EXHIBIT 10.6.4
PAR PHARMACEUTICAL COMPANIES, INC.

TERMS OF PERFORMANCE SHARES AWARD

This document sets forth the terms of the award of Performance Shares (as
defined in Section 1.1 below) granted by PAR PHARMACEUTICAL COMPANIES, INC. (the
“Company”) pursuant to a Certificate of Performance Shares (the “Certificate”)
displayed at the website of Smith Barney Benefits Access®. The Certificate,
which specifies the person to whom the Performance Shares have been awarded (the
“Participant”), other specific details of the award, and the electronic
acceptance of the Certificate at the website of Smith Barney, are incorporated
herein by reference.
 

WHEREAS, the Board of Directors (the “Board”) of the Company has authorized and
approved the Par Pharmaceutical Companies, Inc. 2004 Performance Equity Plan
(the “Plan”), which has been approved by the stockholders of the Company;

WHEREAS, the Plan, in part, provides for the grant of Performance Shares to
certain employees of the Company and any Subsidiary of the Company;

WHEREAS, pursuant to the Plan, the Committee has approved an award to the
Participant of Performance Shares, designated in the Certificate, on the terms
and conditions set forth in the Plan and in these Terms. Capitalized terms used
but not defined in these Terms shall have the meanings set forth in the Plan.

NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
 

 1.  PERFORMANCE SHARES

 
1.1 Grant of Performance Shares.

(a) Subject to the terms and conditions hereinafter set forth and set forth in
the Plan, the Company grants as of the date of grant specified on the
Certificate (the “Date of Grant”) to the Participant shares of common stock, par
value $.01 per share (“Common Stock”), specified on the Certificate and
representing the number of shares to be awarded to the Participant in the event
that all target performance conditions set forth in Section 1.3 of these Terms
are determined to have been met (the “Target Shares”). The Target Shares are
subject to the restrictions set forth in Section 1.2 of these Terms and the
performance vesting conditions of Section 1.3 of these Terms, as well as all
other applicable terms and conditions of the Plan and these Terms. If and when
the restrictions set forth in Section 1.2 expire in accordance with these Terms,
and upon the satisfaction of all other applicable conditions as to the
Performance Shares, such shares not forfeited pursuant to Section 1.4 hereof
shall no longer be considered restricted Target Shares for purposes of these
Terms. As soon as practicable after the Date of Grant, the Company shall direct
that a stock certificate or certificates representing the applicable Target
Shares be registered in the name of, and issued to, the Participant. Such
certificate or certificates shall be held in the custody of the Company or its
designee until such Shares have vested (or such applicable portion of the Shares
as may become vested) in accordance with the schedule in Section 1.3(b). On or
before the date of acceptance of these Terms, the Participant has delivered to
the Company one or more stock powers endorsed in blank relating to the Target
Shares.
 
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(b) In addition to the Target Shares, the Participant may be awarded additional
shares of Common Stock equal to fifty percent (50%) of the Target Shares
following the completion of the Performance Cycle (as defined in Section 1.3(a)
below) in the event that the Company’s performance during the Performance Cycle
is determined to have achieved the maximum performance level set forth in
Section 1.3(b) (the “Maximum Performance Shares”).

(c) In addition to the Target Shares and the Maximum Performance Shares, the
Participant may be awarded additional shares of Common Stock equal to
twenty-five percent (25%) of the total of the Target and, if applicable, the
Maximum Performance Shares ultimately awarded and payable to the Participant
following the completion of the Performance Cycle in the event that the Company
is determined to have met or exceeded the performance conditions relative to the
S&P index set forth in Section 1.3(c) during the Performance Cycle (the “S&P
Performance Shares”). For purposes of these Terms, the Target Shares, the
Maximum Performance Shares and the S&P Performance Shares shall be referred to
collectively as the “Performance Shares.”

