EXHIBIT 10.9.2
 
 
                              EMPLOYMENT AGREEMENT
 
                EMPLOYMENT AGREEMENT (this "Agreement"), dated as of February 6,
2003, by and between  Pharmaceutical  Resources,  Inc., a New Jersey corporation
("Resources"), and Scott L. Tarriff ("Executive").
 
                                R E C I T A L S :
 
                  A.  WHEREAS,  Executive is presently  employed by Resources in
the  capacities of Executive Vice President of Resources and President and Chief
Executive Officer of Resources's  wholly-owned  subsidiary,  Par Pharmaceutical,
Inc. ("Par" and, together with Resources, "Employer"), and currently serves as a
member of the Board of Directors of Resources (the "Board"); and
 
                  B.  WHEREAS,  Employer  and  Executive  desire to  cancel  and
replace Executive's existing employment  agreement,  dated February 20, 1998, as
modified from time to time (the "Existing Employment Agreement"), and enter into
this  Agreement  in order for  Executive  to  continue  to  perform  the  duties
associated  with his  positions  with Employer on the terms and  conditions  set
forth herein.
 
                  In consideration of the mutual promises herein contained,  the
parties hereto hereby agree as follows:
 
                  1.       EMPLOYMENT.
 
                           1.1. GENERAL.  Resources  hereby employs Executive in
the  capacities of Executive Vice President of Resources and President and Chief
Executive  Officer of Par at the  compensation  rate and  benefits  set forth in
Section 2 hereof for the  Employment  Term (as defined in Section  3.1  hereof).
Executive  hereby accepts such  employment,  subject to the terms and conditions
herein contained. In all such capacities,  Executive shall perform and carry out
such duties and  responsibilities as may be assigned to him from time to time by
the Board and by the Chief Executive Officer of Resources reasonably  consistent
with Executive's positions and this Agreement, and shall report to the Board and
the Chief Executive Officer of Resources.
 
                           1.2. TIME DEVOTED TO POSITION.  Executive, during the
Employment Term, shall devote  substantially all of his business time, attention
and skills to the business and affairs of Employer.
 
                           1.3.  CERTIFICATIONS.  Whenever  the Chief  Executive
Officer and/or Chief Financial Officer of Resources are required by law, rule or
regulation or requested by any governmental authority or by Resources's or Par's
auditors  to  provide  certifications  with  respect  to  Resources's  or  Par's
financial  statements or filings with the Securities and Exchange  Commission or
any other governmental  authority,  Executive shall sign such  certifications as
may be reasonably  requested by such officers,  Resources  and/or Par, with such
exceptions as Executive deems necessary to make such certifications accurate and
not misleading.
 
 
                  2.       COMPENSATION AND BENEFITS.
 
                           2.1.  SALARY.  At all  times  Executive  is  employed
hereunder,  Employer shall pay to Executive, and Executive shall accept, as full
compensation for any and all services  rendered and to be rendered by him during
such period to Employer in all  capacities,  including,  but not limited to, all
services that may be rendered by him to any of Employer's existing subsidiaries,
entities and organizations hereafter formed,  organized or acquired by Employer,
directly  or  indirectly   (each,   a   "Subsidiary"   and   collectively,   the
"Subsidiaries"),  the  following:  (i) a base  salary  at  the  annual  rate  of
$300,000,  or at such increased rate as the Board (through its  Compensation and
 
 
                            Exhibit 10.9.2 - Page 1
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Stock Option Committee), in its sole discretion, may hereafter from time to time
grant to Executive,  subject to adjustment in accordance with Section 2.2 hereof
(as so  adjusted,  the "Base  Salary");  and (ii) any  additional  bonus and the
benefits set forth in Sections 2.3, 2.4 and 2.5 hereof. The Base Salary shall be
payable in accordance with the regular payroll practices of Employer  applicable
to senior  executives,  less such deductions as shall be required to be withheld
by applicable law and regulations or otherwise.
 
                           2.2.  ADJUSTMENTS  IN BASE SALARY.  On each October 1
during  the  Employment  Term,  the  Base  Salary  shall  be  increased  by that
percentage,  if any, by which the Consumer  Price Index,  Urban Wage Earners and
Clerical  Workers,  for the New York City  metropolitan  area,  published by the
United States  Government as of the month of September of such year exceeds such
Index for the immediately preceding September.
 
                           2.3.  BONUS. Subject to Section 3.3 hereof, Executive
shall be entitled to an annual bonus during the  Employment  Term in such amount
(if any) as  determined  by the Board based on such  performance  criteria as it
deems appropriate,  including,  without limitation,  Executive's performance and
Employer's  earnings,   financial  condition,  rate  of  return  on  equity  and
compliance with regulatory requirements. The target amount of Executive's annual
bonus shall be fifty (50%) percent of the Base Salary.
 
