Exhibit
10.1


 


	
   

  
	
   

  
	
  CHEMRX CORPORATION

  
	
  2007 INCENTIVE
  COMPENSATION PLAN

  
	
   

  



 


 


1.                                       Purpose of the
Plan


The purpose of this 2007 Incentive Compensation Plan (the “Plan”) is to
advance the interests of the Company and its stockholders by providing a means
(a) to attract, retain, and reward directors, officers, other employees, and
persons who provide services to the Company and its Subsidiaries, (b) to link
compensation to measures of the Company’s performance in order to provide
additional incentives, including stock-based incentives and cash-based
incentives, to such persons for the creation of stockholder value, and (c) to
enable such persons to acquire or increase a proprietary interest in the
Company in order to promote a closer identity of interests between such persons
and the Company’s stockholders.  The Plan
is intended to qualify certain compensation awarded under the Plan as “performance-based”
compensation under Code Section 162(m) to the extent deemed appropriate by
the Committee which administers the Plan.


 


2.                                       Definitions


                        Capitalized terms used in
the Plan and not defined elsewhere in the Plan shall have the meaning set forth
in this Section.


 


2.1                                 “Award” means a
compensatory award made under the Plan pursuant to which a Participant
receives, or has the opportunity to receive, Shares or cash.


2.2                                 “Award
Agreement” means a written document prescribed by the Committee and provided to
a Participant evidencing the grant of an Award under the Plan.


2.3                                 “Beneficiary”
means the person(s) or trust(s) entitled by will or the laws of descent and
distribution to receive any rights with respect to an Award that survive such
Participant’s death, provided that if at the time of a Participant’s death, the
Participant had on file with the Committee a written designation of a person(s)
or trust(s) to receive such rights, then such person(s) (if still living at the
time of the Participant’s death) or trust(s) shall be the “Beneficiary” for
purposes of the Plan.


2.4                                 “Board” means
the Board of Directors of the Company.


2.5                                 “Code” means
the Internal Revenue Code of 1986, as amended, including regulations thereunder
and successor provisions and regulations thereto.


2.6                                 “Committee”
means, as appropriate, either the committee appointed by the Board to
administer the Plan or the Board, where the Board is acting as the Committee or
performing the functions of the Committee, as set forth in Section 3.


2.7                                 “Company” means
Chem Rx Corporation (formerly known as Paramount Acquisition Corp.), a company
organized under the laws of the state of Delaware.


 

















 


2.8                                  “Non-Employee
Director” means a member of the Board who is not otherwise employed by the
Company or any Subsidiary.


2.9                                 “Other Awards”
means Awards that are not Share-Based Awards.


2.10                           “Participant”
means any employee or director of the Company or any Subsidiary, or any other
individual or entity who has been granted an Award under the Plan.


2.11                           “Qualified
Member” means a member of the Committee who is a “non-employee director” of the
Company as defined in Rule 16b-3(b)(3) under the United States Securities
Exchange Act of 1934 and an “outside director” within the meaning of Regulation
§ 1.162-27 under Code Section 162(m).


2.12                           “Shares” means
common shares of the Company and such other securities as may be substituted or
resubstituted for Shares pursuant to Section 7.


2.13                           “Share-Based
Awards” means Awards that are denominated by a specified number of Shares, even
if the Award may be settled in cash or a form other than Shares.


2.14                           “Subsidiary”
means an entity that is, either directly or through one or more intermediaries,
controlled by the Company, including any entity that is a member of the Company’s
“controlled group” (as defined in Code Section 414(b) (as modified by Prop.
Treas. Reg. § 1.409A-1(b)(5)(iii)(D)), except that “Subsidiary” for the
purposes of the requirements with respect to incentive stock options shall only
mean a “subsidiary” as such term is defined in Code Section 424(f).  For purposes of this definition, a “Subsidiary”
includes any entity that becomes such on or after the effective date of this
plan.


3.                                       Administration


3.1                                 Committee.  The Compensation Committee of the Board shall
administer the Plan, unless the Board shall appoint a different committee.  At any time that a member of the Committee is
not a Qualified Member, (i) any action of the Committee relating to an Award
intended by the Committee to qualify as “performance-based compensation” within
the meaning of Code Section 162(m) and regulations thereunder may be taken by a
subcommittee, designated by the Committee or the Board, composed solely of two
or more Qualified Members, and (ii) any action relating to an Award granted or
to be granted to a Participant who is then subject to Section 16 of the
Securities Exchange Act of 1934 in respect of the Company may be taken either
by the Board, a subcommittee of the Committee consisting of two or more
Qualified Members or by the Committee but with each such member who is not a
Qualified Member abstaining or recusing himself or herself from such action,
provided that, upon such abstention or recusal, the Committee remains composed
of two or more Qualified Members.  Such
action, authorized by such a subcommittee or by the Committee upon the
abstention or recusal of such non-Qualified Member(s), shall be the action of
the Committee for purposes of the Plan. 
Other provisions of the Plan notwithstanding, the Board may perform any
function of the Committee under the Plan, and that authority specifically
reserved to the Board under the terms of the Plan, the Company’s Articles of
Incorporation, By-Laws, or applicable law shall be exercised by the Board and
not by the Committee.  The Board shall
serve as the Committee in respect of any Awards made to any Non-Employee
Director.


