**EXHIBIT
        10.6**
  **EMPLOYMENT
        AGREEMENT**
  **EMPLOYMENT
        AGREEMENT** (this
“Agreement”), dated as of March 6, 2008, by and between Par Pharmaceutical,
        Inc., a Delaware corporation (“Par” or “Employer”), and John MacPhee
        (“Executive”).
  RECITALS:
  A.  WHEREAS,
        Executive is presently employed in the capacity of President, Branded Products
        Division; and
  B.  WHEREAS,
        Employer and Executive desire to cancel and replace Executive’s existing
        Employment Agreement, dated January 9, 2006, and enter into this Agreement
        in
        order for Executive to continue to perform the duties associated with his
        position with Employer on the terms and conditions set forth
        herein.
  C.  WHEREAS,
        Executive and Employer agree and acknowledge that the Agreement set forth
        herein
        supersedes any prior and contemporaneous written or oral agreements between
        the
        parties, and that upon execution the terms and conditions set forth in this
        Agreement govern Executive’s employment.
  In
        consideration of the mutual promises herein contained, the parties hereto
        hereby
        agree as follows:
  1.  Employment .
  1.1.  General .
        Employer hereby employs Executive in the capacity of President, Branded Products
        Division 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 capacity, 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 Par reasonably consistent with Executive’s
        position and this Agreement, and shall report to the Board and the Chief
        Executive Officer of Par.
  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 of Par is required by law, rule or
        regulation or requested by any governmental authority or by Par’s auditors to
        provide certifications with respect to 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
        the
        Chief Executive Officer of Par and/or the Board, with such exceptions as
        Executive deems necessary to make such certifications accurate and not
        misleading, and comply with applicable law.
  
 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 $325,000 (Three Hundred and Twenty-Five Thousand
        Dollars), or at such increased rate as the Board (through its Compensation
        and
        Equity Awards Committee), in its sole discretion, may hereafter from time
        to
        time grant to Executive (initially and as so increased the “Base Salary”); and
        (ii) any additional bonus and the benefits set forth in Sections 2.2, 2.3
        and
        2.4 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.  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 bonus shall be equal to 50% of his Base Salary. At the time the
        Board determines the Executive’s eligibility for a bonus, the Board shall set
        forth all material terms of the bonus arrangement in a written document.
        The
        Employer shall pay the bonus by March 1 following the end of the calendar
        year
        in which the bonus is earned.
  2.3.  Equity
        Awards . Executive
        shall be entitled to participate in long-term incentive plans commensurate
        with
        his titles and positions, including, without limitation, stock option,
        restricted stock, and similar equity plans of Employer as may be offered
        from
        time to time.
  2.4.  Executive
        Benefits .
  2.4.1.  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.
  2.4.2.  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.
  2.4.3.  Vacation .
        Executive shall be entitled to four (4) weeks of paid vacation per calendar
        year, prorated for any partial year.
  2
 2.4.4.  Automobile .
        Employer shall provide Executive with an automobile cash allowance commensurate
        with his titles and positions .
  2.4.5.  Life
        Insurance .
        Employer shall obtain (provided, that Executives 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 $1 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 December
        31,
        2010 (the “Initial Term”). Thereafter, this Agreement shall automatically be
        renewed for successive one-year periods commencing on January 1, 2011 (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 ninety (90) days prior to the end of the Employment Term.
        Upon
        nonrenewal of the Employment Term pursuant to this Section 3.1 or termination
        pursuant to Sections 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 consecutive 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
 3.2.4.  For
        Cause By Employer .
        Employer may terminate the Employment Term for “Cause,” as 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 the Executive’s
        receipt of the Employer’s 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,
        or willful misconduct, regardless of harm to the Employer or any of its
        Subsidiaries or affiliates, or other conduct that is materially harmful or
        detrimental to Employer or any of its Subsidiaries or affiliates; (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
        Subsidiaries or 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 Subsidiaries or 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 or any of its Subsidiaries or affiliates.
  3.2.5.  Without
        Cause By Employer .
        Employer may 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 or such shorter period
        if
        Employer shall pay to Executive that amount of the Base Salary amount that
        would
        have been earned between the thirty (30) day period and such shorter period,
        in
        accordance with Employer’s regular payroll practices.