                           2.4.  STOCK OPTIONS.  Executive  shall be entitled to
participate in stock option and similar equity plans of Employer.  In connection
herewith,  Executive  has been  granted  options to purchase  200,000  shares of
common  stock  of  Resources  on  terms  and  conditions  set  forth in the 2001
Performance  Equity Plan and Executive's  Stock Option Agreement with Resources.
Executive  shall be  entitled  to any  additional  annual  stock  option  grants
provided at the discretion of the Board commencing in January 2004.
 
                           2.5. EXECUTIVE BENEFITS.
 
                                2.5.1.   EXPENSES.   Employer   shall   promptly
reimburse  Executive  for expenses he reasonably  incurs in connection  with the
performance of his duties (including business travel and entertainment expenses)
hereunder, all in accordance with Employer's policies with respect thereto as in
effect from time to time.
 
                                2.5.2.   EMPLOYER  PLANS.   Executive  shall  be
entitled to participate in such employee  benefit and welfare plans and programs
as  Employer  may from time to time  generally  offer or  provide  to  executive
officers  of  Employer  or its  Subsidiaries,  including,  but not  limited  to,
participation in life insurance, health and accident, medical plans and programs
and profit sharing and retirement plans.
 
                                2.5.3. VACATION.  Executive shall be entitled to
four (4) weeks of paid  vacation  per  calendar  year,  prorated for any partial
year.
 
                                2.5.4.   AUTOMOBILE.   Employer   shall  provide
Executive  with an automobile  cash allowance  commensurate  with his titles and
positions.
 
                                2.5.5.  LIFE  INSURANCE.  Employer  shall obtain
(PROVIDED,  that Executive qualifies on a non-rated basis) a term life insurance
policy,  the premiums of which shall be borne by Employer and the death benefits
of which shall be payable to  Executive's  estate,  or as otherwise  directed by
Executive, in the amount of $3 million throughout the Employment Term.
 
                  3.       EMPLOYMENT TERM; TERMINATION.
 
                           3.1.   EMPLOYMENT   TERM.    Executive's   employment
hereunder shall commence on the date hereof and, except as otherwise provided in
Section 3.2 hereof, shall continue until the third (3rd) anniversary of the date
of this  Agreement  (the  "Initial  Term").  Thereafter,  this  Agreement  shall
automatically be renewed for successive one-year periods commencing on the third
(3rd)  anniversary  of the date of this Agreement in each  subsequent  year (the
Initial Term,  together with any such  subsequent  employment  period(s),  being
referred to herein as the "Employment Term"), unless Executive or Employer shall
have  provided a Notice of  Termination  (as defined in Section 3.4.2 hereof) in
respect of its or his  election  not to renew the  Employment  Term to the other
party at least  180 days  prior to such  termination.  Upon  non-renewal  of the
Employment Term pursuant to this Section 3.1 or termination pursuant to Sections
 
 
 
                            Exhibit 10.9.2 - Page 2
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3.2.1  through  3.2.6 hereof,  inclusive,  Executive  shall be released from any
duties  hereunder  (except as set forth in Section 4 hereof) and the obligations
of Employer to Executive shall be as set forth in Section 3.3 hereof only.
 
                           3.2. EVENTS OF TERMINATION. The Employment Term shall
terminate upon the occurrence of any one or more of the following events:
 
                                3.2.1. DEATH. In the event of Executive's death,
the Employment Term shall terminate on the date of his death.
 
                                3.2.2. WITHOUT CAUSE BY EXECUTIVE. Executive may
terminate  the  Employment  Term at any time  during  such  Term for any  reason
whatsoever  by  giving  a  Notice  of  Termination  to  Employer.  The  Date  of
Termination  pursuant to this Section  3.2.2 shall be thirty (30) days after the
Notice of Termination is given.
 
                                3.2.3.  DISABILITY.  In the event of Executive's
Disability (as hereinafter defined),  Employer may, at its option, terminate the
Employment  Term by giving a Notice of Termination  to Executive.  The Notice of
Termination  shall  specify  the Date of  Termination,  which  date shall not be
earlier  than thirty  (30) days after the Notice of  Termination  is given.  For
purposes of this  Agreement,  "Disability"  means  disability  as defined in any
long-term   disability  insurance  policy  provided  by  Employer  and  insuring
Executive, or, in the absence of any such policy, the inability of Executive for
180 days in any twelve  (12) month  period to  substantially  perform his duties
hereunder as a result of a physical or mental illness, all as determined in good
faith by the Board.
 