3.2                                   Powers and Duties of Committee.  In addition to the powers and duties
specified elsewhere in the Plan, the Committee shall have full authority and
discretion to:


 


 


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(a)                                  adopt, amend,
suspend, and rescind such rules and regulations and appoint such agents as the
Committee may deem necessary or advisable to administer the Plan;


(b)                                 correct any
defect or supply any omission or reconcile any inconsistency in the Plan and to
construe and interpret the Plan and any Award, rules and regulations, Award
Agreement, or other instrument hereunder;


(c)                                  make
determinations relating to eligibility for and entitlements in respect of
Awards, and to make all factual findings related thereto; and


(d)                                 make all other
decisions and determinations as may be required under the terms of the Plan or
as the Committee may deem necessary or advisable for the administration of the
Plan.


                        All determinations and
decisions of the Committee shall be final and binding upon a Participant or any
person claiming any rights under the Plan from or through any Participant, and
the Participant or such other person may not further pursue his or her claim in
any court of law or equity or other arbitral proceeding.


 


3.3                                 Delegation
by Committee.   Except to
the extent prohibited by applicable law or the applicable rules of a stock
exchange, or as provided in Section 5.2, the Committee may delegate in writing,
on such terms and conditions as it determines in its sole and absolute
discretion, to one or more senior executives of the Company (i) the authority
to make grants of Awards to officers (other than executive officers) and
employees of the Company and any Subsidiary and (ii) other administrative
responsibilities.  Any such delegation
may be revoked by the Committee at any time.


3.4                                 
Limitation of Liability.  Each
member of the Committee shall be entitled to, in good faith, rely or act upon
any report or other information furnished to him by any officer or other
employee of the Company or any Subsidiary, the Company’s independent certified
public accountants, or any executive compensation consultant, legal counsel, or
other professional retained by the Company to assist in the administration of
the Plan.  No member of the Committee,
nor any officer or employee of the Company acting on behalf of the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Committee and any officer or employee of the Company acting on behalf of the
Committee or members thereof shall, to the extent permitted by law, be fully
indemnified and protected by the Company with respect to any such action,
determination, or interpretation.


4.                                       Awards


4.1                                 Eligibility.  The Committee shall have the discretion to
select Award recipients from among the following categories of eligible
recipients: (i) individuals who are employees (including officers) of the
Company or any Subsidiary, (ii) Non-Employee Directors, (iii) any other
individual or entity who provides substantial personal services to the Company
or any Subsidiary, and (iv) any individual who has agreed to become an employee
of the Company or a Subsidiary, provided that no such person may receive any
payment or exercise any right relating to an Award until such person has
commenced employment.  Notwithstanding
the foregoing, incentive stock options may only be granted to employees of the
Company or any Subsidiary.


4.2                                 Type of
Awards.  The Committee shall have the
discretion to determine the type of Awards to be granted under the Plan.  Such Awards may be in a form payable in
either Shares or cash, including, but not limited to, Shares that are, or are
not, subject to transfer restrictions and a risk of forfeiture, options to purchase
Shares (including those qualifying as incentive stock options within the 


 


 


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meaning of Code Section 422 and options not so qualifying), stock
appreciation rights, Share units, performance units and dividend
equivalents.  The Committee is authorized
to grant Awards as a bonus, or to grant Awards in lieu of obligations of the
Company or any Subsidiary to pay cash or grant other awards under other plans
or compensatory arrangements, to the extent permitted by such other plans or
arrangements.  Shares issued pursuant to
an Award in the nature of a purchase right (e.g., options) shall be
purchased for such consideration, paid for at such times, by such methods, and
in such forms, including cash, Shares, other Awards, or other consideration, as
the Committee shall determine.