(d) The Maximum Performance Shares and the S&P Performance Shares granted under
these Terms shall be reflected in a bookkeeping account maintained by the
Company during the Performance Cycle. If and when the Maximum Performance Shares
and the S&P Performance Shares become payable in accordance with these Terms,
and upon the satisfaction of all other applicable conditions as to the Maximum
Performance Shares and the S&P Performance Shares, such Shares shall be settled
in cash or Shares as provided in Section 1.1(g) of these Terms and otherwise in
accordance with the Plan.

(e) Each certificate for the Target Shares shall bear the following legend (the
“Legend”):

   
The ownership and transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Par Pharmaceutical Companies, Inc. 2004 Performance Equity
Plan and the associated Terms of Performance Shares Award entered into between
the registered owner and Par Pharmaceutical Companies, Inc. Copies of such Plan
and Terms are on file in the executive offices of Par Pharmaceutical Companies,
Inc., 300 Tice Boulevard, Woodcliff Lake, NJ 07677.

 
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In addition, the stock certificate or certificates for the Target Shares shall
be subject to such stop-transfer orders and other restrictions as the Company
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which Common Stock
is then listed, and any applicable federal or state securities law, and the
Company may cause a legend or legends to be placed on such certificate or
certificates to make appropriate reference to such restrictions.

(f) As soon as administratively practicable following the vesting of all or any
portion of the Target Shares, and upon the satisfaction of all other applicable
conditions as to such vested Target Shares, including the payment by the
Participant of all applicable withholding taxes, the Company shall deliver or
cause to be delivered to the Participant a certificate or certificates for the
applicable vested Target Shares that shall not bear the Legend.

(g) Except as otherwise provided in these Terms, settlement of the Maximum
Performance Shares and the S&P Performance Shares that become payable under
these Terms shall be delivered as soon as practicable after the end of the
Performance Cycle and the determination as to whether the applicable performance
conditions have been met, and upon the satisfaction of all other applicable
conditions (including the payment by the Participant of all applicable
withholding taxes). The Maximum Performance Shares or S&P Performance Shares so
payable to the Participant shall be paid solely in shares of Common Stock,
solely in cash based on the Fair Market Value of the Common Stock, or in a
combination of the two, as determined by the Committee in its sole discretion.

1.2 Restrictions.

(a) Beginning with the Date of Grant, the Participant shall have all rights and
privileges of a stockholder as to the Target Shares, including the right to vote
and receive dividends or other distributions with respect to the Target Shares,
except that the following restrictions shall apply:

(i) the Participant shall not be entitled to delivery of the certificate or
certificates for the Target Shares until such Target Shares are deemed vested in
accordance with the schedule in Section 1.3(a), and are not otherwise forfeited
pursuant to Section 1.4 hereof and upon the satisfaction of all other applicable
conditions;

(ii)  none of the Target Shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of prior to the date such Target Shares are
deemed vested in accordance with the schedule in Section 1.3(a), except as
provided in Section 8.3 of the Plan or as otherwise permitted by the Committee
in its sole discretion or pursuant to rules adopted by the Committee in
accordance with the Plan;

(iii) all shares of Common Stock distributed as a dividend or distribution, if
any, with respect to the Target Shares prior to the date such Target Shares are
deemed vested in accordance with the schedule in Section 1.3(a) shall be
delivered to and held by the Company and subject to the same restrictions as the
related Target Shares until the vesting of such Target Shares, and subject to
the satisfaction of all other applicable conditions; and
 
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(iv) all of the Target Shares shall be subject to forfeiture on the terms and
conditions set forth in Section 1.4 hereof; if forfeited, the Target Shares
shall be returned to the Company and all rights of the Participant with respect
to the Target Shares shall terminate in their entirety on the terms and
conditions set forth in Section 1.4 hereof.

