EXHIBIT 10.2
PAR PHARMACEUTICAL COMPANIES,
INC.
TERMS OF EXECUTIVE RETENTION STOCK
OPTION AWARD
This document sets forth the terms of an
Option (as defined in Section 1 below) to purchase shares of common
stock granted by PAR PHARMACEUTICAL COMPAMIES, INC. (the
“Company”) pursuant to a Certificate of Stock Option
Grant (the “Certificate”) displayed at the website of
Smith Barney Benefits Access®. The Certificate, which
specifies the person to whom the Option is granted (the
“Optionee”) and other specific details of the grant,
and the electronic acceptance of the Certificate at the website of
Smith Barney, are incorporated herein by reference.
WHEREAS, the Board of Directors (the
“Board”) of the Company has authorized and approved the
Par Pharmaceutical Companies, Inc. 2004 Performance Equity Plan
(the “Plan”), which has been approved by the
stockholders of the Company;
WHEREAS, the Plan, in part, provides for
the grant of Options to certain employees of the Company and any
Subsidiary of the Company;
WHEREAS, pursuant to the Plan, the
Committee has approved an award to the Optionee designated in the
Certificate of an option to purchase common stock of the Company on
the terms and subject to the conditions set forth in the Plan and
these Terms of Executive Retention Stock Option Award.
Capitalized terms used but not defined in these Terms or the
Certificate shall have the meanings set forth in the
Plan.
NOW, THEREFORE, in consideration of the
foregoing and of the terms and conditions herein contained, the
parties hereto agree as follows:
1.
Grant of
Options.
Subject to the terms and
conditions hereinafter set forth and set forth in the Plan, the
Company hereby grants as of the date specified on the Certificate
(the “Grant Date”) to the Optionee, as a matter of
separate agreement and not in lieu of salary, or any other
compensation for services, the right and option (the
“Option”) to purchase all or any part of an aggregate
number of shares of Common Stock (the “Option Shares”)
specified on the Certificate on the terms and conditions set forth
herein and therein.
2.
Nonqualified Option; Withholding
Tax.
This Option shall not be
deemed an “Incentive Stock Option” under the Internal
Revenue Code (“Code”). The Company shall be
entitled, if the Compensation and Management Development Committee
of the Board of Directors of the Company (the
“Committee”) deems it necessary or desirable, to
withhold (or secure payment from the Optionee in lieu of
withholding) the amount of any withholding or other tax required by
law to be withheld or paid by the Company in connection with the
issuance of the Option Shares.
3.
Grant Price.
The grant price of each
Option Share shall be the grant price specified on the
Certificate.
4.
Exercise Period.
4.1
Grant Expiration Date;
Vesting.
4.1.1
Option Term.
Subject to the vesting provisions of Section 4.1.2,
the Option shall be exercisable during the period (the
“Exercise Period”) commencing on the Grant Date and
terminating at the close of business on the date (the “Grant
Expiration Date”) specified on the Certificate. All
rights to exercise the Option shall terminate on the Grant
Expiration Date.
4.1.2
Vesting.
(a)
Service-Based Vesting
Schedule. Subject to
this Section 4 and Section 5 hereof, this Option shall be deemed
vested and exercisable in accordance with the following
schedule:
|
|
|
|
Vesting
Date
|
Vesting
Percentage
|
|
Prior to Third Anniversary of the
Grant Date
|
0%
|
|
Third Anniversary of the Grant
Date
|
100%
|
(b)
Accelerated Performance-Based
Vesting. Notwithstanding
the vesting schedule in Section 4.1.2(a), if both conditions of (i)
and (ii) of this Section 4.1.2(b) are satisfied, the Option shall
be deemed vested and exercisable with respect to a number of Option
Shares equal to 66-2/3% of the total number of Option Shares
granted in the Certificate:
(i) the Committee determines that
the Fair Market Value of the Company’s Common Stock exceeds
one hundred twenty percent (120%) of the Option Grant Price (as
specified in the Certificate) on at least twenty (20) business days
during the fiscal quarter ending on December 31, 2010,
and
(ii) the Optionee remains
continuously employed with the Company or any of its subsidiaries
from the Grant Date through November 18, 2010 or until such time as
the condition set forth in (i) above is met.
Any fractional share resulting from the
above vesting calculation shall be rounded up to the next whole
share.
(c)
Forfeiture of Option on Termination of
Employment. Any portion
of the Option that has not vested in accordance with the schedule
in Section 4.1.2(a) or the performance-based vesting provisions of
Section 4.1.2(b) prior to the Optionee’s termination of
employment for any reason other than as specified in Sections
4.2.5(b) or 4.2.6 shall be forfeited and of no further effect upon
such termination.
