Document:

Exhibit 10.3

ZST DIGITAL NETWORKS, INC. 

 

NOTICE OF RESTRICTED SHARES GRANT

 

	Grantee Name:	Lin Zhong	 
	Address: Address:	c/o ZST Digital Networks, Inc., ITC Kung Kuan, No. 206 Tongbai Road,
	3rd Floor, No.2 Building, Zhengzhou City, Henan Province, China 450007

 

You have been granted
Restricted Shares subject to the terms and conditions of the attached Restricted Shares Grant Agreement, as follows:

 

	Date of Grant:	July 10, 2012
	 	 
	Vesting Commencement Date:	July 10, 2012
	 	 
	Exercise Price per Share:	0
	 	 
	Total Number of Shares Granted:	300,000
	 	 
	Total Purchase Price:	0
	 	 
	Agreement Date	July 10, 2012

 

Vesting Schedule:                               The
Restricted Shares vest in equal installments on a quarterly basis over a five-year period as set forth in the following table.
Notwithstanding the foregoing, the Restricted Shares will become fully vested upon a Change in Control.

 

    	 

    	 

    

 

	Date of Vesting	 	Cumulative Amount Vested	 
	 	 	 	 
	9/30/2012	 	 	15,000	 
	 	 	 	 	 
	12/31/2012	 	 	30,000	 
	 	 	 	 	 
	3/31/2013	 	 	45,000	 
	 	 	 	 	 
	6/30/2013	 	 	60,000	 
	 	 	 	 	 
	9/30/2013	 	 	75,000	 
	 	 	 	 	 
	12/31/2013	 	 	90,000	 
	 	 	 	 	 
	3/31/2014	 	 	105,000	 
	 	 	 	 	 
	6/30/2014	 	 	120,000	 
	 	 	 	 	 
	9/30/2014	 	 	135,000	 
	 	 	 	 	 
	12/31/2014	 	 	150,000	 
	 	 	 	 	 
	3/31/2015	 	 	165,000	 
	 	 	 	 	 
	6/30/2015	 	 	180,000	 
	 	 	 	 	 
	9/30/2015	 	 	195,000	 
	 	 	 	 	 
	12/31/2015	 	 	210,000	 
	 	 	 	 	 
	3/31/2016	 	 	225,000	 
	 	 	 	 	 
	6/30/2016	 	 	240,000	 
	 	 	 	 	 
	9/30/2016	 	 	255,000	 
	 	 	 	 	 
	12/31/2016	 	 	270,000	 
	 	 	 	 	 
	3/31/2017	 	 	285,000	 
	 	 	 	 	 
	6/30/2017	 	 	300,000	 

 

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ZST DIGITAL NETWORKS, INC. 

 

RESTRICTED SHARES GRANT AGREEMENT

 

This RESTRICTED
SHARES GRANT AGREEMENT (this “Agreement”), dated as of the Agreement Date specified on the Notice of Restricted
Shares Grant is made by and between ZST Digital Networks, Inc., a Delaware corporation (the “Company”), and
the grantee named in the Notice of Restricted Shares Grant (the “Grantee,” which term as used herein
shall be deemed to include any successor to Grantee by will or by the laws of descent and distribution, unless the context shall
otherwise require).

 

WHEREAS, the
Grantee serves as the Chief Operating Officer of the Company;

 

WHEREAS, the
Compensation Committee of the Board of Directors of the Company has determined that it is appropriate to grant to Grantee Three
Hundred Thousand (300,000) shares of the Company’s common stock, par value $0.0001 per share (the “Restricted Shares”)
in exchange for his service as the Chief Operating Officer of the Company;

 

WHEREAS, the
Company and the Grantee wish to enter into this Agreement to memorialize the terms on which the Restricted Shares are to be granted
to Grantee as provided for herein.

 

NOW, THEREFORE,
in consideration of the mutual premises and undertakings hereinafter set forth, the parties agree as follows:

 

1.    
      Grant and Purchase of Restricted Shares. The Company hereby grants to
Grantee, and Grantee hereby accepts the Restricted Shares, subject to the payment by Grantee of the total purchase price, if
any, set forth in the attached Notice of Restricted Shares Grant.

 

2.   
       Stockholder Rights. 

 

(a)          Voting
Rights. Until such time as all or any part of the Restricted Shares are forfeited to the Company under this Agreement, if ever,
Grantee (or any successor in interest) has the rights of a stockholder, including voting rights, with respect to the Restricted
Shares subject, however, to the transfer restrictions or any other restrictions set forth in this Agreement.