4.3                                 Terms
and Conditions of Awards.  The Committee
shall determine the size of each Award to be granted (including, where
applicable, the number of Shares to which an Award will relate), and all other
terms and conditions of each such Award (including, but not limited to, any
exercise price, grant price, or purchase price, any restrictions or conditions
relating to transferability, forfeiture, exercisability, or settlement of an
Award, and any schedule or performance conditions for the lapse of such
restrictions or conditions, and accelerations or modifications thereof, based
in each case on such considerations as the Committee shall determine).  The Committee may determine whether, to what extent,
and under what circumstances an Award may be settled, or the exercise price of
an Award may be paid, in cash, Shares, other Awards, or other consideration, or
an Award may be canceled, forfeited, or surrendered.  The right of a Participant to exercise or
receive a grant or settlement of any Award, and the timing thereof, may be
subject to such performance conditions as may be specified by the
Committee.  The Committee may use such
business criteria and measures of performance as it may deem appropriate in
establishing performance conditions, and may exercise its discretion to reduce
or increase the amounts payable under any Award subject to performance
conditions, except as limited under Section 5.1 in the case of a Performance
Award intended to qualify under Code Section 162(m).


4.4                                 Stand-Alone,
Additional, Tandem, and Substitute Awards.  Subject to Section 4.4, Awards granted under
the Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, any Subsidiary, or any
business entity to be acquired by the Company or a Subsidiary, or any other
right of a Participant to receive payment from the Company or any Subsidiary,
and in granting a new Award, the Committee may determine that the value of any
surrendered Award or award may be applied to reduce the exercise price of any
option or appreciation right or purchase price of any other Award.


4.5                                 Incentive
Stock Options and Other Tandem Awards.  Notwithstanding any other provision of this
Plan, the exercise price for an option that is intended to be an incentive
stock option, or a stock appreciation right granted in tandem with an incentive
stock option, shall not be less than the fair market value of the underlying
shares on the date of grant. 
Additionally, if at the time of grant of an option that is intended to
be an incentive stock option, or a stock appreciation right granted in tandem
with an incentive stock option, the participant is an individual who
(considering the stock attribution rules described in Code 424(d)) owns stock
possessing more than 10% of the total combined voting power of all classes of
the stock of the Company or any Subsidiary (a “10% shareholder”), the exercise
price of the incentive stock option, and any stock appreciation right granted
in tandem thereto, shall not be less than 110% of the fair market value of the
underlying shares on the date of grant. 
No option that is intended to be an incentive stock option, or a stock
appreciation right granted in tandem with an incentive stock option, can be
exercised after the expiration of 10 years from the date of grant (five years
from the date of grant in the event of an incentive stock option or related
stock appreciation right granted to a 10% shareholder).  Furthermore, an incentive stock option, or a
stock appreciation right granted in tandem with an incentive stock option, may
not be first exercisable in a calendar year for Shares having a fair market
value (determined as of the date of grant) exceeding $100,000.  If the limitation is exceeded, the applicable
number of options that exceed the limitation shall be treated as nonqualified
stock options.


 


 


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5.                                       Performance
Awards


5.1                                 Performance
Awards Granted to Designated Covered Employees.  If the Committee determines that an Award to
be granted to an eligible person who is designated by the Committee as likely
to be a Covered Employee (as defined below) should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise, and/or
settlement of such Award (a “Performance Award”) shall be contingent upon
achievement of preestablished performance goals and other terms set forth in
this Section 5.1.  This Section 5.1 shall
not apply to Awards that otherwise qualify as “performance-based compensation”
by reason of Regulation §1.162-27(e)(2)(vi) (relating to certain stock options
and stock appreciation rights).


                                                (a)                                  Performance
Goals Generally.  The
performance goals for such Performance Awards shall consist of one or more
business criteria and a targeted level or levels of performance with respect to
each such criteria, as specified by the Committee consistent with this Section
5.1. Performance goals shall be objective and shall otherwise meet the
requirements of Code Section 162(m) and regulations thereunder (including
Regulation §1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being “substantially uncertain.”  The Committee may determine that such
Performance Awards shall be granted, exercised, and/or settled upon achievement
of any one performance goal or that two or more of the performance goals must
be achieved as a condition to grant, exercise, and/or settlement of such
Performance Awards.  Performance goals
may differ for Performance Awards granted to any one Participant or to
different Participants.


 


                                                (b)                                 Business
Criteria.  The
performance goals for Performance Awards shall be based exclusively on one or
more of the following individual, corporate-wide or subsidiary, division or
operating unit financial measures:


                                                                                                                                                                                                (1)                                  pre-tax
or after-tax net income,


 


                                                                                                                                                                                                (2)                                  pre-tax or
after-tax operating income,


 


                                                                                                                                                                                                (3)                                  gross revenue,


 


                                                                                                                                                                                                (4)                              profit margin,


 


                                                                                                                                                                                                (5)                                  stock price
(including market capitalization),


 


                                                                                                                                                                                                (6)                                cash flow(s),


 


                                                                                                                                                                                                (7)                                  market share,


 


                                                                                                                                                                                                (8)                                  pre-tax or
after-tax earnings per share,


 


                                                                                                                                                                                                (9)                                  pre-tax or
after-tax operating earnings per share,