                                3.2.4.  CAUSE.  Employer  may,  at  its  option,
terminate the Employment Term for "Cause" based on objective factors  determined
in good faith by a majority of the Board as set forth in a Notice of Termination
to  Executive  specifying  the  reasons for  termination  and the failure of the
Executive to cure the same within ten (10) days after  Employer shall have given
the Notice of  Termination;  PROVIDED,  HOWEVER,  that in the event the Board in
good  faith  determines  that  the  underlying   reasons  giving  rise  to  such
determination cannot be cured, then the ten- (10) day period shall not apply and
the  Employment  Term shall  terminate on the date the Notice of  Termination is
given.  For  purposes  of this  Agreement,  "Cause"  shall mean (i)  Executive's
conviction of, guilty or no contest plea to, or confession of guilt of, a felony
or other crime involving moral  turpitude;  (ii) an act or omission by Executive
in connection with his employment that constitutes fraud,  criminal  misconduct,
breach of fiduciary duty,  dishonesty,  gross negligence,  malfeasance,  willful
misconduct  or other  conduct  that is  materially  harmful  or  detrimental  to
Employer;  (iii)  a  material  breach  by  Executive  of  this  Agreement;  (iv)
continuing  failure to perform  such  duties as are  assigned  to  Executive  by
Employer in accordance with this Agreement,  other than a failure resulting from
a Disability;  (v) Executive's knowingly taking any action on behalf of Employer
or any of its affiliates without appropriate authority to take such action; (vi)
Executive's knowingly taking any action in conflict of interest with Employer or
any of its affiliates given Executive's position with Employer; and/or (vii) the
commission of an act of personal  dishonesty by Executive that involves personal
profit in connection with Employer.
 
                                3.2.5. WITHOUT CAUSE BY EMPLOYER.  Employer may,
at its  option,  terminate  the  Employment  Term for any  reason  or no  reason
whatsoever  (other than for the reasons set forth elsewhere in this Section 3.2)
by giving a Notice of Termination to Executive.  The Notice of Termination shall
specify  the Date of  Termination,  which date shall not be earlier  than thirty
(30) days after the Notice of Termination is given.
 
                                3.2.6.  EMPLOYER'S  MATERIAL  BREACH.  Executive
may, at his option,  terminate  the  Employment  Term upon  Employer's  material
breach of this Agreement and the  continuation  of such breach for more than ten
(10) days after  written  demand for cure of such breach is given to Employer by
Executive  (which  demand  shall  identify  the  manner  in which  Employer  has
materially  breached  this  Agreement).   Employer's  material  breach  of  this
Agreement  shall mean (i) the failure of Employer to make any payment that it is
required to make  hereunder to Executive  when such payment is due or within two
(2)  business  days  thereafter;  (ii)  the  assignment  to  Executive,  without
Executive's  express written consent, of duties inconsistent with his positions,
responsibilities and status with Employer,  or a change in Executive's reporting
responsibilities,  titles  or  offices  or any  plan,  act,  scheme or design to
constructively  terminate the  Executive,  or any removal of Executive  from his
positions  with  Employer,  except in  connection  with the  termination  of the
 
 
                            Exhibit 10.9.2 - Page 3
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Employment  Term by Employer  for Cause,  without  Cause or  Disability  or as a
result of Executive's death or voluntary  resignation or by Executive other than
pursuant to this Section  3.2.6;  (iii) a reduction  by Employer in  Executive's
Base  Salary;  or (iv) a permanent  reassignment  of  Executive's  primary  work
location,  without the consent of  Executive,  to a location  more than 35 miles
from Employer's executive offices in Woodcliff Lake, New Jersey.
 
                           3.3.  CERTAIN   OBLIGATIONS  OF  EMPLOYER   FOLLOWING
TERMINATION OF THE EMPLOYMENT TERM. Following termination of the Employment Term
under the circumstances  described below, Employer shall pay to Executive or his
estate, as the case may be, the following compensation and provide the following
benefits in full  satisfaction  and final  settlement  of any and all claims and
demands that Executive now has or hereafter may have hereunder against Employer.
In connection with  Executive's  receipt of any or all monies and benefits to be
received  pursuant to this Section 3.3,  Executive shall not have a duty to seek
subsequent  employment  during  the  period in which he is  receiving  severance
payments and the Severance Amount (as defined in Section 3.3.2 hereof) shall not
be reduced solely as a result of Executive's  subsequent employment by an entity
other than Employer.
 
                                3.3.1.   FOR  CAUSE.   In  the  event  that  the
Employment  Term is  terminated  by Employer  for Cause,  Employer  shall pay to
Executive,  in a single lump-sum,  an amount equal to any unpaid but earned Base
Salary through the Date of Termination.
 
