Document:

<PAGE>

                                                                 Exhibit 10.15.3

Record and Return to:
Clinton A. Poff, Esq.
Poff & Bowman LLC
P.O. Box 24
Hawthorne, New Jersey 07507

                        MORTGAGE MODIFICATION AGREEMENT
                        -------------------------------

     This Agreement made as of the first day of May 2001 between

     PAR PHARMACEUTICAL, INC., a New Jersey corporation, located at 1 Ram Ridge
Road, Spring Valley, New York 10977 (the "Borrower"); and

     HUDSON UNITED BANK, a New Jersey corporation, having its administrative
headquarters at 1000 MacArthur Boulevard, Mahwah, New Jersey 07430, successor in
interest to Urban National Bank (the "Bank");

                              W I T N E S S E T H:
                              -------------------

     WHEREAS:

     A.   The Borrower executed and delivered to the Bank its promissory note in
the original principal amount of $1,340,000.00 dated May 4, 1994 (the "Note");

     B.   Such Note is secured by a mortgage dated May 4, 1994 on property
commonly known as 2 Ram Ridge Road, shown and designated as Lot 1 on a certain
map entitled "Subdivision Map Prepared For Ramapo Development Assoc., Town of
Ramapo, Rockland County, New York," made by Ostertag & McDougall, Surveyors,
dated August 9, 1974, last revised December 20, 1974, and filed in the Rockland
County Clerk's Office on January 14, 1975 as Map No. 4585, which mortgage was
recorded in the Rockland County Registrar's Office on May 13, 1994 in Liber 708
Page 1803, etc (the "Mortgage");

     C.   The outstanding principal balance of the mortgage obligation is
$876,662.81; and

     D.   The Borrower has requested and the Bank has agreed to extend the
maturity date of the Note secured by the Mortgage from "May 1, 2001" to "May 1,
2014" and to make certain other modifications and amendments to the Note and
Mortgage as set forth herein.

     NOW, THEREFORE, in consideration of the above premises and for other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties agree as follows:

     1.   Notwithstanding anything to the contrary set forth in the Mortgage,
the maturity date of the Note is changed from "May 1, 2001" to "May 1, 2014."

     2.   Further, the interest rate payable on the Note for the period from May
1, 2001 through and including April 30, 2006 shall be eight and one-half (8-1/2)
percent; commencing May 1, 2006 through and including April 30, 2011 the
interest rate payable on the Note shall be at a fixed rate of interest equal to
325 basis points above the interest rate charged by the Federal Home Loan Bank
Board of New York on mortgage loans having a maturity of five (5) years rounded
up to the nearest one-eighth of one (1/8) percent in effect forty-five (45) days
before May 1, 2006; and commencing from May 1, 2011 and continuing until the
Note is paid in full the interest rate payable on the Note shall be at a fixed
rate of interest equal to 325 basis points above the interest rate charged by
the Federal Home Loan Bank Board of New York on mortgage loans having a maturity
of five (5) years rounded up to the nearest one-eighth of one (1/8) percent in
effect forty-five (45) days before May 1, 2011.

     3.   The Borrower shall be responsible for any and all fees incurred by the
Bank in connection with the transactions contemplated by this Agreement
including, without limitation, any mortgage recording tax and the fees and
disbursements of the Bank's counsel.
<PAGE>

     4.   The Borrower does hereby affirm and ratify the extent and validity of
the Note, the Mortgage and all other documents executed by the Borrower
including, but not limited to, any and all commitment letters (all such
documents being herein collectively referred to as, the "Loan Documents"). The
Borrower hereby confirms that such Loan Documents remain in full force and
effect as of the date hereof. The Borrower does hereby represent, warrant and
confirm that there are no defenses, set-offs, rights, claims or causes of action
of any nature whatsoever which the Borrower has or may assert against the Bank
with respect to the Note, the Mortgage securing such Note and/or any of the
other Loan Documents.

     5.   The undersigned Borrower and Guarantor by executing this Agreement,
with respect to any claims arising prior to the date of the execution of this
Agreement, expressly waives any and all right to assert a claim, counterclaim or
defense against the Bank arising out of or in any way connected with the
mortgage transaction between the Bank and the Borrower relating to the mortgaged
premises, whether such claim, counterclaim or defense now exists. The foregoing
waiver shall apply to any action instituted by any of the undersigned and to any
action or proceeding brought against any of the undersigned by the Bank
including, without limitation, any action brought in connection with any
guarantee executed in connection with the Mortgage.

     6.   THE UNDERSIGNED BORROWER BY EXECUTING THIS DOCUMENT ACKNOWLEDGES THAT
ITS HAS HAD FULL AND FAIR OPPORTUNITY TO REVIEW THIS AGREEMENT AND THE DOCUMENTS
REFERRED TO HEREIN WITH INDEPENDENT COUNSEL OF ITS CHOICE AND THAT IT HAS BEEN
INDEPENDENTLY ADVISED AS TO THEIR TERMS AND CONDITIONS WHICH ARE ACCEPTABLE TO
IT. FURTHER, IT CONFIRMS THAT IN DELIVERING THIS AGREEMENT TO THE BANK, IT IS
NOT RELYING ON ANY PROMISE, COMMITMENT, REPRESENTATION OR UNDERSTANDING, EITHER
EXPRESS OR IMPLIED, MADE BY OR ON BEHALF OF THE BANK THAT IS NOT EXPRESSLY SET
FORTH HEREIN, THE EXISTING MORTGAGE DOCUMENTS OR THE DOCUMENTS REFERRED TO
HEREIN. THE BORROWER BY EXECUTING THIS AGREEMENT ACKNOWLEDGES AND UNDERSTANDS
THAT ALL OBLIGATIONS UNDER THE NOTE AND THE MORTGAGE ARE DUE AND PAYABLE ON MAY
1, 2014, UNLESS THE BANK, IN ITS SOLE AND ABSOLUTE DISCRETION, EXTENDS THE
MATURITY DATE OF SUCH OBLIGATION AND THAT THE BANK HAS NOT MADE ANY
REPRESENTATION THAT IT WILL EXTEND THE MATURITY DATE OF SUCH OBLIGATION.