 


                                                                                                                                                                                                (10)                            expenses,


 


                                                                                                                                                                                                (11)                            return on
equity,


 


                                                                                                                                                                                                (12)                            strategic
business criteria, consisting of one or more objectives based on meeting
specified revenue, market penetration, geographic business 


 


 


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expansion goals, cost
targets, goals relating to acquisitions or divestitures, clinical goals,
distribution and development goals, sales force goals and strategic alliance
goals,


 


or any combination thereof (in each case before or after such objective
income and expense allocations or adjustments as the Committee may specify
within the period set forth in Section 5.1(c)). 
Each such goal may be expressed on an absolute and/or relative basis, may
be based on or otherwise employ comparisons based on current internal targets
and/or the past performance of the Company (including the performance of one or
more subsidiaries, divisions and/or operating units), and in the case of
earnings-based measures, may use or employ comparisons relating to capital
(including, but limited to, the cost of capital), shareholders’ equity and/or
shares outstanding, or to assets or net assets.


 


                                                (c)                                  Performance
Period; Timing for Establishing Performance Award Terms.  Achievement of performance goals in respect
of such Performance Awards shall be measured over a performance period of up to
ten years, as specified by the Committee. 
Performance goals, amounts payable upon achievement of such goals, and
other material terms of Performance Awards shall be established by the
Committee (i) while the performance outcome for that performance period is
substantially uncertain and (ii) no more than 90 days after the commencement of
the performance period to which the performance goal relates or, if less, the
number of days which is equal to 25 percent of the relevant performance period.


 


                                                (d)                                 Performance
Award Pool.  The
Committee may establish a Performance Award pool, which shall be an unfunded
pool, for purposes of measuring performance of the Company in connection with
Performance Awards.  The amount of such
Performance Award pool shall be based upon the achievement of a performance
goal or goals based on one or more of the business criteria set forth in
Section 5.1(b) hereof during the given performance period, as specified by
the Committee in accordance with Section 5.1(c) hereof. The Committee may
specify the amount of the Performance Award pool as a percentage of any of such
business criteria, a percentage thereof in excess of a threshold amount, or as
another amount which need not bear a strictly mathematical relationship to such
business criteria.  In such case,
Performance Awards may be granted as rights to payment of a specified portion
of the Award pool, and such grants shall be subject to the requirements of Section
5.1(c).


 


                                                (e)                                  Settlement
of Performance Awards; Other Terms.  Settlement of such Performance Awards shall
be in cash, Shares, or other Awards, in the discretion of the Committee.  The Committee may, in its discretion, reduce
the amount of a settlement otherwise to be made in connection with such
Performance Awards, but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of a Performance Award subject to this
Section 5.1.  The Committee shall specify
the circumstances in which such Performance Awards shall be paid or forfeited
in the event of termination of employment by the Participant prior to the end
of a performance period or settlement of Performance Awards.


 


                                                (f)                                    Impact
of Extraordinary Items Or Changes In Accounting.  To the extent applicable, the determination
of achievement of performance goals for Performance Awards shall be made in
accordance with U.S generally accepted accounting principles (“GAAP”) and a
manner consistent with the methods used in the Company’s audited financial
statements, and, unless the Committee decides otherwise within the period
described in Section 5.1(c), without regard to (i) extraordinary items as
determined by the Company’s independent public accountants in accordance with
GAAP, (ii) changes in accounting methods, or (iii)  non-recurring acquisition expenses and
restructuring charges.  Notwithstanding
the foregoing, in calculating operating earnings or operating income (including
on a per share basis), the Committee may, within the period described in
Section 5.1(c), provide that such calculation shall be made on the same basis
as reflected in a release of the 


 


 


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Company’s earnings for a previously completed period as specified by
the Committee.


 


5.2                                 Written
Determinations. 
Determinations by the Committee as to the establishment of performance
goals, the amount potentially payable in respect of Performance Awards, the
achievement of performance goals relating to Performance Awards, and the amount
of any final Performance Award shall be recorded in writing.  Specifically, the Committee shall certify in
writing, in a manner conforming to applicable regulations under Code Section
162(m), prior to settlement of each Performance Award, that the performance
goals and other material terms of the Performance Award upon which settlement
of the Performance Award was conditioned have been satisfied.  The Committee may not delegate any
responsibility relating to such Performance Awards, and the Board shall not
perform such functions at any time that the Committee is composed solely of
Qualified Members.