 

(b)          Dividends
and Other Distributions. During the period during which Restricted Shares are subject to forfeiture or restrictions on transfer
pursuant to this Agreement, Grantee holding Restricted Shares is entitled to all regular cash dividends or other distributions
paid with respect to all Restricted Shares while they are so held. If any such dividends or distributions are paid in shares of
Company common stock, such shares will be subject to the same restrictions on transferability and forfeitability as the Restricted
Shares with respect to which they were paid.

 

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3.           Vesting
of Restricted Shares.

 

(a)           The
Restricted Shares are restricted and subject to forfeiture until vested. The Restricted Shares which have vested and are no longer
subject to forfeiture are referred to as “Vested Shares.” All Restricted Shares which have not become Vested
Shares are referred to as “Nonvested Shares.”

 

(b)           Restricted
Shares will vest and become nonforfeitable in accordance with the vesting schedule contained in the Notice of Restricted Shares
Grant except that 100% of Grantee’s Nonvested Shares will vest in full upon a Change in Control.

 

(c)           Definitions.
Terms used in section 3 and 4 have the following meanings:

 

(i)           
“Cause” has the meaning ascribed to such term or words of similar import in Grantee’s written employment or service
contract with the Company or its subsidiaries and, in the absence of such agreement or definition, means Grantee’s (i) conviction
of, or plea of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud on or misappropriation of any funds
or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence,
willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses),
or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Grantee’s duties
or willful failure to perform Grantee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal
use or distribution of drugs; (vi) violation of any rule, regulation, procedure or policy of the Company or its subsidiaries;
or (vii) breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement
executed by Grantee for the benefit of the Company or its subsidiaries, all as determined by the Board of Directors of the Company,
which determination will be conclusive.

 

(ii)           
“Change in Control” means the occurrence of any of the following events:

 

1)           Any
“person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange
Act”)) becomes the "beneficial owner" (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly,
of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then
outstanding voting securities; provided however, that for purposes of this subsection 1) any acquisition of securities directly
from the Company shall not constitute a Change in Control; or

 

2)           The
consummation of the sale or disposition by the Company of all or substantially all of the Company's assets;

 

3)           A
change in the composition of the Board of Directors of the Company (the “Board”) occurring within a two-year
period, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors”
means directors who either (A) are members of the Board as of the date of this Agreement, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election
or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or

 

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4)           The
consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately
after such merger or consolidation.

 

For avoidance
of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is the change the state of the Company’s
incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions
by the persons who held the Company’s securities immediately before such transaction.

 

(iii)           
“Retirement” means Grantee’s retirement from Company employ at age 65 as determined in accordance with the policies
of the Company or its subsidiaries in good faith by the Board of Directors of the Company, which determination will be final and
binding on all parties concerned.

 

(d)           Nonvested
Shares may not be sold, transferred, assigned, pledged, or otherwise disposed of, directly or indirectly, whether by operation
of law or otherwise. The restrictions set forth in this Section will terminate upon a Change in Control.

 

4.           Forfeiture
of Nonvested Shares. Except as provided herein, if Grantee's service with the Company ceases for any reason other than
Grantee’s (a) death, (b) Disability, (c) Retirement, or (d) termination by the Company without Cause, any Nonvested Shares
will be automatically forfeited to the Company.

 

(a)           Legend.
Each certificate representing Restricted Shares granted pursuant to the Notice of Restricted Shares Grant may bear a legend substantially
as follows:

 

“The
sale or other transfer of the shares represented by this certificate, whether voluntary, involuntary or by operation of law, is
subject to certain restrictions on transfer as set forth in a Restricted Share Grant Agreement dated JUly 10, 2012. transfer of
these shares may be made only in compliance with the provisions of said agreement, a copy of which may be obtained from the company.”

 

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(b)           Escrow
of Nonvested Shares. The Company has the right to retain the certificates representing Nonvested Shares in the Company’s
possession until such time as all restrictions applicable to such shares have been satisfied.

 

(c)           Removal
of Restrictions. Grantee is entitled to have the legend removed from certificates representing Vested Shares.