     7.   This Agreement shall be binding on the parties hereto and their
successors and assigns or heirs and personal representatives, as the case may
be.

     IN WITNESS WHEREOF, the parties have executed this document the day and
year first above written.

WITNESS:                                  PAR PHARMACEUTICAL, INC.

/s/ Peter H. Streelman                    by /s/ Dennis J. O'Connor
----------------------                       ----------------------
                                             Dennis J. O'Connor
                                             Vice President, CFO and
                                             Secretary

WITNESS:                                     HUDSON UNITED BANK

/s/ Kristen Hamilton                      by /s/ Peter H. Streelman
--------------------                         ----------------------
                                             Peter H. Streelman
                                             Senior Vice President

<PAGE>

     The undersigned guarantor of performance and payment does hereby approve
all of the terms of this agreement, does hereby approve the execution and
delivery of the agreement by Par Pharmaceutical, Inc. and does hereby
acknowledge and confirm its continuing liability and responsibility to Hudson
United Bank, with respect to the debt referred to in the agreement in accordance
with its guaranty.

WITNESS:                              PHARMACEUTICAL RESOURCES, INC.

/s/ Peter H. Streelman             by /s/ Dennis J. O'Connor
----------------------                ----------------------
                                      Dennis J. O'Connor
                                      Vice President, CFO and
                                      Secretary
<PAGE>

STATE OF NEW YORK  )
                      :  SS.:
COUNTY OF ROCKLAND)

     On this 28 day of June, in the year two thousand and one, before me, the
             --
undersigned, personally appeared Dennis J. O'Connor, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed same in his capacity and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument and that such individual made such appearance before the
undersigned in the Town of Spring Valley, County of Rockland, State of New York.
                   ----    -------------            --------           --------

                                   /s/ Peter H. Streelman
                                   ----------------------------------
                                   (Signature and Office of
                                   individual taking acknowledgement)

STATE OF NEW YORK  )
                      )  ss.:
COUNTY OF  ROCKLAND   )

     On this 28 day of June, in the year two thousand and one, before me, the
             --
undersigned, personally appeared Peter H. Streelman personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed same in his capacity and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument and that such individual made such appearance before the
undersigned in the Town of Spring Valley, County of Rockland, State of New York.
                   ----    -------------

                                   /s/ Kristen Hamilton
                                   ----------------------------------
                                   (Signature and Office of
                                   individual taking acknowledgement)
<PAGE>

STATE OF NEW YORK  )
                        :  SS.:
COUNTY OF ROCKLAND)

     On this 28 day of June, in the year two thousand and one, before me, the
             --
undersigned, personally appeared Dennis J. O'Connor, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed same in his capacity and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument and that such individual made such appearance before the
undersigned in the Town of Spring Valley, County of Rockland, State of New York.
                   ----    -------------            --------           --------

                                   /s/ Peter H. Streelman
                                   ----------------------------------
                                   (Signature and Office of
                                   individual taking acknowledgement)
<PAGE>

                          RESTATED MORTGAGE LOAN NOTE

$1,340,000.00                                            Dated as of May 1, 2001
                                                         Hawthorne, New Jersey

     The undersigned, PAR PHARMACEUTICAL, INC., with an address at One Ram Ridge
Road, Spring Valley, New York 10977, promises to pay to the order of Hudson
United Bank, successor in interest to Urban National Bank (the "Bank"), having
its principal office located at 1000 MacArthur Boulevard, Mahwah, New Jersey,
the principal sum of ONE MILLION THREE HUNDRED FORTY THOUSAND and NO/100
(1,340,000.00) DOLLARS as hereinafter provided or so much thereof as may be
outstanding, and to pay interest as hereinafter provided on the unpaid principal
balance of this Note from time to time, from the date hereof until the principal
balance is paid in full.

     1.   The unpaid principal balance shall earn interest (i) during the first
five (5) years of the term of this Note at the fixed rate of eight and one-half
(8-1/2) percent per annum; and (ii) during the next two (2) years of the term
hereof at a fixed rate of 8.5% percent per annum; (iii) during the next five (5)
years of the term of this Note at a fixed rate of interest equal to eight and
one-half (8-1/2) percent per annum; (iv) from May 1, 2006 through and including
April 30, 2011 at a fixed rate of interest equal to 325 basis points above the
interest rate charged by the Federal Home Loan Bank Board of New York on
mortgage loans having a maturity of five (5) years rounded up to the nearest
one-eighth of one (1/8) percent in effect forty-five (45) days before May 1,
2006; and (v) from May 1, 2011 until this Note is paid in full at a fixed rate
of interest equal to 325 basis points above the interest rate charged by the
Federal Home Loan Bank Board of New York on mortgage loans having a maturity of
five (5) years rounded up to the nearest one-eighth of one (1/8) percent in
effect forty-five (45) days before May 1, 2011.