5.3                                   Status of Section 5.1 Awards under Code Section 162(m).  It is the intent of the Company that
Performance Awards under Section 5.1 constitute “performance-based
compensation” within the meaning of Code Section 162(m) and regulations
thereunder.  Accordingly, the terms of
Sections 5.1, 5.2 and 5.3, including the definitions of Covered Employee
and other terms used therein, shall be interpreted in a manner consistent with
Code Section 162(m) and regulations thereunder.  The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will be a
Covered Employee with respect to a fiscal year that has not yet been completed,
the term “Covered Employee” as used herein shall mean only a person designated
by the Committee, at the time of grant of a Performance Award, as likely to be
a Covered Employee with respect to a specified fiscal year.  If any provision of the Plan as in effect on
the date of adoption of any agreements relating to Performance Awards does not
comply or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.


6.                                       Limitations on
Awards


6.1                                 Aggregate
Number of Shares Available for Awards.  The maximum aggregate number of Shares that
may be delivered to Participants or their Beneficiaries pursuant to all Awards
granted under the Plan shall be 1,350,000, and not more than 1,350,000 Shares
shall be available for incentive stock options. 
Awards made under this Plan which are forfeited (including a repurchase or
cancellation of Shares subject thereto by the Company in exchange for the
price, if any, paid to the Company for such Shares, or for their par or other
nominal value), cancelled or have expired, without issuance or vesting of the
Shares, shall be disregarded for purposes of the preceding sentence.


6.2                                 Per
Participant Limitation on Share-Based Awards.  In any calendar year, no Participant may be
granted Awards that relate to more than 1,000,000 Shares. This Section 6.2
shall apply only with respect to Awards that are denominated by a specified number
of Shares, even if the Award may be settled in cash or a form other than
Shares. If the number of Shares ultimately payable in respect of an Award is a
function of future achievement of performance targets, then for purposes of
this limitation, the number of Shares to which such Award relates shall equal
the number of Shares that would be payable assuming maximum performance was
achieved.


6.3                                 Per
Participant Limitation on Other Awards.  In any calendar year, no Participant may be
granted Awards not otherwise described in Section 6.2 that can be settled for
cash, Shares or other consideration having a value in excess of $1,000,000.


 


 


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7.                                       Adjustments


                        In the event of
any change in the outstanding Shares by reason of any Share dividend or split,
reorganization, recapitalization, merger, amalgamation, consolidation,
spin-off, combination or exchange of Shares, repurchase, liquidation,
dissolution or other corporate exchange, any large, special and non-recurring
dividend or distribution to stockholders, or other similar corporate
transaction, the Committee shall make such substitution or adjustment, if any,
as is equitable and appropriate in order to preserve, without enlarging, the
rights of Participants, as to (i) the number and kind of Shares which may
be delivered pursuant to Sections 6.1 and 6.2, (ii) the number and kind of
Shares subject to or deliverable in respect of outstanding Awards, and
(iii) the exercise price, grant price or purchase price relating to any
Award.  In addition, the Committee shall
make such equitable and appropriate adjustments in the terms and conditions of,
and the criteria included in, Awards (including cancellation of Awards in
exchange for the intrinsic (i.e., in-the-money) value, if any, of the vested
portion thereof, substitution of Awards using securities or other obligations
of a successor or other entity, acceleration of the expiration date for Awards,
or adjustment to performance goals in respect of Awards) in recognition of
unusual or nonrecurring events (including events described in the preceding
sentence, as well as acquisitions and dispositions of businesses and assets)
affecting the Company, any Subsidiary or any business unit, or the financial
statements of the Company or any Subsidiary, or in response to changes in
applicable laws, regulations, or accounting principles.  Notwithstanding the foregoing, if any such
event will result in the acquisition of all or substantially all of the Company’s
outstanding Shares, then if the document governing such acquisition (e.g.,
merger agreement) specifies the treatment of outstanding Awards, such treatment
shall govern without the need for any action by the Committee.


 


8.                                       General
Provisions


8.1                                 Compliance
with Laws and Obligations.  The
Company shall not be obligated to issue or deliver Shares in connection with
any Award or take any other action under the Plan in a transaction subject to
the registration requirements of any applicable securities law, any requirement
under any listing agreement between the Company and any securities exchange or
automated quotation system, or any other law, regulation, or contractual
obligation of the Company, until the Company is satisfied that such laws,
regulations, and other obligations of the Company have been complied with in
full.  Certificates representing Shares
issued under the Plan will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations, and other
obligations of the Company, including any requirement that a legend or legends
be placed thereon.


8.2                                 Limitations
on Transferability.  Awards and
other rights under the Plan will not be transferable by a Participant except to
a Beneficiary in the event of the Participant’s death (to the extent any such
Award, by its terms, survives the Participant’s death), and, if exercisable,
shall be exercisable during the lifetime of a Participant only by such
Participant or his guardian or legal representative; provided, however,
that such Awards and other rights (not including incentive stock options or
stock appreciation rights granted in tandem with incentive stock options) may
be transferred during the lifetime of the Participant, for purposes of the
Participant’s estate planning or other purposes consistent with the purposes of
the Plan (as determined by the Committee), and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent permitted by the Committee. 
Awards and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims
of creditors.  A Beneficiary, transferee,
or other person claiming any rights under the Plan from or through any
Participant shall be subject to all terms and conditions of the Plan and any
Award Agreement applicable to such Participant, except as otherwise determined
by the Committee, and to any additional terms and conditions deemed necessary
or appropriate by the Committee.