 

5.           Recapitalizations,
Exchanges, Mergers, Etc. The provisions of this Agreement apply to the full extent set forth herein with respect to any
and all shares of capital stock of the Company or successor of the Company which may be issued in respect of, in exchange for,
or in substitution for the Restricted Shares by reason of any stock dividend, split, reverse split, combination, recapitalization,
reclassification, merger, consolidation or otherwise which does not terminate this Agreement. Except as otherwise provided herein,
this Agreement is not intended to confer upon any other person except the parties hereto any rights or remedies hereunder.

 

6.           Grantee
Representations.

 

Grantee represents to the Company the following:

 

(a)           Restrictions
on Transfer. Grantee acknowledges that the Restricted Shares to be issued to Grantee must be held indefinitely unless subsequently
registered and qualified under the Securities Act or unless an exemption from registration and qualification is otherwise available.
In addition, Grantee understands that the certificate representing the Restricted Shares will be imprinted with a legend which
prohibits the transfer of such Restricted Shares unless they are sold in a transaction in compliance with the Securities Act or
are registered and qualified or such registration and qualification are not required in the opinion of counsel acceptable to the
Company.

 

(b)           Relationship
to the Company; Experience. Grantee either has a preexisting business or personal relationship with the Company or any of its
officers, directors or controlling persons or, by reason of Grantee’s business or financial experience or the business or
financial experience of Grantee’s personal representative(s), if any, who are unaffiliated with and who are not compensated
by the Company or any affiliate or selling agent, directly or indirectly, has the capacity to protect Grantee’s own interests
in connection with Grantee’s acquisition of the Restricted Shares to be issued to Grantee hereunder. Grantee and/or Grantee’s
personal representative(s) have such knowledge and experience in financial, tax and business matters to enable Grantee and/or them
to utilize the information made available to Grantee and/or them in connection with the acquisition of the Restricted Shares to
evaluate the merits and risks of the prospective investment and to make an informed investment decision with respect thereto.

 

(c)           Grantee’s
Liquidity. In reaching the decision to invest in the Restricted Shares, Grantee has carefully evaluated Grantee’s financial
resources and investment position and the risks associated with this investment, and Grantee acknowledges that Grantee is able
to bear the economic risks of the investment. Grantee (i) has adequate means of providing for Grantee’s current needs
and possible personal contingencies, (ii) has no need for liquidity in Grantee’s investment, (iii) is able to bear
the substantial economic risks of an investment in the Restricted Shares for an indefinite period and (iv) at the present
time, can afford a complete loss of such investment. Grantee’s commitment to investments which are not readily marketable
is not disproportionate to Grantee’s net worth and Grantee’s investment in the Restricted Shares will not cause Grantee’s
overall commitment to become excessive.

 

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(d)           Access
to Data. Grantee acknowledges that during the course of this transaction and before deciding to acquire the Restricted Shares,
Grantee has been provided with financial and other written information about the Company. Grantee has been given the opportunity
by the Company to obtain any information and ask questions concerning the Company, the Restricted Shares, and Grantee’s investment
that Grantee felt necessary; and to the extent Grantee availed himself of that opportunity, Grantee has received satisfactory information
and answers concerning the business and financial condition of the Company in response to all inquiries in respect thereof.

 

(e)           Risks.
Grantee acknowledges and understands that (i) an investment in the Company constitutes a high risk, (ii) the Restricted
Shares are highly speculative, and (iii) there can be no assurance as to what investment return, if any, there may be. Grantee
is aware that the Company may issue additional securities in the future which could result in the dilution of Grantee’s ownership
interest in the Company.

 

(f)           Valid
Agreement. This Agreement when executed and delivered by Grantee will constitute a valid and legally binding obligation of
Grantee which is enforceable in accordance with its terms.

 

(g)           Residence.
The address set forth on the Notice of Restricted Shares Grant is Grantee’s current address and accurately sets forth Grantee’s
place of residence.

 

(h)           Tax
Consequences. Grantee has reviewed with Grantee’s own tax advisors the federal, state, local and foreign tax consequences
of this investment and the transactions contemplated by this Agreement. Grantee is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents. Grantee understands that Grantee (and not the Company) is responsible
for Grantee’s own tax liability that may arise as a result of the transactions contemplated by this Agreement. Grantee understands
that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income
the difference between the purchase price for the Restricted Shares and the fair market value of the Restricted Shares as of the
date any restrictions on the Restricted Shares lapse. Grantee understands that Grantee may elect to be taxed at the time the Restricted
Shares is purchased rather than when and as the restrictions lapse by filing an election under Section 83(b) of the Code with
the Internal Revenue Service within 30 days from the date of this Agreement.