                                3.3.2.  WITHOUT  CAUSE  BY  EMPLOYER;   MATERIAL
BREACH BY EMPLOYER;  ELECTION  NOT TO RENEW BY  EMPLOYER.  In the event that the
Employment Term is terminated by Employer pursuant to Section 3.2.5 hereof or by
Executive  pursuant to Section 3.2.6 hereof or Employer elects not to renew this
Agreement  at any time  pursuant to Section 3.1  hereof,  Employer  shall pay to
Executive, subject to Executive's continued compliance with the terms of Section
4 hereof,  an amount equal to (i) if such  termination is effective  (subject to
clause (ii) of this  Section  3.3.2)  before July 15,  2003,  two times the Base
Salary  in  effect  at such  applicable  time,  or (ii) if such  termination  is
effective  after  July 15,  2003 or at any time  after a Change of  Control  (as
defined in  Section  3.4.1  hereof) of  Employer,  $1 million  ((i) or (ii),  as
applicable,  the "Severance Amount").  Any payments made in accordance with this
Section 3.3.2 shall be made in twelve (12) equal installments over the course of
one (1) year from the Date of Termination in accordance with Employer's  regular
payroll practices.
 
                                3.3.3 WITHOUT  CAUSE BY EXECUTIVE;  ELECTION NOT
TO RENEW BY EXECUTIVE.  In the event that the  Employment  Term is terminated by
Executive pursuant to Section 3.2.2 hereof or Executive elects not to renew this
Agreement  at any time  pursuant to Section 3.1  hereof,  Employer  shall pay to
Executive,  in a single lump-sum,  an amount equal to any unpaid but earned Base
Salary through the Date of Termination.
 
                                3.3.4. DEATH, DISABILITY.  In the event that the
Employment Term is terminated by reason of Executive's death pursuant to Section
3.2.1  hereof or by Employer  by reason of  Executive's  Disability  pursuant to
Section 3.2.3 hereof,  Employer shall pay to Executive,  subject to, in the case
of  Disability,  Executive's  continued  compliance  with the terms of Section 4
hereof,  the  Severance  Amount,  less  any  life  insurance  and/or  disability
insurance  benefits  received by Executive  or his estate  pursuant to insurance
policies  provided by Employer  (including  pursuant to Section  2.5.5  hereof),
payable in accordance with Section 3.3.2 hereof.
 
                                3.3.5.  POST-EMPLOYMENT  TERM  BENEFITS.  In the
event  Executive is terminated  pursuant to Sections 3.2.1 through 3.2.6 hereof,
inclusive,  or either  Employer or Executive  elects not to renew this Agreement
pursuant to Section 3.1  hereof,  Employer  shall  reimburse  Executive  for any
unpaid expenses  pursuant to Section 2.5.1 hereof and if Executive is terminated
pursuant  to Sections  3.2.3,  3.2.5 or 3.2.6  hereof or Employer  elects not to
renew this  Agreement  pursuant to Section 3.1  hereof,  Employer  shall pay, on
behalf of Executive, for a period equal to twenty-four (24) months from the Date
of  Termination  (the  "Benefits  Period"),  subject  to  Executive's  continued
compliance  with the terms of  Section 4 hereof,  all life  insurance,  medical,
health and accident,  and disability  plans and programs in which  Executive was
entitled to participate immediately prior to the Date of Termination;  PROVIDED,
that Executive's  continued  participation is legally possible under the general
terms and provisions of such plans and programs; and PROVIDED,  FURTHER, that in
the  event  Executive  is  entitled  to  equal  or  comparable  benefits  from a
subsequent  employer  during the Benefits  Period,  Employer's  obligation  with
respect thereto pursuant to this Section 3.3.5 shall end as of such date. In the
event  that  Executive's  participation  in any such plan or  program is barred,
Employer,  at its sole cost and expense,  shall use its commercially  reasonable
efforts to provide Executive with benefits  substantially  similar to those that
 
 
                            Exhibit 10.9.2 - Page 4
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Executive  was  entitled  to  receive  under  such  plans and  programs  for the
remainder of the Benefits Period.
 
                                3.3.6. STOCK OPTIONS.
 
                                (a) If,  within  twelve (12) months  following a
Change of Control  (as  defined  in  Section  3.4.1  hereof)  of  Employer,  the
Employment  Term is  terminated  other than for Cause,  then  Executive  (or his
estate)  shall  have  twenty-four  (24)  months  from the date of such  event to
exercise  such stock  options;  PROVIDED,  that the  relevant  stock option plan
remains in effect and such stock  options  shall not have  otherwise  expired in
accordance with the terms thereof. In connection  therewith,  Employer agrees to
use commercially reasonable efforts to amend Executive's Stock Option Agreements
if necessary to effectuate the provisions of this Section 3.3.6(a).
 
                                (b)  In  the  event  the   Employment   Term  is
terminated (i) by Employer pursuant to Section 3.2.5
 
hereof and the reason for such  termination is not related to the performance of
Executive in his duties with respect to Employer,  or (ii) by Executive pursuant
to Section 3.2.6 hereof, then all stock options theretofore granted to Executive
shall thereupon vest and Executive shall have  twenty-four (24) months from such
date to exercise such  options;  PROVIDED,  that the relevant  stock option plan
remains in effect and such stock  options  shall not have  otherwise  expired in
accordance with the terms thereof. In connection  therewith,  Employer agrees to
use commercially reasonable efforts to amend Executive's Stock Option Agreements
if necessary to effectuate the provisions of this Section 3.3.6(b).
 