  3.2.6.  Employer’s
        Material Breach .
        Executive may terminate the Employment Term upon Employer’s material breach of
        this Agreement and the continuation of such breach so long as Executive has
        provided written notice to Employer of material breach (which notice shall
        identify the manner in which Employer has materially breached this Agreement)
        within ninety (90) days of the initial existence of the breach, and afforded
        Employer no less than thirty (30) days for cure of such breach. Employer
        is not
        required to pay severance under Section 3.2.2 when Employer cures the material
        breach identified in Executive’s notice within thirty (30) days of Employer’s
        receipt of notice. 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; (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 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 thirty-five (35) miles from Employer’s executive offices in Woodcliff
        Lake, New Jersey.
  4
 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. All lump-sum payments
        owed by Employer shall be made to Executive within forty-five (45) days of
        the
        Date of Termination in accordance with Employer’s regular payroll practices. In
        connection with Executive’s receipt of any or all compensation and benefits to
        be received pursuant to this Section 3.3, Executive shall not have a duty
        to
        seek subsequent employment while he is receiving such monies and benefits
        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. The Executive must execute within thirty (30) days after
        the Date of Termination Employer’s standard form of Release Agreement attached
        as Exhibit A hereto.
  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 within forty-five (45) days
        of the
        Date of Termination an amount equal to any unpaid but earned Base Salary
        through
        the Date of Termination in accordance with Employer’s regular payroll practices.
        The Employer shall also pay any annual bonus earned but unpaid as of the
        Date of
        Termination for any previously completed fiscal year in accordance with the
        terms of the bonus, and such employee benefits as to which Executive may
        be
        entitled under the employee benefit plans of Employer.
  3.3.2.  Without
        Cause by Employer; Material Breach by Employer; Non-Renewal
        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 is not
        renewed
        by Employer pursuant to Section 3.1 hereof, Employer shall pay to Executive
        severance in an amount equal to two (2) times his Base Amount. For purposes
        hereof, “Base Amount” shall mean the sum of Executive’s Base Salary in effect on
        the Date of Termination, and if Executive’s termination is not a result of, in
        whole or in part, Executive’s performance of his duties hereunder, the amount of
        Executive’s last annual cash bonus pursuant to Section 2.2 hereof (the
“Severance Amount”). The Employer shall pay the Severance Amount in
        installments, and shall first determine the amount of each installment if
        the
        Severance Amount were paid in equal semimonthly installments for two (2)
        years
        (the “Installment Payment”) commencing on the forty-fifth (45th) day after the
        Date of Termination. The Employer shall then withhold and accumulate the
        Installment Payments payable beginning on the forty-fifth (45th) day after
        the
        Date of Termination through the end of the sixth (6th) month after the Date
        of
        Termination (the time period, the “Severance Holdback Period”) (the withheld
        payments, the “Severance Holdback Amounts”). The Employer shall pay the
        Severance Holdback Amounts in a single lump sum on the first (1st) day of
        the
        seventh (7th) month after the Date of Termination (the “Severance Delayed
        Payment Date”). The Severance Holdback Amounts paid to the Executive on the
        Severance Delayed Payment Date are to accrue interest from the date each
        Severance Holdback Amount would have been paid during the Severance Holdback
        Period absent the holdback requirement until the Severance Delayed Payment
        Date.
        The interest rate is the prime rate as published in The
        Wall Street Journal seven
        (7) days prior to the Severance Delayed
        Payment Date. The Employer shall pay the accrued interest on the Severance
        Delayed Payment Date. From the Severance Delayed Payment Date through the
        end of
        two (2) years after the forty-fifth (45th) day after the Date of Termination,
        the Employer shall pay the Installment Payments semimonthly. Payment of the
        Severance Amount is subject to Executive’s continued compliance with the terms
        of Section 4. The Employer shall also pay any annual bonus earned but unpaid
        as
        of the Date of Termination for any previously completed fiscal year in
        accordance with the terms of the bonus, and such employee benefits as to
        which
        Executive may be entitled under the employee benefit plans of the
        Employer.