 

GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S
SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY
OR ITS REPRESENTATIVES TO MAKE THIS FILING ON GRANTEE’S BEHALF.

 

7.           No
Employment Contract Created. The issuance of the Restricted Shares is not be construed as granting to Grantee any right
with respect to continuance of employment or any service with the Company or any of its subsidiaries. The right of the Company
or any of its subsidiaries to terminate at will Grantee's employment or terminate Grantee’s service at any time (whether
by dismissal, discharge or otherwise), with or without cause, is specifically reserved, subject to any other written employment
or other agreement to which the Company and Grantee may be a party.

 

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8.           Tax
Withholding. The Company has the power and the right to deduct or withhold, or require Grantee to remit to the Company,
an amount sufficient to satisfy Federal, state and local taxes (including the Grantee’s FICA obligation) required by law
to be withheld with respect to the grant and vesting of the Restricted Shares.

 

9.           Interpretation.
The Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) will interpret and
construe this Agreement, and any action, decision, interpretation or determination made in good faith by the Compensation Committee
will be final and binding on the Company and Grantee.

 

10.           Notices.
All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally
delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail,
postage prepaid, return receipt requested, addressed as follows:

 

if to Grantee, to the address (or telecopy
number) set forth on the Notice of Restricted Shares Grant; and

 

if to the Company, to the attention of the Corporate
Secretary of the Company at the address set forth below:

 

ZST Digital Networks, Inc.

ITC Kung Kuan, No. 206 Tongbai Road,

3rd Floor, No.2 Building,

Zhengzhou City, Henan Province, China 450007

 

or to such other address as the party to
whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such communication will
be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first
Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fifth
Business Day following the date on which the piece of mail containing such communication is posted, if sent by mail. As used herein,
“Business Day” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which
the notice or communication is to be sent are not required to be open.

 

11.           Specific
Performance. Grantee expressly agrees that the Company will be irreparably damaged if the provisions of this Agreement
are not specifically enforced. Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement by
Grantee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing
any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof. The Compensation
Committee has the power to determine what constitutes a breach or threatened breach of this Agreement. Any such determinations
will be final and conclusive and binding upon Grantee.

 

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12.           No
Waiver. No waiver of any breach or condition of this Agreement will be deemed to be a waiver of any other or subsequent
breach or condition, whether of like or different nature.

 

13.           Grantee
Undertaking. Grantee hereby agrees to take whatever additional actions and execute whatever additional documents the Company
may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions
imposed on Grantee pursuant to the express provisions of this Agreement.

 

14.           Modification
of Rights. The rights of Grantee are subject to modification and termination in certain events as provided in this Agreement.

 

15.           Governing
Law. This Agreement is governed by, and construed in accordance with, the laws of the State of Delaware, without giving
effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement
to the substantive law of another jurisdiction.

 

16.           Counterparts;
Facsimile Execution. This Agreement may be executed in one or more counterparts, each of which will be deemed to be an
original, but all of which together will constitute one and the same instrument. Facsimile execution and delivery of this Agreement
is legal, valid and binding execution and delivery for all purposes.

 

17.           Entire
Agreement. This Agreement (including the attached Notice of Restricted Shares Grant) constitutes the entire agreement between
the parties with respect to the subject matter hereof, and supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto.

 

18.           Severability.
In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Agreement, and this
Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

19.           WAIVER
OF JURY TRIAL. THE GRANTEE HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto
have executed this Restricted Share Grant Agreement as of the date first written above.

 

	 	ZST DIGITAL NETWORKS, INC. 
	 	 	 
	 	By:	/s/ Bo Zhong
	 	Name:	Bo Zhong
	 	Title:	Chief Executive Officer
	 	 	 
	 	GRANTEE:
	 	 
	 	/s/ Lin Zhong
	 	Name: Lin ZhongEXECUTION VERSION

 

EXHIBIT 4.1

 

AMENDMENT NO. 1

 

TO

 

RIGHTS AGREEMENT

 

AMENDMENT NO. 1, dated as of July 14, 2012
(this “Amendment”), to the Rights Agreement (the “Rights Agreement”), dated as of October
27, 2004, between PAR PHARMACEUTICAL COMPANIES, INC., a Delaware corporation (the “Company”), and AMERICAN
STOCK TRANSFER & TRUST COMPANY, a New York corporation, as the Rights Agent (the “Rights Agent”). Capitalized
terms used in this Amendment but not otherwise defined herein shall have the meanings ascribed to such terms in the Rights Agreement.