     2.   All computations of interest shall be calculated on the basis of the
actual number of days elapsed divided by 360.

     3.   Payment of principal shall be made in eighty-three equal consecutive
monthly installments of $5,583.33, together with accrued and unpaid interest,
commencing on June 1, 1994 and continuing on the first day of each month
thereafter until May 1, 2001; and commencing on June 1, 2001 and continuing on
the same day of each and every month thereafter, the undersigned shall make a
periodic payment of principal and interest until May 1, 2014 (the "Maturity
Date") at which time the entire unpaid principal balance of this Note together
with all accrued but unpaid interest and all other amounts due under this Note
and the Mortgage shall be immediately due and payable. From June 1, 2001 through
May 1, 2006, the undersigned shall make a periodic payment and interest of
$9,366.05. The periodic payment of principal and interest shall be recalculated
on May 1, 2006 and May 1, 2011 based on the new interest rate then in effect,
the unpaid principal balance of this Note and the remaining term of this Note.

     4.   This Note which replaces and supersedes (but shall not be considered a
repayment of) a note of the undersigned dated May 4, 1994 in the original
principal amount of $1,340,000.00, (the "Prior Note"). Any and all amounts
evidenced by the Prior Note shall hereafter be evidenced by this Note and any
accrued but unpaid interest due and owing under the Prior Note shall be payable
on the first interest payment date hereunder.

     5.   If required by the Bank, on the first day of each month the
undersigned shall pay to the Bank one-twelfth (1/12th) of the sum of (a) the
taxes on the Mortgaged Premises (as defined below and (b) the aggregate premiums
for insurance coverage on the Mortgaged Premises payable within the succeeding
twelve months. The Bank shall hold such monies in an escrow account and apply
same to the payment of taxes and insurance premiums as same become payable.

     6.   As security for the payment of the money owing thereon, as well as the
performance of all items and conditions of this Note, the undersigned has
delivered to the Bank a first mortgage and security agreement of even date
herewith on real property located in the Town of Ramapo, Rockland County, New
York (the "Mortgage"). The real property encumbered by the Mortgage are
hereinafter referred to as the "Mortgaged Premises."  The terms, covenants and
conditions of the Mortgage are hereby made a part of this Note, to the extent
and with the same effect as if set forth herein at length and the undersigned
shall be bound and shall comply with all terms, covenants and conditions of the
Mortgage.
<PAGE>

     7.   The Bank may charge and the undersigned agrees to pay a penalty of
five (5) percent of any installment of interest and/or principal of any portion
thereof which is not paid within fifteen (15) days after the same become due and
payable under this Note.

     8.   Notwithstanding the foregoing, the unpaid balance of the principal
amount owing hereunder, together with interest thereon, shall immediately become
due and payable, at the election of the holder hereof, in the event of:

          (a)  A failure to make any payment of principal or interest hereunder
within ten (10) days after written notice of such non-payment form the Bank to
the undersigned;

          (b)  Failure to observe or perform any term, covenant or condition of
   this Note or the Mortgage (other than with respect to the payment of the
   principal or interest which shall be governed by (a) above) and, if no other
   grace period is applicable, within thirty (30) days after written notice of
   such default from the Ban to the undersigned and/or;

          (c)  Any event of default as defined in the Mortgage.

     9.   In the event of default, the Bank shall have the right immediately,
and without notice or other action, to set-off against the undersigned's
liability to the Bank any money owed by the Bank to the undersigned, whether due
or not, and the Bank shall be deemed to have exercised such right of set-off and
to have made a charge against any such money immediately upon the occurrence of
a default under this Note, even thought the actual book entries may be made at
some time subsequent thereto.

     10.  In addition to any late payment charge which may be due under this
Note, if the debt evidenced hereby is declared immediately due and payable by
the Bank pursuant to the provisions of this Note, or the Mortgage, or if the
debt evidenced hereby is not paid in full on the Maturity Date, the undersigned
shall hereafter pay interest on the principal balance form the date of such
declaration or the Maturity Date, as the case may be, until the date the
principal balance is paid in full, at the rate per annum (calculated for the
actual number of days elapsed on the basis of a 360-day year) equal to five (5)
percent per annum above the interest rate then in effect as set forth herein,
provided, however, that such interest rate shall in no event exceed the maximum
interest rate which the undersigned may by law pay (the "Default Rate").

     11.  This Note is subject to the express condition that at no time shall
the undersigned by obligated or required to pay interest on the principal
balance at the rate which could subject the Bank to either civil or criminal
liability as a result of being in excess of the maximum rate which the
undersigned is permitted by law to contract or agree to pay. If by the terms of
this Note, the undersigned is at any time required or obligated to pay interest
on the principal balance at a rate in excess of such maximum rate, the rate of
interest under this Note shall be deemed to be immediately reduced to such
maximum rate and interest payable hereunder shall be computed at such maximum
rate and interest payable hereunder shall be computed at such maximum rate and
the portion of al prior interest payments in excess of such maximum rate shall
be applied and shall be deemed to have been payments in reduction of the
principal balance.

     12.  Upon the continuance of any default in the payment of any installment
of interest and/or principal due hereunder, or of any portion thereof, or of any
penalty, or upon any default in the performance of any covenant, agreement or
conditions contained in the Mortgage within the time limits established in the
Mortgage, then at the option of the holder hereof, the whole principal sum with
accrued interest shall become and be immediately due and payable without further
notice, demand or presentment for payment.

     13.  Except as otherwise provided in this Note or the Mortgage, the
undersigned and all other parties who at any time may be liable hereon in any
capacity, jointly and severally, waive presentment, demand for payment, protest
and notice of dishonor of this Note, and authorize the Bank without notice, but
only with the consent of the undersigned, to grant extensions in the time of
payment of and reduction or increase in the rate of interest on any money owing
on this Note.

     14.  This Note may be prepaid, at any time, together with interest due to
the date of such prepayment, in increments of $25,000.00 without prepayment
penalty or additional premium.