(b) The Participant shall have no rights as a stockholder of the Company by
virtue of any Maximum Performance Shares or S&P Performance Shares unless and
until such Shares become payable hereunder and resulting shares of Common Stock
are issued to the Participant. Further, none of the Maximum Performance Shares
or the S&P Performance Shares, or any interest in such Shares, may be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of unless and
until such Shares become payable hereunder and resulting shares of Common Stock
are issued to the Participant, except as may be permitted by the Plan or as
otherwise permitted by the Committee in its sole discretion or pursuant to rules
adopted by the Committee in accordance with the Plan.

(c) Any attempt to dispose of any Performance Shares or any interest in any
Performance Shares in a manner contrary to the restrictions set forth in these
Terms shall be void and of no effect.

1.3 Performance Cycle and Performance Vesting Conditions. 

(a) For purposes of this Performance Share Award, the “Performance Cycle” is the
3-year fiscal period of the Company commencing on January 1, 2008 and ending on
December 31, 2010. At the close of the Performance Cycle, the Committee shall
determine the extent to which the applicable performance conditions have been
achieved and authorize settlement of the Performance Shares to the extent such
Shares become issuable or payable as a result of such performance. Settlement of
the Performance Shares shall occur as soon as practicable thereafter, but in any
event shall be no later than March 15, 2011.

(b) The Target Shares and the Maximum Performance Shares shall vest and become
issuable or payable, as the case may be, based on the following performance
schedule:

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Performance Measure Based on Total Shareholder
Return (TSR) Annualized over 3-Year
Performance Cycle
 
Performance Level
 
Percentage of
Performance Shares
 to be Issued
 
Meet or Exceed 75th Percentile TSR for Peer Group
 
 
 
Maximum
 
 
150%
 
Meet or Exceed Median TSR for Peer Group
 
 
 
Target
 
 
100%
 
Meet or Exceed 6% TSR
 
 
 
Threshold
 
 
25%
 
Less Than 6% TSR
 
 
 
Below Threshold
 
 
0%

For purposes of the above performance schedule only, the following terms shall
have the meanings set forth below:
 
(i) “Peer Group” consists of Alpharma Inc., Angiotech Pharmaceuticals, Inc.,
Barr Pharmaceuticals, Inc., Biovail Corporation, Endo Pharmaceuticals Holdings
Inc., K-V Pharmaceutical Company, King Pharmaceuticals, Inc., Medicis
Pharmaceutical Corporation, Mylan Inc. (formerly Mylan Laboratories, Inc.),
Perrigo Company, Sciele Pharma, Inc., Shire plc, Teva Pharmaceutical Industries
Ltd., Valeant Pharmaceutical International, Warner Chilcott Limited, and Watson
Pharmaceuticals, Inc. If during the Performance Cycle a company in the Peer
Group is acquired or becomes no longer publicly traded, then that company shall
be removed from the Peer Group and shall not be factored into the performance
calculation. If more than four companies are removed from the Peer Group, the
Committee in its discretion shall approve additional companies to be added to
the Peer Group to maintain a broad comparator group.

(ii) “Total Shareholder Return” or “TSR” means the percentage equal to the
annualized appreciation in the Common Stock price determined using the average
stock price for the last three months of 2007 as the beginning point and the
average price for the last three months of 2010 as the ending point, plus
dividends (on a cumulative reinvested basis). The starting point for the
Performance Cycle is $19.58, which is the average of the Company’s Common Stock
price for the last three months of 2007.

(c) The S&P Performance Shares shall vest and become payable following the
Performance Cycle if the Company’s TSR for the Performance Cycle exceeds the
median TSR of the Standard & Poor’s 400 MidCap Index (or any equivalent index
designated by the Committee in the event that the S&P 400 MidCap Index is
replaced or otherwise no longer available during the Performance Cycle). The S&P
Performance Shares are payable only if the Company’s performance otherwise
reaches the Threshold level or above in the schedule under Section 1.3(b).
 