  5
 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 pursuant to
        Section
        3.1 hereof, Employer shall pay to Executive in a single lump-sum within thirty
        (30) days of the Date of Termination an amount equal to any unpaid but earned
        Base Salary through the Date of Termination in accordance with Employer’s
        regular payroll practices. The Employer shall also pay any annual bonus earned
        but unpaid as of the Date of Termination for any previously completed fiscal
        year in accordance with the terms of the bonus, and such employee benefits
        as to
        which Executive may be entitled under the employee benefit plans of the
        Employer.
  3.3.4.  Without
        Cause by Executive During Window Period .
        If a
        Change of Control (as defined in Section 3.4.1 hereof) occurs, and the Executive
        continues employment for six (6) months after the date of the Change of Control
        (as defined in Section 3.4.1 hereof) (the “Stay Period”), the Executive may
        terminate the Employment Term (the “Resignation”) during the ninety (90) days
        following the Stay Period (the “Window Period”). The Executive must provide the
        Resignation in a Notice of Termination to the Employer during the Window
        Period.
        Upon the Resignation, the provisions of Sections 3.3.2 and 3.3.6 shall apply
        as
        if the Resignation were a termination of the Employment Term without Cause
        by
        the Employer under Section 3.2.5.
  3.3.5.  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
        Section 4 hereof, the Severance Amount, less any life insurance and/or
        disability insurance received by Executive or his estate pursuant to insurance
        policies provided by Employer (including without limitation pursuant to Section
        2.4.5 hereof). The Executive shall retain all vested benefits granted pursuant
        to Section 2.3 hereof. In the case of death, the Employer shall pay the
        Severance Amount commencing on the thirtieth (30th) day after the Executive’s
        date of death, and otherwise in accordance with the payment provisions of
        Section 3.3.2 hereof without the holdback requirement. In the case of
        Disability, the Employer shall pay the Severance Amount in accordance with
        the
        payment provisions of Section 3.3.2 hereof. The Employer shall also pay any
        annual bonus earned but unpaid as of the Date of Termination for any previously
        completed fiscal year in accordance with the terms of the bonus, and such
        employee benefits as to which Executive may be entitled under the employee
        benefit plans of the Employer.
  6
 3.3.6.  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 2.4.1
        hereof, and Executive will have the opportunity and responsibility to elect
        COBRA continuation coverage pursuant to the terms of that law and will thus
        be
        responsible for the execution of the continuation of coverage forms upon
        termination of his insurance coverage. Except as provided immediately below,
        Executive will be responsible for all COBRA premiums. If Executive is terminated
        pursuant to Sections 3.2.3, 3.2.5, 3.2.6, or Employer elects not to renew
        this
        Agreement pursuant to Section 3.1 hereof, Executive shall be entitled to
        participate, at Employer’s expense, in all medical and health plans and programs
        of Employer in accordance with COBRA for a period of up to eighteen (18)
        months
        (the “Benefits Period”), subject to Executive’s continued compliance with the
        terms of Section 4 hereof; provided , however ,
        that
        Executive’s continued participation is permissible under the terms and
        provisions of such plans and programs; and provided , further ,
        that in
        the event Executive becomes entitled to equal or comparable benefits from
        a
        subsequent employer during the Benefits Period, Employer’s obligations under
        this Section 3.3.6 shall end as of such date. The Employer shall commence
        payment of COBRA premiums on the forty-fifth (45th) day after the Date of
        Termination.
  3.3.7.  Equity
        Awards .
  (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 termination to exercise any vested equity awards; provided ,
        however, that the relevant equity award plan remains in effect and such equity
        awards have not otherwise expired in accordance with the terms thereof. In
        connection therewith, Employer agrees to use commercially reasonable efforts
        to
        amend Executive’s Equity Award Agreements if necessary to effectuate the
        provisions of this Section 3.3.7(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, as set forth in the Notice
        of
        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 equity awards theretofore granted to Executive shall thereupon vest and
        Executive shall have twenty-four (24) months from such date to exercise such
        options; provided , however ,
        that
        the relevant equity award plan remains in effect and such equity awards 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 Equity Award Agreements if necessary to effectuate the provisions of
        this Section 3.3.7(b).