     15.  The undersigned shall not enter into any additional financing with
respect to the Mortgaged Premises during the term of the loan evidenced by this
Note.
<PAGE>

     16.  The undersigned hereby waives its right to a jury trial.

     17.  This Note shall be construed according to and governed by the laws of
the State of New Jersey.

     18.  This Note may only be modified, amended, changed or terminated by an
agreement in writing signed by the Bank and the undersigned.  No waiver of any
term, covenant or provisions of the Note shall be effective unless given in
writing by the Bank and if so given by the Bank shall only be effective in the
specific instance in which given.

     19.  The undersigned expressly covenants and agrees that it will abide by
the terms and conditions of the commitment letter of the Bank to the undersigned
dated April 13, 1994, to the extent that such terms and conditions have not been
incorporated in this Note or the Mortgage.

     20.  No delay n the part of the Bank in exercising any right or remedy
under this Note or failure to exercise the same shall operate as a waiver in
whole or in part of any such right by or remedy.

     IN WITNESS WHEREOF, the undersigned has hereunto set its hand and seal or
caused these presents to be signed by its proper corporate officers and its
proper corporate seal to be hereto affixed the day and year first written above.

                                   PAR PHARMACEUTICAL, INC.

                                   by: /s/ Dennis J. O'Connor
                                      -------------------------------
                                      Dennis J. O'Connor
                                      Vice President, CFO and
                                      Secretary
<PAGE>

STATE OF NEW YORK  )
                         :  SS.:
COUNTY OF ROCKLAND)

     On this 28 day of June, in the year two thousand and one, before me, the
             --
undersigned, personally appeared Dennis J. O'Connor, personally known to me or
proved to me on the basis of satisfactory evidence to be the individual whose
name is subscribed to the within instrument and acknowledged to me that he
executed same in his capacity and that by his signature on the instrument, the
individual, or the person upon behalf of which the individual acted, executed
the instrument and that such individual made such appearance before the
undersigned in the Town of Spring Valley, County of Rockland, State of New York.
                   ----    -------------            --------           --------

                                   /s/ Peter H. Streelman
                                   ----------------------------------
                                   (Signature and Office of
                                   individual taking acknowledgement)<PAGE>

                                                                 Exhibit 10.16.2

                         PHARMACEUTICAL RESOURCES, INC.
                          2001 PERFORMANCE EQUITY PLAN

Section 1.  Purpose; Definitions.

1.1.  Purpose.  The purpose of the Pharmaceutical Resources, Inc. (the
"Company") 2001 Performance Equity Plan (the "Plan"), adopted for the term set
forth in Section 9 hereof, is to enable the Company to offer to its key
employees and to key employees of its subsidiaries, and independent agents and
consultants of the Company and its subsidiaries, Stock Options in the Company,
thereby enhancing its ability to attract, retain and reward such key employees
and individuals, and to increase the mutuality of interests between those
employees and individuals and the shareholders of the Company.

The Company previously adopted the 1990 Stock Incentive Plan and the 2000
Performance Equity Plan (the "Prior Plans").  Awards granted under the Prior
Plans prior to the effective date of this Plan ("Prior Awards") shall not be
affected by the adoption of this Plan, and the Prior Plans shall remain in
effect following the effective date to the extent necessary to administer the
Prior Awards.

1.2.  Definitions.  For purposes of the Plan, the following terms shall be
defined as set forth herein:

          (a)  "Agents" means those persons who are not employees of the Company
or any subsidiary, including independent agents and consultants.

          (b)  "Agreement" means the agreement between the Company and the
Holder setting forth the terms and conditions of an award under the Plan.

          (c)  "Board" means the Board of Directors of the Company.

          (d)  "Change of Control" means a change of control of the Company
pursuant to Section 6 hereof.

          (e)  "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute or statutes thereto.

          (f)  "Committee" means the Compensation and Stock Option Committee of
the Board or any other committee of the Board which the Board may designate.

          (g)  "Common Stock" means the Common Stock of the Company, par value
$.01 per share.

          (h)  "Company" means Pharmaceutical Resources, Inc., a corporation
organized under the laws of the State of New Jersey, and any successor thereto.

          (i)  "Disability" means disability as determined under procedures
established by the Committee for purposes of the Plan.

          (j)  "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor statute or statutes thereto.

          (k)  "Exchange Act Holder" means such officer or director or 10%
beneficial owner of Common Stock subject to Section 16(b) of the Exchange Act.

          (l)  "Fair Market Value," unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date: (i) if the Common Stock (as hereinafter defined) is listed on a
national securities exchange or quoted on the NASDAQ National Market System, the
closing price of the Common Stock on the last preceding day on which the Common
Stock was traded, as reported on the composite tape or by NASDAQ/NMS

                                       1
<PAGE>

System Statistics, as the case may be; (ii) if the Common Stock is not listed on
a national securities exchange or quoted on the NASDAQ National Market System,
but is traded in the over-the-counter market, the average of the bid and asked
prices for the Common Stock on the last preceding day for which such quotations
are reported by NASDAQ; and (iii) if the fair market value of the Common Stock
cannot be determined pursuant to clause (i) or (ii) hereof, such price as the
Committee shall determine.

          (m)  "Holder" means an eligible employee, prospective employee or
Agent of the Company or a Subsidiary who has received an award under the Plan.

          (n)  "Incentive Stock Option" means any Stock Option intended to be
and designated as an "incentive stock option" within the meaning of Section 422
of the Code.

          (o)  "Non-Qualified Stock Option" means any Stock Option that is not
an Incentive Stock Option.

          (p)  "Plan" means this Pharmaceutical Resources, Inc. 2001 Performance
Equity Plan, as hereinafter amended from time to time.

