc. Executive and Employer hereby represent and warrant 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; and (c) this Agreement is his or its valid and binding
obligation in accordance with its terms.
 
5.11. Enforcement; Jurisdiction. If any party institutes legal action to enforce
or interpret the terms and conditions of this Agreement, the applicable court
shall award the prevailing party reasonable attorneys' fees at all trial and
appellate levels, and the expenses 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, 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 located in the
State of 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.
 
 
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5.12. Arbitration.
 
(a) Any dispute under Section 3 hereof, including, but not limited to, the
determination by the Board of a termination for Cause pursuant to Section 3.2.4
hereof, or in respect of the breach thereof (other than a claim for equitable
relief) shall be settled by arbitration in New Jersey. 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, or if the AAA or its successor fails to
appoint a third arbitrator within ten (10) days after such request, then either
party may apply, with written notice to the other, to the Superior Court of New
Jersey, Bergen County, 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 party against whom the award is rendered (the “non-prevailing party”) shall
pay all fees and expenses incurred by the prevailing party in connection with
the arbitration (including fees and disbursements of the prevailing party's
counsel), as well as the expenses of the arbitration proceeding. The arbitrators
shall determine in their decision and award which of the parties is the
prevailing party, which is the non-prevailing party, the amount of the fees and
expenses of the prevailing party and the amount of the arbitration expenses. 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,
not later than thirty (30) days after the appointment of the third arbitrator.
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
having jurisdiction.
 
5.13. Specified Employee. Notwithstanding any other provision of this Agreement,
if Executive is a specified employee under Treas. Reg. §1.409A-1 as of the Date
of Termination, all payments to which Executive would otherwise be entitled
during the first six months following the date of separation from service shall
be accumulated and paid on the first day of the seventh month following the date
of separation from service, or if earlier within thirty (30) days of the
Executive’s date of death following the date of separation from service. 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 COMPANIES, INC.
       
By:
/s/ Melvin Sharoky
 
Name: Melvin Sharoky
 
Title: Chair, Compensation Committee
   
PAR PHARMACEUTICAL, INC.
   
By:
/s/ Thomas J. Haughey
 
Name: Thomas J. Haughey
 
Title: Executive Vice President and General Counsel
               
/s/ Patrick LePore
Patrick LePore

 
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