 


 


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8.3                                 No
Right to Continued Employment; Leaves of Absence.  Neither the Plan, the grant of any Award, nor
any other action taken hereunder shall be construed as giving any employee,
consultant, director, or other person the right to be retained in the employ or
service of the Company or any of its Subsidiaries (for the vesting period or
any other period of time), nor shall it interfere in any way with the right of
the Company or any of its Subsidiaries to terminate any person’s employment or
service at any time.  Unless otherwise
specified in the applicable Award Agreement, (i) an approved leave of absence
shall not be considered a termination of employment or service for purposes of
an Award under the Plan, and (ii) any Participant who is employed by or
performs services for a Subsidiary shall be considered to have terminated
employment or service for purposes of an Award under the Plan if such
Subsidiary is sold or no longer qualifies as a Subsidiary of the Company,
unless such Participant remains employed by the Company or another Subsidiary.


8.4                                 Taxes.  The Company and any Subsidiary are authorized
to withhold from any delivery of Shares in connection with an Award, any other
payment relating to an Award, or any payroll or other payment to a Participant,
amounts of withholding and other taxes due or potentially payable in connection
with any transaction involving an Award, and to take such other action as the
Committee may deem advisable to enable the Company, its Subsidiaries and
Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. 
This authority shall include authority to withhold or receive Shares or
other consideration and to make cash payments in respect thereof in
satisfaction of withholding tax obligations.


8.5                                 Changes
to the Plan and Awards.  The
Board may amend, suspend, discontinue, or terminate the Plan or the Committee’s
authority to grant Awards under the Plan without the consent of stockholders or
Participants, except that any amendment shall be subject to the approval of the
Company’s stockholders at or before the next annual meeting of stockholders for
which the record date is after the date of such Board action if such
stockholder approval is required by any applicable law, regulation or stock
exchange rule, and the Board may otherwise, in its discretion, determine to
submit other such amendments to stockholders for approval.  Notwithstanding the foregoing, without the
consent of an affected Participant, no such action may materially impair the
rights of such Participant under any Award theretofore granted except as
provided under Section 8.14.  The
Committee may amend, suspend, discontinue, or terminate any Award theretofore
granted and any Award Agreement relating thereto; provided, however,
that, without the consent of an affected Participant, no such action may
materially impair the rights of such Participant under such Award except as
provided under Section 8.14.  Any action
taken by the Committee pursuant to Section 7 shall not be treated as an action
described in this Section 8.5.


8.6                                 No
Right to Awards; No Stockholder Rights.  No Participant or other person shall have any
claim to be granted any Award under the Plan, and there is no obligation for
uniformity of treatment of Participants, employees, consultants, or
directors.  No Award shall confer on any
Participant any of the rights of a stockholder of the Company unless and until
Shares are duly issued or transferred and delivered to the Participant in
accordance with the terms of the Award.


8.7                                 Unfunded
Status of Awards; Creation of Trusts.  The Plan is intended to constitute an “unfunded”
plan for incentive compensation.  With
respect to any payments not yet made to a Participant pursuant to an Award,
nothing contained in the Plan or any Award shall give any such Participant any
rights that are greater than those of a general creditor of the Company; provided,
however, that the Committee may authorize the creation of trusts or make
other arrangements to meet the Company’s obligations under the Plan to deliver
cash, Shares, other Awards, or other consideration pursuant to any Award, which
trusts or other arrangements shall be consistent with the “unfunded” status of
the Plan unless the Committee otherwise determines.


 


 


9

















 


8.8                                 Nonexclusivity
of the Plan.  Neither the
adoption of the Plan by the Board nor the submission of the Plan or of any
amendment to stockholders for approval shall be construed as creating any
limitations on the power of the Board to adopt such other compensatory
arrangements as it may deem desirable, including the granting of awards
otherwise than under the Plan, and such arrangements may be either applicable
generally or only in specific cases.


8.9                                 Successors
and Assigns.  The Plan
and Award Agreements may be assigned by the Company to any successor to the
Company’s business.  The Plan and any
applicable Award Agreement shall be binding on all successors and assigns of
the Company and a Participant, including any permitted transferee of a
Participant, the Beneficiary or estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant’s creditors.


8.10                           Governing
Law. The Plan and all Award Agreements shall be governed by and construed
in accordance with the laws of the New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York, except to the extent
Delaware Corporation Law applies by reason of the Company’s incorporation in
the State of Delaware.