  (c)  For
        grants of time-based restricted stock made during calendar year 2008 (the
“2008
        Grants”) under the 2008 Long Term Incentive Program (the “2008 Program”), (i)
        (A) if after a Change of Control (as defined in Section 3.4.1 hereof) the
        Employer or its successor requires the Executive to remain employed for the
        Stay
        Period, (B) the Executive continues employment for the Stay Period, and (C)
        the
        Change of Control (as defined in Section 3.4.1 hereof) occurs within two
        (2)
        years after the date of grant of the 2008 Grants, all 2008 Grants shall vest
        on
        the last day of the Stay Period; or (ii) if there is a termination of the
        Employment Term under Section 3.2.5 or 3.2.6 after the date of a Change of
        Control (as defined in
        Section 3.4.1 hereof), all 2008 Grants shall vest on the Date of Termination;
        or
        (iii) if a Change of Control (as defined in Section 3.4.1 hereof) occurs
        two (2)
        or more years after the date of grant of the 2008 Grants, all 2008 Grants
        shall
        vest on the date of the Change of Control (as defined in Section 3.4.1 hereof); provided , however ,
        that
        the 2008 Program remains in effect and the 2008 Grants 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 2008 Grant
        Agreements if necessary to effectuate the provisions of this Section
        3.3.7(c).
  7
 (d)  To
        the
        extent not determined by this Agreement, the terms and conditions of all
        equity
        awards, including without limitation awards of performance contingent restricted
        stock under the 2008 Program, shall be determined by the Executive’s Equity
        Award Agreements, Grant Agreements, Certificates of Performance Shares, and
        the
        terms of the plans and award documents pursuant to which the equity awards
        were
        made.
  3.4.  Definitions .
  3.4.1.  “Change
        of Control” Defined .
        A
“Change of Control” of the Employer means any of the following events, unless
        otherwise defined in an Award Agreement or Grant Agreement:
  (a)  Any
        individual, firm, corporation or other entity, or any group (as defined in
        Section 13(d)(3) of Securities Exchange Act of 1934, as amended (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 twenty
        (20%) percent of the then outstanding shares entitled to vote generally in
        the
        election of directors of the Employer;
  (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 Employer’s
        capital stock; or
  (c)  The
        stockholders of the Employer approve (i) a definitive agreement for the merger
        or other business combination of the Employer with or into another corporation
        pursuant to which the stockholders of the Employer do not own, immediately
        after
        the transaction, more than fifty (50%) percent of the voting power of the
        corporation that survives and is a publicly owned corporation and not a
        subsidiary of another corporation, (ii) a definitive agreement for the sale,
        exchange or other disposition of all or substantially all of the assets of
        the
        Employer, or (iii) any plan or proposal for the liquidation or dissolution
        of
        the Employer.
  Provided,
        however, that a Change of Control shall not be deemed to have taken place
        if
        beneficial ownership is acquired by, or a tender or exchange offer is commenced
        or announced by, the Employer, any profit-sharing, employee ownership or
        other
        employee benefit plan of the Employer, any trustee of or fiduciary with respect
        to any such plan when acting in such capacity, or any group comprised solely
        of
        such capacity, or any group comprised solely of such entities
  8
 (d)  In
        determining whether a Change of Control of the Employer has occurred, “Employer”
means Par Pharmaceutical, Inc. or Par Pharmaceutical Companies,
        Inc.
  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 (other than as required
        under Sections 3.2.2, 3.2.6, and 3.3.7) 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/
        Non-Solicitation/Non-Compete .
  4.1.  “Confidential
        Information” Defined .
        “Confidential Information” means any and all information (oral or written)
        relating to Employer or any Subsidiary or any person or 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;
        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 for the benefit of any person or entity
        other than Employer (except as may be required under legal process by subpoena
        or other court order).
  4.3.  Non-Solicitation .
        Executive shall not, while employed by Employer and for a period of one (1)
        year
        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, customer, prospective
        customer, 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 Employer and for a period of one (1)
        year
        following the Date of Termination, directly or indirectly provide any services
        (whether in the management, sales, marketing, public relations, finance,
        research, development, general office, administrative, or other areas) as
        an
        employee, agent, stockholder, officer, director, consultant, advisor, investor,
        or other representative of Employer's
        competitors in the branded or generic pharmaceutical industry in any state
        or
        country in which Employer does or seeks to do business. Employer's competitors
        include any entity, individual, or affiliate of such company or individual
        that
        develops, sells, markets, or distributes any products that compete with or
        are
        the same or similar to those of Employer. However, the restrictions of this
        paragraph 4.4 shall not apply if 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; nor shall this paragraph prohibit Executive from being a passive
        owner of not more than one percent (1%) of any publicly-traded class of capital
        stock of any entity engaged in a competing business.