          (q)  "Prior Awards" and "Prior Plans" shall have the respective
meanings given to those terms in Section 1.1.

          (r)  "Stock Option" or "Option" means any Non-Qualified Stock Option
or Incentive Stock Option to purchase shares of Stock which is awarded pursuant
to the Plan.

          (s)  "Subsidiary" means any present or future subsidiary corporation
of the Company, as such term is defined in Section 424(f) of the Code.

Section 2.  Administration.

2.1.  Committee Membership.  The Plan shall be administered by the Committee,
the membership of which shall be at all times constituted so as to not adversely
affect the compliance of awards under the Plan with the requirements of Rule
16b-3 under the Exchange Act, Section 162(m) of the Code, or with the
requirements of any other applicable law, rule or regulation.

2.2.  Powers of Committee.  The Committee shall have full authority to award
Stock Options pursuant to the terms of the Plan, to eligible employees and
prospective employees described under Section 4 hereof.  For purposes of
illustration and not of limitation, the Committee shall have the authority
(subject to the express provisions of this Plan):

          (a)  to select the eligible employees, prospective employees and
Agents to whom Stock Options may from time to time be awarded hereunder;

          (b)  to determine the Incentive Stock Options and Non-Qualified Stock
Options, if any, to be awarded hereunder to one or more eligible employees,
prospective employees and Agents;

          (c)  to determine the number of shares to be covered by each award
granted hereunder;

          (d)  to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award hereunder (including, but not limited to, share
price, any restrictions or limitations, and any vesting, settlement, surrender,
cancellation, acceleration, termination, exercise or forfeiture provisions, as
the Committee shall determine);

          (e)  to determine any specified performance goals or such other
factors or criteria which need to be attained for the vesting of an award
granted hereunder; and

                                       2
<PAGE>

          (f)  to determine the terms and conditions under which awards
hereunder are to operate in conjunction with or apart from other equity awarded,
and cash awards made by the Company or any Subsidiary outside of this Plan.

2.3.  Interpretation of Plan.  Subject to Section 8 hereof, the Committee shall
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable, to interpret the terms and provisions of the Plan and any award
issued under the Plan (and to determine the form and substance of all Agreements
relating thereto), and to otherwise supervise the administration of the Plan.

Notwithstanding any provision in the Plan to the contrary, no term of the Plan
relating to Incentive Stock Options or any Agreement providing for Incentive
Stock Options shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be so exercised, so as to disqualify the
Plan under Section 422 of the Code, or, without the consent of the Holder(s)
affected, to disqualify any Incentive Stock Option under such Section 422.
Subject to Section 7 hereof, all decisions made by the Committee pursuant to the
provisions of the Plan shall be made in the Committee's sole discretion and
shall be final and binding upon all persons, including the Company, its
Subsidiaries and the Holders.

Section 3.  Common Stock Subject to Plan.

3.1.  Number of Shares.  The total number of shares of Common Stock reserved and
available for distribution under the Plan shall be 2,500,000 shares.  In
addition, Common Stock covered by any unexercised portions of terminated Options
or Prior Awards (including canceled Options or Prior Awards), or Prior Awards
which are otherwise surrendered by the Holder may again be subject to new awards
under this Plan.  The number of shares of Common Stock deemed to be issued under
the Plan upon the exercise of an Option in the nature of a stock purchase right
shall be reduced by the number of shares of Common Stock surrendered by the
Holder in payment of the exercise or purchase price of the award and withholding
taxes thereon.

3.2.  Character of Shares.  Shares of Common Stock under the Plan may consist,
in whole or in part, of authorized and unissued shares or treasury shares.

3.3.  Adjustment Upon Changes in Capitalization, Etc.  In the event of any
acquisition, merger, reorganization, consolidation, recapitalization, dividend
(other than a dividend or its equivalent which is credited to a Holder or a
regular cash dividend), stock split, reverse stock split, or other change in
corporate structure affecting the Common Stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under the
Plan, in the maximum number of shares with respect to which awards may be
granted to any employee in any year, in the number and exercise price of shares
subject to outstanding Options, as may be determined to be appropriate by the
Committee in order to prevent the dilution or enlargement of each Holder's
rights, provided that the number of shares subject to any award shall always be
a whole number.

Section 4.  Eligibility.

4.1.  General.  Awards under the Plan may be made to (i) officers and other key
employees of the Company or any Subsidiary (including officers and key employees
serving as directors of the Company) who are at the time of the grant of an
award under this Plan regularly employed by the Company or any Subsidiary; (ii)
prospective employees of the Company or its Subsidiaries and (iii) Agents of the
Company.  The exercise of any Stock Option and the vesting of any award
hereunder granted to a prospective employee shall be conditioned upon such
person becoming an employee of the Company or a Subsidiary.  The term
"prospective employee" shall mean any person who holds an outstanding offer of
regular employment on specific terms from the Company or a Subsidiary.

Section 5.  Stock Options.

5.1.  Grant and Exercise.  Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options.  Any
Stock Option granted under the Plan shall contain such terms, not inconsistent
with this Plan, as the Committee may from time to time approve.  The Committee
shall have the authority to grant to any Holder hereof Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options.  To the extent that
any Stock Option (or portion thereof) does not qualify as an Incentive Stock
Option, it shall constitute a separate Non-Qualified Stock

                                       3
<PAGE>

Option.