8.11                           Severability
of Provisions.  If any
provision of the Plan shall be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions hereof, and the Plan
shall be construed and enforced as if such provisions had not been included.


8.12                           Plan
Termination.  The Board
may terminate the Plan at any time.  Upon
any such termination of the Plan, no new authorizations of grants of Awards may
be made, but then-outstanding Awards shall remain outstanding in accordance with
their terms, and the Committee otherwise shall retain its full powers under the
Plan with respect to such Awards.


8.13                           Effective
Date of Plan.  The Plan is
effective on October 26, 2007, the date of adoption by the Board, contingent,
however, on the approval of the Plan by the Company’s shareholders within 12
months of such date.  Awards may be
granted under the Plan as of the effective date, provided that no Award shall
be effective, exercisable, vested, earned or payable unless the Company’s
shareholders approve the Plan within 12 months of the Board’s adoption of the
Plan.  No Award may be granted under this
Plan on or after 10 years following the effective date of the Plan.  Awards granted before that date shall remain
valid in accordance with their terms.  No
Awards that are intended to constitute Performance Awards under Section 162(m)
of the Code shall be made on any date to a Covered Employee, unless the
requirements of Treas. Reg. § 1.162-27(e)(4)(vi) (regarding shareholder
approval of the material terms of the performance goal) have been satisfied.


8.14                           Code
Section 409A.  It is
intended that Awards granted under the Plan shall either be exempt from, or
comply with, the requirements of Code Section 409A.  Accordingly, notwithstanding any other provision
hereof, the Committee may amend any outstanding Award without Participant’s
consent if, as determined by the Committee in its sole discretion, such
amendment is required to either (i) comply with Code Section 409A or (ii)
prevent the Participant from being subject to any tax or penalty under Code
Section 409A.  Notwithstanding the
foregoing, however, neither the Company nor any of its Subsidiaries nor the
Committee shall be liable to a Participant if an Award is subject to Code
Section 409A or the Participant otherwise is subject to any additional tax or
penalty under Code Section 409A.  Each
Participant is solely responsible for the payment of any tax liability
(including any taxes and penalties that may arise under Code Section 409A) that
may result from any Award.


 


 


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Exhibit Index


 




	
  2.1

  	
   

  	
  Stock Purchase Agreement, dated as of June 1, 2007, by and among
  Paramount, Chem Rx and the Sellers (incorporated by reference to Exhibit 2.1
  of the Current Report on Form 8-K filed by Paramount on June 1, 2007)

  
	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Amendment to the Stock Purchase Agreement, dated as of October 8,
  2007, by and among Paramount, Chem Rx and the Sellers (incorporated by
  reference to Exhibit 2.1 of the Current Report on Form 8-K filed by Paramount
  on October 10, 2007)

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Amended and Restated Certificate of Incorporation of the Company

  
	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Amended and Restated Bylaws of the Company

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Voting Agreement, dated as of October 26, 2007, by and among the
  Company and the individuals party thereto.

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Chem Rx Corporation 2007 Incentive Compensation Plan, dated as of
  June 1, 2007

  
	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  New Jersey Merger Agreement, dated as of June 15, 2007, by and among
  Paramount, Paramount Merger Sub (NJ), Inc., ChemRx New Jersey, LLC, Chem Rx,
  and the members of ChemRx New Jersey, LLC (incorporated by reference to
  Exhibit 10.3 of the Current Report on Form 8-K filed by Paramount on June 15,
  2007)

  
	
   

  	
   

  	
   

  
	
  10.3

  	
   

  	
  Registration Rights Agreement, dated as of October 26, 2007, by and
  among the Company and the Sellers

  
	
   

  	
   

  	
   

  
	
  10.4

  	
   

  	
  Executive Employment Agreement between the Company and Jerry Silva,
  dated as of June 1, 2007 (incorporated by reference to Exhibit 10.1 of the
  Current Report on Form 8-K filed by Paramount on June 1, 2007)

  
	
   

  	
   

  	
   

  
	
  10.5

  	
   

  	
  Executive Employment Agreement between the Company and Steven Silva,
  dated as of June 1, 2007 (incorporated by reference to Exhibit 10.2 of the
  Current Report on Form 8-K filed by Paramount on June 1, 2007)

  
	
   

  	
   

  	
   

  
	
  10.6

  	
   

  	
  Executive Employment Agreement between the Company and Chuck Kelly,
  dated as of June 15, 2007 (incorporated by reference to Exhibit 10.1 of the
  Current Report on Form 8-K filed by Paramount on June 15, 2007)

  
	
   

  	
   

  	
   

  
	
  10.7

  	
   

  	
  Executive Employment Agreement between the Company and Michael Segal,
  dated as of June 15, 2007 (incorporated by reference to Exhibit 10.2 of the
  Current Report on Form 8-K filed by Paramount on June 15, 2007)

  
	
   

  	
   

  	
   

  
	
  10.8

  	
   

  	
  Unit Purchase Agreement, dated as of October 1, 2007, by and between
  Benny Salerno and B.J.K. Inc.