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4.2
Effect of Termination of
Employment.
4.2.1
Termination Upon Death or
Disability.
Upon the termination of the
Optionee's employment by reason of the death or disability (for
purposes of the Plan) of the Optionee, this Option or any
unexercised portion thereof, which was otherwise exercisable on the
date of such termination, shall terminate unless such Option, to
the extent exercisable on such date, is exercised by the Optionee
or the executor or administrator of his estate, as the case may be,
within one year after the date of such termination of his
employment. However, should the death of the Optionee occur
during the one-year period following the termination of the
employment of the Optionee by reason of his disability, the Option,
to the extent exercisable on the date of termination of employment,
may be exercised by the executor or administrator of the Optionee's
estate within one year following such death. A transfer of
the Option by the Optionee by will or by laws of descent and
distribution shall not be effective to bind the Company unless the
Company shall have been furnished with written notice thereof and
such other evidence as the Company may deem necessary or desirable
to establish the validity of the transfer and the acceptance by the
transferee or transferees of the terms and conditions of the
Option. Notwithstanding anything herein to the contrary, in
no event shall the Option be exercisable after the Grant Expiration
Date.
4.2.2
Termination by Reason of
Retirement.
Should the employment of the
Optionee terminate during the term of the Option by reason of
retirement by the Optionee on or after age 65, or with the approval
of the Committee, from active employment with the Company or any
subsidiary prior to age 65 (“Retirement”), this Option
or any unexercised portion thereof which was otherwise exercisable
on the date of such termination, shall terminate within thirty (30)
days of the date of such termination unless the Committee, at or
before the time of such Retirement, shall determine that the Option
shall remain exercisable by the Optionee for a period of one year
following the effective date of such termination of employment;
provided, however, that if the Optionee dies within such one-year
period, the Option may be exercised by the executor or
administrator of the Optionee's estate within one year following
such death. Notwithstanding anything herein to the contrary,
in no event shall the Option be exercisable after the Grant
Expiration Date.
4.2.3
Termination by Reason of
Resignation.
Should the employment of the
Optionee terminate during the term of the Option by reason of
resignation by the Optionee (for any reason other than Retirement),
this Option or any unexercised portion thereof which was otherwise
exercisable on the date of such resignation, shall terminate unless
such Option, to the extent exercisable on the date of such
resignation, is exercised within thirty (30) days of the date on
which the Optionee resigns. Notwithstanding anything herein
to the contrary, in no event shall the Option be exercisable after
the Grant Expiration Date.
4.2.4
Termination For
Cause.
If the Optionee's employment
is terminated “for cause,” this Option or any
unexercised portion thereof shall terminate and be of no further
force and effect from the date of termination. Termination
“for cause” as used herein means the termination of
Optionee's employment by the Company (or, if applicable, any
subsidiary thereof), “for cause” as defined in any
agreement between the Company (or any such subsidiary) and the
Optionee or, in the event no such agreement exists, based upon
objective factors determined in good faith by the
Company.
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4.2.5
Termination Without
Cause.
(a)
Termination Prior to Second
Anniversary. If the
employment of the Optionee with the Company or any of its
subsidiaries is terminated for any reason other than death,
disability, Retirement, resignation or discharge “for
cause” at any time prior to the second anniversary of the
Grant Date, this Option or any unexercised portion thereof which
was otherwise exercisable on the date of such termination, shall
terminate unless such Option, to the extent exercisable on the date
of such termination in accordance with Section 4.1.2, is exercised
within ninety (90) days of the date on which he ceases to be an
employee. Notwithstanding anything herein to the contrary, in
no event shall the Option be exercisable after the Grant Expiration
Date.
(b)
Termination After Second
Anniversary. Notwithstanding the provisions of Section
4.2.5(a), (i) if the employment of the Optionee with the Company or
any of its subsidiaries is terminated for any reason other than
death, disability, Retirement, resignation or any other termination
by the Optionee, or discharge “for cause” and (ii) such
termination occurs on or after the second anniversary of the Grant
Date and prior to the third anniversary of the Grant Date, the
Optionee’s right to exercise the Option with respect to that
number of Option Shares equal to the total number of Option Shares
granted in the Certificate multiplied by the “Ratio.”
In that event, this Option or any unexercised portion thereof
which was otherwise exercisable on the date of the Optionee’s
termination, shall terminate unless such Option, to the extent
exercisable on the date of such termination in accordance with
Section 4.1.2 or this Section 4.2.5, is exercised within ninety
(90) days of the date on which the Optionee ceases to be an
employee. Notwithstanding anything herein to the contrary, in
no event shall the Option be exercisable after the Grant Expiration
Date. As used he