 

WHEREAS, the Company and the Rights Agent
entered into the Rights Agreement specifying the terms of the Rights;

 

WHEREAS, the Company, Sky Growth Holdings
Corporation, a Delaware corporation (“Parent”), and Sky Growth Acquisition Corporation, a Delaware corporation
and a wholly-owned subsidiary of Parent (“Merger Sub”), have proposed to enter into an Agreement and Plan of
Merger to be dated the date hereof (the “Merger Agreement”);

 

WHEREAS, the Board of Directors of the Company
desires to amend the Rights Agreement to render the Rights inapplicable to the Merger (as defined in the Merger Agreement) and
the other transactions contemplated by the Merger Agreement;

 

WHEREAS, the Company deems this Amendment
to be advisable and in the best interests of the holders of the Rights (including, prior to the Distribution Date, registered holders
of the Common Shares) and at a duly convened meeting the Company’s Board of Directors has duly approved this Amendment;

 

WHEREAS, pursuant to Section 27 of the Rights
Agreement, for so long as the Rights are then redeemable, the Company may, in its sole and absolute discretion, and the Rights
Agent shall, if the Company so directs, supplement or amend any provision of the Rights Agreement in any respect without the approval
of any holders of the Rights;

 

WHEREAS, no Person has become an Acquiring
Person as of the date hereof;

 

WHEREAS, pursuant to Section 27 of the Rights
Agreement, the Company has delivered to the Rights Agent a certificate signed by Thomas J. Haughey, President of the Company, certifying
that this Amendment complies with the terms of Section 27 of the Rights Agreement; and

 

    	 

    	 

    

 

WHEREAS, the Company desires to amend the
Rights Agreement in accordance with Section 27 of the Rights Agreement as set forth herein.

 

NOW, THEREFORE, in consideration of the
premises and mutual agreements set forth in the Rights Agreement and this Amendment, the parties hereby agree as follows:

 

		1.	Section 1 of the Rights Agreement is hereby amended by adding the following terms in the appropriate alphabetical order:

 

“Effective Time” shall have the
meaning ascribed to such term in the Merger Agreement.

 

“Merger” shall have the meaning
ascribed to such term in the Merger Agreement.

 

“Merger Agreement” shall mean
the Agreement and Plan of Merger dated as of July 14, 2012, by and among the Company, Parent and Merger Sub.

 

“Merger Sub” shall mean Sky Growth
Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent.

 

“Parent” shall mean Sky Growth
Holdings Corporation, a Delaware corporation.

 

“Parent Group” shall mean Parent,
Merger Sub and their respective Affiliates (as such term is defined in the Merger Agreement).

 

		2.	The second sentence of the definition of “Acquiring Person” set forth in Section 1(a) of the Rights Agreement
shall be amended to read in its entirety:

 

“Notwithstanding the foregoing, a Person shall
be deemed not to be an ‘Acquiring Person’ as the result of (i) such Person’s (or its Affiliates’) being
party to the Merger Agreement or other Permitted Transaction or (ii) an acquisition of shares of Common Stock by the Company that,
by reducing the number of shares outstanding, increases the proportionate number of shares beneficially owned by such Person to
15% or more of the shares of Common Stock then outstanding; PROVIDED, HOWEVER, that if a Person shall become the Beneficial Owner
of 15% or more of the shares of Common Stock then-outstanding because of such share acquisitions by the Company and thereafter
becomes the Beneficial Owner of any additional shares of Common Stock (other than pursuant to a Permitted Transaction or a dividend
or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock), then such Person shall be deemed to be an “Acquiring Person,” subject to the proviso set forth in the
first sentence of this Section 1(a), unless upon the consummation of the acquisition of such additional shares of Common Stock
such Person does not beneficially own 15% or more of the shares of Common Stock then-outstanding.”

 

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		3.	The definitions of “Beneficial Owner”, “Beneficial Ownership” and “beneficially
own” set forth in Section 1(c) of the Rights Agreement are hereby amended by inserting the following at the end of such
definitions:

 

“Notwithstanding anything to the contrary set
forth in this definition or in this Agreement, the Parent Group, either individually or collectively, shall not be deemed to be
a ‘Beneficial Owner’ of, to have ‘Beneficial Ownership’ of, or to ‘beneficially own’, any securities
solely by virtue of or as a result of any Permitted Transaction.”