5.2.  Terms and Conditions.  Stock Options granted under the Plan shall be
subject to the following terms and conditions:

          (a)  Exercise Price.  The exercise price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee at the
time of grant but except as otherwise provided in Section 5.3 in the case of
Options granted to replace stock options issued by acquired companies, shall be
not less than 100% of the Fair Market Value of the Common Stock at the time of
grant (110%, in the case of an Incentive Stock Option granted to a Holder ("10%
Shareholder") who, at the time of grant, owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the Company or its
parent (if any) or subsidiary corporations, as those terms are defined in
Sections 424(e) and (f) of the Code).

          (b)  Option Term.  The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date on which the Option is granted.

          (c)  Exercisability.  Stock Options shall be exercisable at such time
or times and subject to such terms and conditions as shall be determined by the
Committee.  If the Committee provides, in its discretion, that any Stock Option
is exercisable only in installments, the Committee may waive such installment
exercise provisions at any time at or after the time of grant in whole or in
part, based upon such factors as the Committee shall determine.

          (d)  Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case, Stock Options may
be exercised in whole or in part at any time during the term of the Option, by
giving written notice of exercise to the Company specifying the number of shares
of Common Stock to be purchased. Such notice shall be accompanied by payment in
full of the purchase price, which shall be in cash or, unless otherwise provided
in the Agreement, in whole shares of Common Stock which are already owned by the
Holder of the Stock Option or, unless otherwise provided in the Stock Option
Agreement, partly in cash and partly in such Common Stock. Cash payments shall
be made by wire transfer, certified or bank check or personal check, in each
case payable to the order of the Company; provided, however, that the Company
shall not be required to deliver certificates for shares of Common Stock with
respect to which a Stock Option is exercised until the Company has confirmed the
receipt of good and available funds in payment of the purchase price thereof.
Payments in the form of Common Stock (which shall be valued at the Fair Market
Value of a share of Common Stock on the date of exercise) shall be made by
delivery of stock certificates in negotiable form which are effective to
transfer good and valid title thereto to the Committee, free of any liens or
encumbrances. Payment may also be made, in the discretion of the Company, by the
delivery (including, without limitation, by fax) to the Company or its
designated agent of an executed irrevocable option exercise form together with
irrevocable instructions to a broker-dealer to sell or margin a sufficient
portion of the shares and deliver the sale or margin loan proceeds directly to
the Company to pay for the exercise price. Except as otherwise expressly
provided in this Plan or in the Agreement, no Stock Option granted to an
employee or prospective employee may be exercised at any time unless the Holder
thereof is then an employee of the Company or of a Subsidiary. The Holder of a
Stock Option shall have none of the rights of a shareholder with respect to the
shares subject to the Stock Option until such shares shall be transferred to the
Holder upon the exercise of the Stock Option.

          (e)  Buyout and Settlement Provisions.  The Committee may at any time
offer to buy out for cash or otherwise settle a Stock Option previously granted,
based upon such terms and conditions as the Committee shall establish and
communicate to the Holder at the time that such offer is made.

5.3.  Awards for Acquired Companies.  After any merger, consolidation,
reorganization, stock or asset purchase or similar transaction in which the
Company or a Subsidiary shall be a surviving corporation, the Committee may
grant Options under the provisions of the Plan, pursuant to Section 424 of the
Code or as is otherwise permitted under the Code, in full or partial replacement
of or substitution for stock options granted under a plan of another party to
the transaction whose shares of stock subject to the old options may no longer
be issued following the transaction.  The manner of application of the foregoing
provisions to such options and any appropriate adjustments in the terms of such
awards shall be determined by the Company in its sole discretion.  Any such
adjustments may provide for the elimination of any fractional shares which might
otherwise become subject to any awards.  The foregoing shall not be deemed to
preclude the Company from assuming or substituting for stock options of acquired
companies other than pursuant to this Plan.

                                       4
<PAGE>

Section 6.  Acceleration.

6.1.  Acceleration Upon Change of Control.  Unless the award Agreement provides
otherwise or unless the Holder waives the application of this Section 6.1 prior
to a Change of Control (as hereinafter defined), in the event of a Change of
Control, each outstanding Stock Option granted under the Plan shall immediately
become exercisable in full notwithstanding the vesting or exercise provisions
contained in the Agreement.

6.2.  Change of Control Defined. A "Change of Control" shall be deemed to have
occurred upon any of the following events:

          (a)  any individual, firm, corporation or other entity, or any group
(as defined in Section 13(d)(3) of 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 20% of the then outstanding
shares of the Company's capital stock entitled to vote generally in the election
of directors of the Company; or

          (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 Company's capital stock; or

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

          provided, however, that a "Change of Control" shall not be deemed to
have taken place if (A) beneficial ownership is acquired by, or a tender or
exchange offer is commenced or announced by, the Company, any profit-sharing,
employee ownership or other employee benefit plan of the Company, any trustee of
or fiduciary with respect to any such plan when acting in such capacity, or any
group comprised solely of such entities, or (B) there is an increase by Lipha
Americas, Inc. or its affiliates, in its stock ownership in the Company provided
that after such increase, the Company is still a publicly owned corporation
listed on a national securities exchange or quoted on the NASDAQ National Market
System.

          (d)  In the event of a "Change of Control" as defined in Subsection
(a) above, all outstanding Stock Options, shall become exercisable in full,
whether or not otherwise exercisable at such time, and any such Stock Option
shall remain exercisable in full thereafter until it expires pursuant to its
terms, unless the provisions of this Section 6 are suspended or terminated by an
affirmative vote of a majority of the Board.

6.3.  General Waiver by Committee.  The Committee may, after grant of an award,
accelerate the vesting of all or any part of any Stock Option and/or waive any
limitations or restrictions, if any, for all or any part of an award.