                           3.4. DEFINITIONS.
 
                                3.4.1. "CHANGE OF CONTROL" DEFINED. A "Change of
Control" of Employer means (i) the approval by the  stockholders of Resources of
the sale,  lease,  exchange or other  transfer  (other than pursuant to internal
reorganization)  by  Resources  or  Par  of  all  or  substantially  all  of its
respective assets to a single purchaser or to a group of associated  purchasers;
(ii) the first  purchase  of shares of  equity  securities  of Par or  Resources
pursuant  to a tender  offer or  exchange  offer  (other than an offer by Par or
Resources) for at least fifteen (15%) percent of the equity securities of Par or
Resources;  (iii) the approval by the  stockholders of Resources of an agreement
for a merger or  consolidation  in which neither Par nor Resources shall survive
as an independent,  publicly-owned corporation;  (iv) the acquisition (including
by means of a merger) by a single purchaser or a group of associated  purchasers
of  securities  of Par or  Resources  from either Par or  Resources or any third
party  representing  thirty-five  (35%)  percent or more of the combined  voting
power of Par's or Resources's  then  outstanding  equity  securities in one or a
related   series  of   transactions   (other   than   pursuant  to  an  internal
reorganization)  or (v) the change of the  membership of a majority of the Board
during any period of two (2)  consecutive  years,  unless the  election,  or the
nomination  for election by Resources's  stockholders,  of each new director was
approved by a vote of at least two-thirds of the directors of the Board still in
office who were directors of Resources at the beginning of the period.
 
                                3.4.2. "NOTICE OF TERMINATION" DEFINED.  "Notice
of Termination"  means a written notice that indicates the specific  termination
provision  relied  upon by  Employer  or  Executive  and,  except in the case of
termination  pursuant to Sections 3.2.1, 3.2.2 or 3.2.5 hereof,  that sets forth
in reasonable detail the facts and circumstances  claimed to provide a basis for
termination of the Employment Term under the termination provision so indicated.
 
                                3.4.3. "DATE OF TERMINATION"  DEFINED.  "Date of
Termination" means such date as the Employment Term is expired if not renewed or
terminated in accordance with Sections 3.1 or 3.2 hereof.
 
                  4.       CONFIDENTIALITY AND NONSOLICITATION; PROPERTY RIGHTS.
 
                           4.1.     "CONFIDENTIAL      INFORMATION"     DEFINED.
"Confidential  Information"  means  any and all  information  (oral or  written)
relating to Employer or any Subsidiary or any entity controlling, controlled by,
or  under  common  control  with  Employer  or any  Subsidiary  or any of  their
respective activities,  including,  but not limited to, information relating to:
technology,  research,  test  procedures  and results,  machinery and equipment;
 
 
                            Exhibit 10.9.2 - Page 5
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manufacturing   processes;   financial  information;   products;   identity  and
description  of  materials  and  services  used;  purchasing;   costs;  pricing;
customers and  prospects;  advertising,  promotion and  marketing;  and selling,
servicing and information pertaining to any governmental  investigation,  except
such information which becomes public, other than as a result of a breach of the
provisions of Section 4.2 hereof.
 
                           4.2.  NON-DISCLOSURE  OF  CONFIDENTIAL   INFORMATION.
Executive shall not at any time (other than as may be required or appropriate in
connection  with the  performance by him of his duties  hereunder),  directly or
indirectly,   use,   communicate,   disclose  or  disseminate  any  Confidential
Information  in any manner  whatsoever  (except as may be  required  under legal
process by subpoena or other court order).
 
                           4.3. CERTAIN  ACTIVITIES.  Executive shall not, while
employed by Resources  and for a period of two (2) years  following  the Date of
Termination,  directly or indirectly, hire, offer to hire, entice away or in any
other  manner  persuade or attempt to persuade  any  officer,  employee,  agent,
lessor,  lessee,  licensor,  licensee  or  supplier  of  Employer  or any of its
Subsidiaries  to discontinue or alter his or its  relationship  with Employer or
any of its Subsidiaries.
 
                           4.4.  NON-COMPETITION.  Executive  shall  not,  while
employed by  Resources  and for a period of one (1) year  following  the Date of
Termination,  engage or participate  in,  directly or indirectly  (whether as an
officer,  director,  employee,  partner,  consultant,  equityholder,  lender  or
otherwise),  any business  that  manufactures,  markets or sells  products  that
compete with any product of Employer that is significant to Employer's  business
based on  sales  and/or  profitability  of any  such  product  as of the Date of
Termination,  unless the Employment  Term is terminated by Employer  pursuant to
Section 3.2.5 hereof or by Executive  properly pursuant to Section 3.2.6 hereof.
Nothing herein shall  prohibit  Executive from being a passive owner of not more
than one (1%)  percent  of any  publicly-traded  class of  capital  stock of any
entity engaged in a competing business.
 