 

		4.	The definition of “Final Expiration Date” set forth in Section 1(i) of the Rights Agreement is hereby amended
to read in its entirety:

 

“Final Expiration Date” shall mean
the earlier of (i) the close of business on October 27, 2014, and (ii) the point in time immediately prior to the Effective Time,
but only if such Effective Time shall occur.”

 

		5.	The parenthetical containing the definition of “Distribution Date” set forth in Section 3(a) of the Rights
Agreement is hereby amended to read in its entirety:

 

“(the earlier of such dates being herein referred
to as the ‘Distribution Date’; provided that a Distribution Date shall not be deemed to have occurred by virtue
of or as a result of any Permitted Transaction or the public announcement thereof.)”

 

		6.	The definition of “Permitted Transaction”, as set forth in Section 1(l) of the Rights Agreement is hereby
amended by inserting the following at the end of such definition:

 

“Notwithstanding anything to the contrary set
forth in this definition or in this Agreement, (A) the approval, execution, delivery or amendment of the Merger Agreement; (B)
the public announcement of the Merger Agreement or the Merger; (C) the consummation of the Merger; and (D) the consummation of
the other transactions contemplated by the Merger Agreement shall, in each case, be deemed to be a Permitted Transaction.”

 

		7.	The definition of “Stock Acquisition Date”, as set forth in Section 1(p) of the Rights Agreement is hereby
amended by inserting the following at the end of such definition:

 

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“Notwithstanding anything to the contrary set
forth in this definition or in this Agreement, a Stock Acquisition Date shall not be deemed to have occurred by virtue of or as
a result of any Permitted Transaction or the public announcement thereof.”

 

		8.	Section 29 of the Rights Agreement is hereby amended to add the following sentence at the end thereof:

 

“Nothing in this Agreement shall be construed
to give any holder of Rights (including, prior to the Distribution Date, the Common Shares of the Company) or any person any legal
or equitable right, remedy or claim under this Agreement by virtue of or in connection with any Permitted Transaction.”

 

		9.	The following is added as a new Section 11(p) of the Rights Agreement:

 

“Notwithstanding anything to the contrary in this
Section 11 or in this Agreement, an ‘invalidation time’ shall not be deemed to have occurred by virtue of or as a result
of any Permitted Transaction or the public announcement thereof.”

 

		10.	The following is added as a new Section 13(h) of the Rights Agreement:

 

“Notwithstanding anything to the contrary in this
Section 13 or in this Agreement, a transaction of the type contemplated by Sections 13(a)(i)-(iii) shall not be deemed to have
occurred by virtue of or as a result of any Permitted Transaction or the public announcement thereof.”

 

		11.	Section 23 of the Rights Agreement is hereby amended to add the following at the end thereof:

 

“(c) At the Final Expiration Date, (i) this Agreement
shall be terminated and be void and of no further force or effect, (ii) none of the parties to this Agreement will have any rights,
obligations or liabilities hereunder and (iii) the holders of the Rights (including, prior to the Distribution Date, registered
holders of the Common Shares) shall not be entitled to any benefits, rights or other interests under this Agreement, including,
without limitation, the right to purchase or otherwise acquire any securities of the Company.”

 

		12.	The Exhibits to the Rights Agreement shall be deemed restated to reflect this Amendment, mutatis mutandis.

		13.	The term “Agreement” as used in the Rights Agreement shall be deemed to refer to the Rights Agreement as amended
hereby.

		14.	This Amendment shall be effective upon execution by the Company pursuant to Section 27 of the Rights Agreement and, except
as set forth herein, the Rights Agreement shall remain in full force and effect and shall be otherwise unaffected hereby.

 

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		15.	If the Merger Agreement is terminated, then from and after such time this Amendment shall be of no further force and effect
and the Rights Agreement shall be restored to the terms that existed immediately prior to execution of this Amendment.

		16.	This Amendment may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and the same instrument.

		17.	The Rights Agent shall not be subject to, nor be required to interpret or comply with, nor determine if any Person has complied
with, the Merger Agreement, even though reference thereto may be made in this Amendment or the Rights Agreement.

  

    	5

    	 

    

 

IN WITNESS WHEREOF, the Company has caused this Amendment
to be duly executed as of the day and year first above written.

 

	 	PAR PHARMACEUTICAL COMPANIES, INC.,
	 	by	 
	 	 	/s/ Thomas J. Haughey
	 	 	Name:	Thomas J. Haughey
	 	 	Title:	President

 

[Amendment No. 1 to Rights Agreement]

 

    	6

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