  9
 4.5.  Injunctive
        Relief .
        The
        parties hereby acknowledge and agree that (a) the type, scope and periods
        of
        restrictions imposed in paragraph 4 are necessary, fair and reasonable to
        protect Employer’s legitimate business interests and to prevent the inevitable
        disclosure of Employer’s Confidential Information; (b) Employer will be
        irreparably injured in the event of a breach by Executive of any of his
        obligations under this Section 4; (c) monetary damages will not be an adequate
        remedy for any such breach; (d) 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 (e) 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.
  4.6.  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:
  10
 If
        to
        Employer, to:
  Par
        Pharmaceutical, Inc.
 300
        Tice
        Boulevard
 Woodcliff
        Lake, New Jersey 07677
 Attention:  Chairman
 Telecopy
        No. 201-802-4620
  Copy
        to:
  Christine
        A. Amalfe, Esq.
 Gibbons, P.C.
 One
        Gateway Center
 Newark,
        New Jersey 07102-5310
 Telecopy
        No.: (973) 639-6230
  If
        to
        Executive, to:
  John
        MacPhee
 c/o
        Par
        Pharmaceutical, Inc.
 300
        Tice
        Boulevard
 Woodcliff
        Lake, New Jersey 07677
  And
 
 John
        MacPhee
 280
        Greenway Road
 Ridgewood,
        New Jersey 07450
  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 Par and
        Executive.
  5.5.  Entire
        Agreement .
        This
        Agreement and, with respect to Section 3.3.7 hereof, Executive’s Equity Award
        Agreements and governing equity award 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 parties’ Employment
        Agreement dated January
        9, 2006. Executive and Employer hereby agree that the Employment Agreement
        dated
        January 9, 2006, 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 3.3.7 hereof and Executive’s Equity Award
        Agreements and the governing equity award plans, Section 3.3.7 shall
        govern.
  11
 5.6.  Applicable
        Law .
        This
        Agreement shall be governed by and construed in accordance with the laws
        of the
        State of New Jersey 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 transaction had taken
        place.
  5.9.  Waiver .
        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 .
        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 applicable court shall award the prevailing party
        reasonable attorneys’ fees at all trial and appellate levels, and the expenses
        and costs incurred by such prevailing party in connection therewith, subject
        to
        the requirements of Treas. Reg. §1.409A-3(i)(1)(iv). Subject to Section 5.12,
        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 of New Jersey, and each party agrees
        not to
        assert, by way of motion, as a 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.
  12
 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 (other than a claim for equitable relief) shall
        be
        settled by arbitration in New Jersey. 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 Superior Court
        of New
        Jersey, Bergen 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.
  5.13.  Specified
        Employee .
        Notwithstanding any other provision of this Agreement, if the Executive is
        a
        specified employee under Treas. Reg. § 1.409A-1
        as of the Date of Termination, all payments to which the Executive would
        otherwise be entitled during the first six months following the Date of
        Termination shall be accumulated and paid on the first day of the seventh
        month
        following the Date of Termination, or if earlier within thirty (30) days
        of the
        Executive’s date of death following the Date of Termination. This provision
        shall not apply to all payments on separation from service that satisfy the
        short-term deferral rule of Treas. Reg. § 1.409A-1(b)(4),
        or to the portion of the payments on separation from service that satisfy
        the
        requirements for separation pay due to an involuntary separation from service
        under Treas. Reg. § 1.409A-1(b)(9)(iii),
        or to any payments that are otherwise exempt from the six month delay
        requirement of the Treasury Regulations under Code Section 409A.
  [SIGNATURE
        PAGE FOLLOWS]
  13
  **IN
        WITNESS WHEREOF** ,
        this
        Agreement has been executed and delivered by the parties hereto as of the
        date
        first above written.




**PAR
                PHARMACEUTICAL, INC.**By:
                /s/ Stephen
                MontaltoName:
                Stephen MontaltoTitle:  
                Senior Vice President,Human
                Resources/s/ John
              MacPheeJohn
                MacPhee






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