(d) Notwithstanding subsections (b) and (c) above, upon a “Change of Control” of
the Company, the Participant shall be deemed to have vested in a number of
Performance Shares based on the extent to which the Company has achieved the
performance conditions in this Section 1.3 as of the date of such Change in
Control (as determined by the Committee) and such Shares shall no longer be
subject to forfeiture under Section 1.4 hereof or the restrictions set forth in
Section 1.2 hereof and shall be issuable or payable, as the case may be, as soon
as practicable following the Committee’s determination. Notwithstanding the
foregoing, if the Participant is at a classification level of Senior Vice
President or above at the time of such Change in Control and the Change in
Control occurs before January 1, 2010, the Participant shall be required to
continue in the service of the successor company for a period of six (6) months
following the Change in Control in order to become vested in the applicable
number of Performance Shares determined under the preceding sentence; provided,
however, that such Participant shall be deemed fully vested in such Performance
Shares if, prior to the expiration of such six (6)-month period, the acquiring
company terminates the Participant’s employment without “Cause.” For purposes of
these Terms only, the term “Cause” shall mean (i) the Participant’s conviction
of, or plea of nolo contendere to, a crime that constitutes a felony; (ii) the
Participant’s gross misconduct that is materially and demonstrably injurious to
the Company or its successor; or (iii) the commission by the Participant of an
act of fraud or embezzlement against the Company or its successor.
 
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1.4 Forfeiture. 

(a)  Subject to the applicable provisions of this Section 1.4 and Section 1.6
hereof, if prior to the date the Performance Shares are deemed vested in
accordance with the schedule and conditions in Section 1.3, (i) the
Participant’s employment with the Company, its Affiliates and/or its
Subsidiaries is terminated for any reason other than death or disability,
including termination by reason of resignation, (ii) there occurs a material
breach of these Terms by the Participant or (iii) the Participant fails to meet
the tax withholding obligations described in Section 1.5(b) hereof, all rights
of the Participant to the Performance Shares that have not vested in accordance
with Section 1.3 hereof as of the date of such termination shall terminate
immediately and be forfeited in their entirety.

(b) In the event that the Participant’s employment with the Company, its
Affiliates and/or its Subsidiaries, is terminated due to the Participant’s death
or disability, the Participant (or, in the event of the Participant’s death, the
Participant’s Beneficiary) shall be entitled to the number of Performance Shares
that become issuable or payable in accordance with Sections 1.1(f) and (g), as
applicable, following the Performance Cycle.

(c) In the event of any forfeiture under this Section 1.4 hereof, the
certificate or certificates representing the forfeited Target Shares shall be
canceled to the extent of any Target Shares that were forfeited.

1.5 Withholding.

(a) The Committee shall determine the amount of any withholding or other tax
required by law to be withheld or paid by the Company with respect to any income
recognized by the Participant with respect to the Performance Shares.
 
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(b) The Participant shall be required to meet any applicable tax withholding
obligation in accordance with the provisions of Article 18 of the Plan.

(c) The Committee shall be authorized, in its sole discretion, to establish such
rules and procedures relating to the use of shares of Common Stock to satisfy
tax withholding obligations as it deems necessary or appropriate to facilitate
and promote the conformity of the Participant’s transactions under the Plan and
these Terms with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, if such Rule is applicable to transactions by the Participant.

1.6 Committee’s Discretion. Notwithstanding any provision of these Terms to the
contrary, the Committee shall have discretion under Section 17.1 of the Plan to
waive any forfeiture of the Performance Shares as set forth in Section 1.4
hereof, the restrictions set forth in Section 1.2 hereof and any other
conditions set forth in these Terms.
 

 2.  REPRESENTATIONS OF THE PARTICIPANT

 
The Participant hereby represents to the Company that the Participant has read
and fully understands the provisions of these Terms and the Plan and his or her
decision to participate in the Plan is completely voluntary. Further, the
Participant acknowledges that the Participant is relying solely on his or her
own advisors with respect to the tax consequences of this award.