                           4.5. PROPERTY RIGHTS; ASSIGNMENT OF INVENTIONS.  With
respect to  information,  inventions  and  discoveries  or any  interest  in any
copyright  and/or  other  property  right  developed,  made or  conceived  of by
Executive,  either alone or with others,  at any time during his  employment  by
Employer and whether or not within working hours, arising out of such employment
or  pertinent  to any  field of  business  or  research  in which,  during  such
employment,  Employer  is  engaged or (if such is known to or  ascertainable  by
Executive) is considering engaging, Executive hereby agrees:
 
                           (a)  that  all  such   information,   inventions  and
discoveries  or any  interest in any  copyright  and/or  other  property  right,
whether  or not  patented  or  patentable,  shall be and  remain  the  exclusive
property of Employer;
 
                           (b)   to   disclose   promptly   to   an   authorized
representative of Employer all such  information,  inventions and discoveries or
any copyright  and/or other  property  right and all  information in Executive's
possession as to possible applications and uses thereof;
 
                           (c) not to file any patent  application  relating  to
any such  invention or  discovery  except with the prior  written  consent of an
authorized officer of Employer (other than Executive);
 
                           (d) that Executive hereby waives and releases any and
all  rights  Executive  may  have in and to  such  information,  inventions  and
discoveries,  and  hereby  assigns  to  Executive  and/or  its  nominees  all of
Executive's  right, title and interest in them, and all Executive's right, title
and interest in any patent,  patent  application,  copyright  or other  property
right based  thereon.  Executive  hereby  irrevocably  designates  and  appoints
Employer  and each of its duly  authorized  officers and agents as his agent and
attorney-in-fact  to act for him and on his  behalf  and in his stead to execute
and file any document and to do all other lawfully permitted acts to further the
prosecution,  issuance and enforcement of any such patent,  patent  application,
copyright or other  property right with the same force and effect as if executed
and delivered by Executive; and
 
                           (e) at the request of Employer,  and without  expense
to Executive,  to execute such documents and perform such other acts as Employer
deems  necessary  or  appropriate,  for  Employer  to  obtain  patents  on  such
 
 
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inventions in a jurisdiction  or  jurisdictions  designated by Employer,  and to
assign to  Employer  or its  designee  such  inventions  and any and all  patent
applications and patents relating thereto.
 
                           4.6.    INJUNCTIVE   RELIEF.   The   parties   hereby
acknowledge and agree that (a) Employer will be irreparably injured in the event
of a breach by  Executive  of any of his  obligations  under this Section 4; (b)
monetary  damages  will  not be an  adequate  remedy  for any such  breach;  (c)
Employer will be entitled to injunctive  relief, in addition to any other remedy
which it may have, in the event of any such breach; and (d) the existence of any
claims that Executive may have against Employer, whether under this Agreement or
otherwise,  will not be a defense to the  enforcement  by Employer of any of its
rights under this Section 4.
 
                           4.7.  NON-EXCLUSIVITY AND SURVIVAL.  The covenants of
Executive  contained  in this  Section 4 are in addition to, and not in lieu of,
any  obligations  that  Executive  may have with  respect to the subject  matter
hereof, whether by contract, as a matter of law or otherwise, and such covenants
and their enforceability shall survive any termination of the Employment Term by
either party and any  investigation  made with respect to the breach  thereof by
Employer at any time.
 
                  5.       MISCELLANEOUS PROVISIONS.
 
                           5.1. SEVERABILITY.  If, in any jurisdiction, any term
or  provision  hereof is  determined  to be  invalid or  unenforceable,  (a) the
remaining  terms  and  provisions  hereof  shall  be  unimpaired;  (b) any  such
invalidity  or  unenforceability  in any  jurisdiction  shall not  invalidate or
render  unenforceable  such  provision  in any other  jurisdiction;  and (c) the
invalid  or  unenforceable  term  or  provision  shall,  for  purposes  of  such
jurisdiction,  be  deemed  replaced  by a term or  provision  that is valid  and
enforceable and that comes closest to expressing the intention of the invalid or
unenforceable term or provision.
 
                           5.2. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in one or more  counterparts,  and by the different  parties  hereto in
separate  counterparts,  each of which shall be deemed to be an original but all
of which taken  together  shall  constitute  one and the same agreement (and all
signatures  need not appear on any one  counterpart),  and this Agreement  shall
become  effective when one or more  counterparts  has been signed by each of the
parties hereto and delivered to each of the other parties hereto.
 