6.4.  Acceleration Upon Termination of Employment.  In the case of a Holder
whose employment with the Company or a Subsidiary is involuntarily terminated
for any reason (other than for cause), the Committee may accelerate the vesting
of all or any part of any award and/or waive in whole or in part any or all of
the remaining limitations or restrictions imposed hereunder or pursuant to the
Agreement.

Section 7.  Forfeiture Provisions Following a Termination of Employment.

7.1.  This Section 7.1 shall apply to all awards granted under this Plan except
to the extent that the applicable award agreement provides otherwise.
Notwithstanding any provision in this Plan to the contrary, in any instance
where the rights of the Holder of an award granted under the Plan extend past
the date of termination of the Holder's employment, all of such rights shall
immediately and automatically terminate and be forfeited if, in the
determination of the Committee, the Holder at any time during a twenty-four
month period following his or her termination of employment, directly or
indirectly, either (i) personally or (ii) as an employee, agent, partner,
shareholder, officer or director of, consultant to, or

                                       5
<PAGE>

otherwise of any entity or person engaged in any business in which the Company
or any Subsidiary is engaged, or is actively proposing to engage at the time of
such termination of employment, engages in conduct that breaches his or her duty
of loyalty to the Company or any Subsidiary or that is in material competition
with the Company or any Subsidiary or is materially injurious to the Company or
any Subsidiary, monetarily or otherwise, which conduct shall include, but not be
limited to: (i) disclosing or using any confidential information pertaining to
the Company or any Subsidiary; (ii) any attempt, directly or indirectly, to
induce any employee of the Company or any Subsidiary to be employed or perform
services elsewhere; or (iii) any attempt, directly or indirectly, to solicit the
trade of any customer or supplier or prospective customer or supplier of the
Company or any Subsidiary; or (iv) disparaging the Company or any Subsidiary or
any of their respective officers or directors. The determination of whether any
conduct, action or failure to act falls within the scope of activities
contemplated by this Section shall be made by the Committee, in its discretion,
and shall be final and binding upon the Holder. A determination that any
particular conduct, action or failure falls outside the scope of activities
contemplated by this Section shall not imply that, or be determinative of
whether, such conduct, action or failure is otherwise lawful or appropriate. For
purposes of this paragraph, a Holder shall not be deemed to be a shareholder of
a competing entity if the Holder's record and beneficial ownership of equity
securities of said entity amount to not more than one percent (1%) of the
outstanding equity securities of any company subject to the periodic and other
reporting requirements of the Exchange Act. In the event the existence of any
circumstance which would trigger the forfeiture of an award pursuant to this
Section 7.1 but for the fact that said award has previously been converted into
or exercised for other securities of the Company (e.g., upon the exercise of
stock options), or converted into cash or other property (e.g., upon the sale by
or for the account of the Holder of Common Stock acquired by him or her upon the
exercise of Stock Options), whether before or after the termination of
employment, then, in such event, said securities, or cash or other property, as
the case may be, shall be deemed to be held in trust for the Company and shall
be promptly paid over to the Company upon demand (net of any amounts that may
have been theretofore actually paid by the Holder to the Company in respect
thereof (e.g., as the cash exercise price of a warrant). By virtue of his or her
acceptance of the award under the Plan to which this Agreement relates, the
Holder shall be irrevocable deemed to have agreed to be bound by the provisions
of this Section 7.1. The Holder further recognizes that (i) the Company would be
irreparably injured in the event of a breach by the Employee of any of his
obligations under this Section 7; (ii) monetary damages would not be an adequate
remedy for any such breach; and (iii) the Company shall be entitled to
injunctive relief, in addition to any other remedies that it may have, in the
event of any such breach.

Section 8.  Amendments and Termination.

8.1.  Amendments to Plan.  The Board may at any time, and from time to time,
amend any of the provisions of the Plan, and may at any time suspend or
terminate the Plan; provided, however, that no such amendment shall be effective
unless and until it has been duly approved by the shareholders of the requisite
number of outstanding shares of Common Stock if (a) it increases the aggregate
number of shares of Common Stock which are available pursuant to the Plan,
(except as provided in Section 3 hereof) or (b) the failure to obtain such
approval would adversely affect the compliance of the Plan with the requirements
of any applicable law, rule or regulation.

8.2.  Amendments to Individual Awards.  The Committee may amend the terms of any
award granted under the Plan; provided, however, that subject to Section 3
hereof, no such amendment may be made by the Committee which in any material
respect impairs the rights of the Holder without the Holder's consent.

Section 9.  Term of Plan.

9.1.  Effective Date.  The Plan shall be effective upon approval of the
shareholders of the Company.

9.2.  Termination Date.  No award shall be granted pursuant to the Plan on or
after the tenth anniversary of its effective date, but awards granted prior to
or on such date may extend beyond that date.  The Plan shall terminate at such
time as no further awards may be granted and all awards granted under the Plan
are no longer outstanding.

                                       6
<PAGE>

Section 10.  General Provisions.

10.1.  Investment Representations.  The Committee may require each person
acquiring shares of Common Stock pursuant to an award under the Plan to
represent to and agree with the Company in writing that the Holder is acquiring
the shares for investment without a view to distribution thereof.

10.2.  Additional Incentive Arrangements.  Nothing contained in the Plan shall
prevent the Board from adopting such other or additional incentive arrangements
as it may deem desirable, including, but not limited to, the granting of stock
options and the awarding of stock and cash otherwise than under the Plan; and
such arrangements may be either generally applicable or applicable only in
specific cases.

10.3.  No Right of Employment.  Nothing contained in the Plan or in any award
hereunder shall be deemed to confer upon any employee of the Company or any
Subsidiary any right to continued employment with the Company or any Subsidiary,
nor shall it interfere in any way with the right of the Company or any
Subsidiary to terminate the employment of any of its employees at any time.