3. NOTICES

All notices or communications under these Terms shall be in writing, addressed
as follows:
 

  To the Company:      
Par Pharmaceutical Companies, Inc.
300 Tice Boulevard
Woodcliff Lake, NJ 07677
Attention: General Counsel
      To the Participant:     Address on file with the Company

 
Any such notice or communication shall be (a) delivered by hand (with written
confirmation of receipt) or sent by a nationally recognized overnight delivery
service (receipt requested) or (b) be sent certified or registered mail, return
receipt requested, postage prepaid, addressed as above (or to such other address
as such party may designate in writing from time to time), and the actual date
of receipt shall determine the time at which notice was given.
 
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4.
ASSIGNMENT; BINDING AGREEMENT

These Terms shall be binding upon and inure to the benefit of the heirs and
representatives of the Participant and the assigns and successors of the
Company, but neither these Terms nor any rights hereunder shall be assignable or
otherwise subject to hypothecation by the Participant.

5.
ENTIRE AGREEMENT; AMENDMENT; TERMINATION

These Terms and the Certificate represent the entire agreement of the parties
with respect to the subject matter hereof. The provisions of the Plan are
incorporated in these Terms in their entirety. In the event of any conflict
between the provisions of these Terms and the Certificate and the Plan, the
provisions of the Certificate or the Plan, as the case may be, shall control.
These Terms may be amended at any time by written agreement of the parties
hereto.

6.
GOVERNING LAW

These Terms and their validity, interpretation, performance and enforcement
shall be governed by the laws of the State of Delaware other than the conflict
of laws provisions of such laws.

7.
SEVERABILITY

Whenever possible, each provision in these Terms shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of these Terms shall be held to be prohibited by or invalid under applicable
law, then (a) such provision shall be deemed amended to accomplish the
objectives of the provision as originally written to the fullest extent
permitted by law and (b) all other provisions of these Terms shall remain in
full force and effect.

8.
NO RIGHT TO CONTINUED EMPLOYMENT OR PARTICIPATION; EFFECT ON OTHER PLANS

 
These Terms shall not confer upon the Participant any right with respect to
continued employment by the Company, its Affiliates or its Subsidiaries or
continued participation under the Plan, nor shall it interfere in any way with
the right of the Company, its Affiliates and its Subsidiaries to terminate the
Participant’s employment at any time. Payments received by the Participant
pursuant to these Terms shall not be included in the determination of benefits
under any pension, group insurance or other benefit plan of the Company, its
Affiliates or any Subsidiaries in which the Participant may be enrolled or for
which the Participant may become eligible, except as may be provided under the
terms of such plans or determined by the Board.
 
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9.
NO STRICT CONSTRUCTION

No rule of strict construction shall be implied against the Company, the
Committee or any other person in the interpretation of any of the terms of the
Plan, these Terms or any rule or procedure established by the Committee.
 
10.
USE OF THE WORD “PARTICIPANT”

 
Wherever the word “Participant” is used in any provision of these Terms under
circumstances where the provision should logically be construed to apply to the
executors, the administrators, or the person or persons to whom the Performance
Shares may be transferred by will or the laws of descent and distribution, the
word “Participant” shall be deemed to include such person or persons.
 
11. 
FURTHER ASSURANCES

 
The Participant agrees, upon demand of the Company or the Committee, to do all
acts and execute, deliver and perform all additional documents, instruments and
agreements (including, without limitation, stock powers with respect to shares
of Common Stock issued as a dividend or distribution on Target Shares) that may
be reasonably required by the Company or the Committee, as the case may be, to
implement the provisions and purposes of these Terms and the Plan.

IN WITNESS WHEREOF, the parties have duly executed these Terms, as of the day
and year first above written.
 

  PAR PHARMACEUTICAL COMPANIES, INC.      
Thomas J. Haughey
Executive Vice President and General Counsel
          PARTICIPANT      
(Acceptance designated electronically at the
website of Smith Barney)

 
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