                           5.3.  NOTICES.  All  notices,  requests,  demands and
other  communications  hereunder  shall be in writing  and shall be deemed  duly
given upon receipt when delivered by hand,  overnight delivery or telecopy (with
confirmed delivery), or three (3) business days after posting, when delivered by
registered or certified mail or private courier service, postage prepaid, return
receipt requested, as follows:
 
         If to Employer, to:
 
                  Pharmaceutical Resources, Inc.
                  One Ram Ridge Road
                  Spring Valley, New York  10977
                  Attention:  Vice President - Finance and
                              Administration
                  Telecopy No.: (845) 425-7922
 
         Copy to:
 
                  Stephen A. Ollendorff, Esq.
                  Whitney John Smith, Esq.
                  Kirkpatrick & Lockhart LLP
                  599 Lexington Avenue
                  New York, New York  10022
                  Telecopy No.:  (212) 536-3901
 
 
                            Exhibit 10.9.2 - Page 7
<PAGE>
 
 
         If to Executive, to:
 
                  Scott L. Tarriff
                  c/o Pharmaceutical Resources, Inc.
                  One Ram Ridge Road
                  Spring Valley, New York  10977
 
or to such other  address(es)  as a party hereto shall have  designated  by like
notice to the other parties hereto.
 
                           5.4. AMENDMENT. No provision of this Agreement may be
modified,  amended,  waived  or  discharged  in any  manner  except by a written
instrument executed by both Resources and Executive.
 
                           5.5.  ENTIRE  AGREEMENT.  This  Agreement  and,  with
respect to Section 3.3.6 hereof,  Executive's  Stock Option  Agreements  and the
governing  stock option  plans  constitute  the entire  agreement of the parties
hereto with  respect to the  subject  matter  hereof,  and  supersede  all prior
agreements and understandings of the parties hereto, oral or written, including,
but not limited to, the Existing  Employment  Agreement  and that certain  Trade
Secret,  Non-Disclosure and Restrictive Covenant Agreement,  dated as of October
19, 1999 (the  "Restrictive  Covenant  Agreement"),  with respect to the subject
matter  hereof.  Executive  and Employer  hereby agree that each of the Existing
Employment Agreement and the Restrictive Covenant Agreement is hereby superseded
and of no further force and effect,  and that this Agreement  shall be effective
as of the date hereof. In the event of any conflict between Section 3.3.6 hereof
and  Executive's  Stock Option  Agreements and the governing stock option plans,
Section 3.3.6 shall govern.
 
                           5.6. APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to contracts made and to be wholly performed therein.
 
                           5.7. HEADINGS.  The headings contained herein are for
the sole purpose of convenience of reference,  and shall not in any way limit or
affect the meaning or  interpretation  of any of the terms or provisions of this
Agreement.
 
                           5.8.   BINDING   EFFECT;   SUCCESSORS   AND  ASSIGNS.
Executive  may not  delegate  any of his duties or assign his rights  hereunder.
This  Agreement  shall inure to the benefit of, and be binding upon, the parties
hereto  and  their  respective  heirs,  legal  representatives,  successors  and
permitted  assigns.  Employer  shall  require any successor  (whether  direct or
indirect and whether by purchase, merger,  consolidation or otherwise) to all or
substantially all of the business and/or assets of Employer,  by an agreement in
form and substance reasonably satisfactory to Executive, to expressly assume and
agree to perform  this  Agreement in the same manner and to the same extent that
Employer would be required to perform if no such succession had taken place.
 
                           5.9.  WAIVER,  ETC.  The  failure  of  either  of the
parties  hereto to at any time enforce any of the  provisions of this  Agreement
shall not be deemed or construed to be a waiver of any such provision, nor to in
any way affect the  validity of this  Agreement or any  provision  hereof or the
right of either of the  parties  hereto  thereafter  to  enforce  each and every
provision of this Agreement. No waiver of any breach of any of the provisions of
this  Agreement  shall be  effective  unless  set forth in a written  instrument
executed  by the  party  against  whom or which  enforcement  of such  waiver is
sought,  and no waiver of any such breach  shall be  construed or deemed to be a
waiver of any other or subsequent breach.
 
                           5.10.  CAPACITY,  ETC.  Executive and Employer hereby
represent  and warrant to the other  that,  as the case may be: (a) he or it has
full power, authority and capacity to execute and deliver this Agreement, and to
perform his or its  obligations  hereunder;  (b) such  execution,  delivery  and
performance  shall not (and  with the  giving of notice or lapse of time or both
would not) result in the breach of any agreements or other  obligations to which
he or it is a party or he or it is otherwise  bound;  and (c) this  Agreement is
his or its valid and binding obligation in accordance with its terms.
 