10.4.  Withholding Taxes.  Not later than the date as of which an amount first
becomes includible in the gross income of the Holder for federal income tax
purposes with respect to any award under the Plan, the Holder shall pay to the
Company, or make arrangements satisfactory to the Committee regarding the
payment of, any federal, state and local taxes of any kind required by law to be
withheld or paid with respect to such amount.  If permitted by the Committee,
tax withholding or payment obligations may be settled with Common Stock,
including Common Stock that is part of the award that gives rise to the
withholding requirement.  The obligations of the Company under the Plan shall be
conditional upon such payment or arrangements and the Company or the Holder's
employer (if not the Company) shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment of any kind otherwise due to the
Holder from the Company or any Subsidiary.

10.5.  Governing Law.  To the extent not preempted by the laws of the United
States, the laws of the State of New Jersey, without reference to conflict of
laws provisions, shall be the controlling law in all matters relating to the
Plan and all awards made and actions taken thereunder.

10.6.  Other Benefit Plans.  Any award granted under the Plan shall not be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary and shall not affect any benefits under any
other benefit plan now or subsequently in effect under which the availability or
amount of benefits is related to the level of compensation (unless required by
specific reference in any such other plan to awards under this Plan).

10.7.  Employee Status.  A leave of absence, unless otherwise determined by the
Committee prior to the commencement thereof, shall not be considered a
termination of employment.  Any awards granted under the Plan to an employee
shall not be affected by any change of employment, so long as the Holder
continues to be an employee of the Company or any Subsidiary.

10.8.  Non-Transferability.  Other than the transfer of a Stock Option by will,
by the laws of descent and distribution, or pursuant to the express provisions
of the applicable Agreement, no award under the Plan may be alienated, sold,
assigned, hypothecated, pledged, exchanged, transferred, encumbered or charged,
and any attempt to alienate, sell, assign, hypothecate, pledge, exchange,
transfer, encumber or charge the same shall be void.  No right or benefit
hereunder shall in any manner be liable for or subject to the debts, contracts,
liabilities or torts of the person entitled to such benefit.  Except as
expressly provided in any applicable Agreement, any Stock Option or other award
granted under this Plan shall be only exercisable during the lifetime of the
Holder by the Holder or by his or her guardian or legal representative.
Notwithstanding the foregoing, the Company may grant Non-Qualified Stock Options
that are transferable, without payment of consideration, to immediate family
members of the Holder, to trusts or partnerships for such family members, or to
such other parties as the Committee may approve (as evidenced by the applicable
award agreement or an amendment thereto), and the Company may also amend
outstanding Non-Qualified Stock Options to provide for such transferability.

10.9.  Applicable Laws.  The obligations of the Company with respect to all
awards under the Plan shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required,
including,

                                       7
<PAGE>

without limitation, the effectiveness of a registration statement under the
Securities Act of 1933, as amended, and (ii) the rules and regulations of any
securities exchange on which the Common Stock may be listed or the NASDAQ
National Market System if the Common Stock is designated for quotation thereon.

10.10.  Conflicts.  If any of the terms or provisions of the Plan conflict with
the requirements of Rule 16b-3 under the Exchange Act, or with the requirements
of any other applicable law, rule or regulation, and/or with respect to
Incentive Stock Options, Section 422 of the Code, then such terms or provisions
shall be deemed inoperative to the extent they so conflict with the requirements
of said Rule 16b-3, and/or with respect to Incentive Stock Options, Section 422
of the Code.  With respect to Incentive Stock Options, if this Plan does not
contain any provision required to be included herein under Section 422 of the
Code, such provision shall be deemed to be incorporated herein with the same
force and effect as if such provision had been set out at length herein.

10.11.  Written Agreements.  Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder.  The Committee may terminate any award made under the
Plan if the Agreement relating thereto is not executed and returned to the
Company within 60 days after the Agreement has been delivered to the Holder for
his or her execution.

10.12.  Common Stock Certificates.  Notwithstanding anything to the contrary
contained herein, whenever certificates representing shares of Common Stock
subject to an award are required to be delivered pursuant to the terms of the
Plan, the Company may in lieu of such delivery requirement comply with the
provisions of Section 14A:7-11 of the New Jersey Business Corporation Act.  All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stop-transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.

10.13.  Unfunded Status of Plan.  The Plan is intended to constitute an
"unfunded" plan for incentive compensation.  With respect to any payments not
yet made to a Holder by the Company, nothing contained herein shall give any
such Holder any rights that are greater than those of a general creditor of the
Company.

10.14.  Certain Mergers. If in connection with a merger, reorganization,
consolidation, share exchange, transfer of assets or other transaction having
similar effect involving the Company ("Merger") in which the Company is not the
surviving corporation or pursuant to which a majority of the shares which are of
the same class as the shares that are subject to outstanding Options are
exchanged for, or converted into, or otherwise become shares of another
corporation, the surviving, continuing, successor or purchasing corporation, as
the case may be (the "Acquiring Corporation"), does not assume the Company's
rights and obligations under outstanding award agreements or substitute awards
in respect of the Acquiring Corporation's stock for outstanding awards, the
Board shall provide prior to the Merger that any unexercisable and/or unvested
portion of the outstanding awards shall be immediately exercisable and vested as
of a date prior to such Merger, as the Board so determines.  The exercise and/or
vesting of any award that was permissible solely by reason of this Section 10.14
shall be conditioned upon the consummation of the Merger.  Any awards which are
neither assumed by the Acquiring Corporation nor exercised as of the date of the
Merger shall terminate effective as of the effective date of the Merger.

                                       8

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