  
	
   

  	
   

  	
   

  
	
  10.9

  	
   

  	
  First Lien Credit and Guaranty Agreement, dated as of October 26, 2007,
  by and among Chem Rx Corporation, certain subsidiaries of Chem Rx Corporation
  as Guarantors, various lenders parties thereto, CIBC World Markets Corp. as
  Sole Lead Arranger and Sole Book Runner, and Canadian Imperial Bank of
  Commerce, New York Agency as Administrative Agent and Collateral Agent

  






 

















 


 




	
   

  	
   

  	
   

  
	
  10.10

  	
   

  	
  Second Lien Credit and Guaranty Agreement, dated as of October 26,
  2007, by and among Chem Rx Corporation, certain subsidiaries of Chem Rx
  Corporation as Guarantors, various lenders parties thereto, CIBC World
  Markets Corp. as Sole Lead Arranger and Sole Book Runner, and Canadian
  Imperial Bank of Commerce, New York Agency as Administrative Agent and
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
  10.11

  	
   

  	
  First Lien and Pledge and Security Agreement, dated as of October 26,
  2007, among Chem Rx Corporation, certain subsidiaries of Chem Rx Corporation
  as Grantors, and Canadian Imperial Bank of Commerce, New York Agency, as the
  Collateral Agent

  
	
   

  	
   

  	
   

  
	
  10.12

  	
   

  	
  Second Lien and Pledge and Security Agreement, dated as of October
  26, 2007, among Chem Rx Corporation, certain subsidiaries of Chem Rx
  Corporation as Grantors, and Canadian Imperial Bank of Commerce, New York
  Agency, as the Collateral Agent

  
	
   

  	
   

  	
   

  
	
  10.13

  	
   

  	
  Subordinated Note, dated as of October 26, 2007, by and between Chem
  Rx Corporation and Jerry Silva

  
	
   

  	
   

  	
   

  
	
  10.14

  	
   

  	
  Subordinated Note, dated as of October 26, 2007, by and between Chem
  Rx Corporation and Steven Silva

  
	
   

  	
   

  	
   

  
	
  10.15

  	
   

  	
  Subordinated Note, dated as of October 26, 2007, by and between Chem
  Rx Corporation and Jerry Silva, as Life Tenant, and Steven Silva, as
  Remainderman

  
	
   

  	
   

  	
   

  
	
  10.16

  	
   

  	
  Subordinated Note, dated as of October 26, 2007, by and between Chem
  Rx Corporation and The Jody R. Silva Trust

  
	
   

  	
   

  	
   

  
	
  10.17

  	
   

  	
  Subordinated Note, dated as of October 26, 2007, by and between Chem
  Rx Corporation and The Jerry Silva 2007 Annuity Trust

  
	
   

  	
   

  	
   

  
	
  10.18

  	
   

  	
  MHA 2000 Member Agreement, dated as of July 5, 1995, between Managed
  Healthcare Associates, Inc. of Florham Park, NJ and B.J.K. Inc.

  
	
   

  	
   

  	
   

  
	
  10.19

  	
   

  	
  Participating Provider Agreement, dated as of May 16, 2005, as
  amended on September 12, 2005 and January 1, 2006, by and between MHA Long
  Term Care Network, Inc. and B.J.K. Inc.

  
	
   

  	
   

  	
   

  
	
  10.20

  	
   

  	
  Second Amended and Restatement Lease Agreement, dated as of October
  26, 2007, by and between 750 Park Place Realty Co., LLC and B.J.K. Inc.

  
	
   

  	
   

  	
   

  
	
  10.21

  	
   

  	
  Guaranty of Lease, dated as of October 26, 2007, by and between the
  Company and 750 Park Place Realty Co., LLC

  
	
   

  	
   

  	
   

  
	
  10.22

  	
   

  	
  Prime Vendor Agreement, dated as of April 1, 2007, between
  AmersourceBergen Drug Corporation (“ABDC”) and B.J.K. Inc.

  
	
   

  	
   

  	
   

  
	
  10.23

  	
   

  	
  Amendment to Prime Vendor Agreement, dated October 26, 2007, between
  ABDC, B.J.K. Inc., ChemRx NJ and ChemRx/Salerno’s, LLC

  
	
   

  	
   

  	
   

  
	
  99.1

  	
   

  	
  Press release, dated October 26, 2007

  






 


 


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