                           5.11.   ENFORCEMENT;   JURISDICTION.   If  any  party
institutes legal action to enforce or interpret the terms and conditions of this
Agreement,  the prevailing party shall be awarded reasonable  attorneys' fees at
all trial and  appellate  levels,  and the expenses  and costs  incurred by such
prevailing party in connection therewith.  Any legal action, suit or proceeding,
in equity or at law,  arising  out of or  relating  to this  Agreement  shall be
instituted  exclusively  in the State or Federal courts located in the State and
County of New York and each party agrees not to assert,  by way of motion,  as a
 
 
                            Exhibit 10.9.2 - Page 8
<PAGE>
 
 
defense or otherwise,  in any such action,  suit or  proceeding,  any claim that
such party is not subject personally to the jurisdiction of any such court, that
the action,  suit or proceeding is brought in an  inconvenient  forum,  that the
venue of the action, suit or proceeding is improper or should be transferred, or
that this  Agreement or the subject  matter  hereof may not be enforced in or by
any such court.  Each party further  irrevocably  submits to the jurisdiction of
any such court in any such action,  suit or  proceeding.  Any and all service of
process and any other notice in any such  action,  suit or  proceeding  shall be
effective  against any party if given  personally  or by registered or certified
mail,  return  receipt  requested or by any other means of mail that  requires a
signed  receipt,  postage  prepaid,  mailed to such  party as  herein  provided.
Nothing  herein  contained  shall be  deemed to affect or limit the right of any
party to serve process in any other manner permitted by applicable law.
 
                           5.12. ARBITRATION.
 
                                 (a)  Any  dispute   under   Section  3  hereof,
including,  but not limited to, the  determination by the Board of a termination
for Cause pursuant to Section 3.2.4 hereof,  or in respect of the breach thereof
shall be settled by arbitration  in the Borough of Manhattan,  City of New York.
The arbitration shall be accomplished in the following manner.  Either party may
serve upon the other party  written  demand  that the  dispute,  specifying  the
nature thereof,  shall be submitted to  arbitration.  Within ten (10) days after
such demand is given in accordance with Section 5.3 hereof,  each of the parties
shall  designate an arbitrator and provide  written  notice of such  appointment
upon the other party. If either party fails within the specified time to appoint
such arbitrator,  the other party shall be entitled to appoint both arbitrators.
The two (2)  arbitrators so appointed shall appoint a third  arbitrator.  If the
two arbitrators  appointed fail to agree upon a third arbitrator within ten (10)
days after their  appointment,  then an application  may be made by either party
hereto,  upon  written  notice to the other party,  to the American  Arbitration
Association  (the  "AAA"),  or  any  successor  thereto,  or if  the  AAA or its
successor  fails to appoint a third  arbitrator  within ten (10) days after such
request,  then either party may apply,  with written notice to the other, to the
Supreme Court of the State of New York, New York County,  for the appointment of
a third arbitrator,  and any such appointment so made shall be binding upon both
parties hereto.
 
                                 (b) The  decision of the  arbitrators  shall be
final and binding upon the parties. The party against whom the award is rendered
(the  "non-prevailing  party")  shall pay all fees and expenses  incurred by the
prevailing  party  in  connection  with  the  arbitration  (including  fees  and
disbursements of the prevailing party's counsel), as well as the expenses of the
arbitration  proceeding.  The arbitrators  shall determine in their decision and
award which of the parties is the prevailing party,  which is the non-prevailing
party,  the  amount of the fees and  expenses  of the  prevailing  party and the
amount of the arbitration expenses.  The arbitration shall be conducted,  to the
extent consistent with this Section 5.12, in accordance with the then prevailing
rules of commercial  arbitration  of the AAA or its successor.  The  arbitrators
shall have the right to retain and  consult  experts and  competent  authorities
skilled in the matters under arbitration, but all consultations shall be made in
the presence of both parties, who shall have the full right to cross-examine the
experts and  authorities.  The  arbitrators  shall render their award,  upon the
concurrence  of at least two of their  number,  not later than  thirty (30) days
after the appointment of the third  arbitrator.  The decision and award shall be
in writing, and counterpart copies shall be delivered to each of the parties. In
rendering  an award,  the  arbitrators  shall have no power to modify any of the
provisions  of  this  Agreement,  and the  jurisdiction  of the  arbitrators  is
expressly  limited  accordingly.  Judgment  may be  entered  on the award of the
arbitrators and may be enforced in any court having jurisdiction.
 
                            [SIGNATURE PAGE FOLLOWS]
 
 
 
                            Exhibit 10.9.2 - Page 9
<PAGE>
 
 
                  IN WITNESS  WHEREOF,  this  Agreement  has been  executed  and
delivered by the parties hereto as of the date first above written.
 
 
 
                                     PHARMACEUTICAL RESOURCES, INC.
 
 
                                     By: /s/ Kenneth I. Sawyer
                                         -----------------------------
                                         Name: Kenneth I. Sawyer
                                         Title: Chief Executive Officer
 
                                     /s/ Scott L. Tarriff
                                     --------------------
                                         Scott L. Tarriff
 
 
 
 
 
 
 
 
 
 
                            Exhibit 10.9.2 - Page 10