**EXHIBIT 10.2****SEPARATION AND RELEASE AGREEMENT**     This Separation and Release Agreement (“Agreement”) is made by and between **PAR PHARMACEUTICALCOMPANIES, INC.,**and **PAR PHARMACEUTICAL, INC**. (collectively referred to as “THE COMPANY”), and **MARKAUERBACH**(“EMPLOYEE”), a specified employee of THE COMPANY. The Effective Date of this Agreementshall be as set forth in Section 8 herein.**RECITALS**     A. For purposes of this Agreement, “THE COMPANY” means PAR PHARMACEUTICAL COMPANIES, INC., andPAR PHARMACEUTICAL, INC., and each and any of their parent and subsidiary corporations, affiliates,departments and divisions.     B. EMPLOYEE has been employed by THE COMPANY as the Executive Chairman of the Board ofDirectors of THE COMPANY (“the Board”).     C. As a result of EMPLOYEE’s separation from THE COMPANY, and to fully and finally resolve allissues concerning EMPLOYEE’s employment relationship with THE COMPANY, and to reiterate certainterms contained in EMPLOYEE’s Employment Agreement dated September 16, 2003, THE COMPANY andEMPLOYEE have decided to enter into this Agreement.     For and in consideration of the mutual promises and covenants in this Agreement, and for othergood and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, theparties agree as follows:**OPERATIVE PROVISIONS**          1. Separation of Employment. THE COMPANY and EMPLOYEE agree that EMPLOYEE shallseparate from THE COMPANY effective at the end of business on October 31, 2006 (“Separation Date”),such separation of employment with THE COMPANY occurring pursuant to Section 3.2.5 of that certainEmployment Agreement dated as of September 16, 2003 by and between the parties (“EmploymentAgreement”).          2. Pay, Benefits and Stock Options Upon Separation.               (a) Separation Pay. In accordance with the Employment Agreement EMPLOYEE is, onaccount of his separation from THE COMPANY, entitled to severance in the amount of six hundredforty two thousand one hundred fourteen dollars ($642,114.00), which severance shall be payable insix (6) equal installments beginning in the seventh (7th) month after the SeparationDate and continuing for five (5) months thereafter. The aforementioned payments shall be subjectto all appropriate federal and state withholding and employmenttaxes.
 

 
EMPLOYEE hereby agrees that he is entitled to no other payment from THE COMPANY as the resultof his separation or during the aforementioned period.               (b) Benefits/Termination. In accordance with Section 3.3.5 the Employment Agreement,on account of EMPLOYEE’s separation from THE COMPANY, THE COMPANY shall, for a twenty-four (24)month period from the Separation Date, maintain in effect for EMPLOYEE coverage under THE COMPANY’Smedical, health and accident, and disability plans and programs in which EMPLOYEE was entitled toparticipate immediately prior to the Separation; provided, that such benefits shall immediatelyterminate in the event EMPLOYEE becomes eligible for equal or comparable coverage by a subsequentemployer prior to the expiration of the twenty-four (24) month period. Following the terminationof the twenty-four (24) month period, if EMPLOYEE is not eligible for equal or comparable coverageunder another employer’s benefit program, EMPLOYEE will have the opportunity to elect continuationcoverage pursuant to COBRA and will thus be responsible for the execution of the COBRA continuationof coverage forms. All other benefits and allowances, except those in which EMPLOYEE has vestedrights under the terms of an employee benefit plan, terminate as of the Separation Date.Notwithstanding the foregoing, THE COMPANY shall pay EMPLOYEE a one-time Executive Health CareAllowance in the amount of five thousand dollars ($5,000.00). THE COMPANY shall use itscommercially reasonable efforts to provide such benefits to EMPLOYEE in accordance with Section3.3.5 of the Employment Agreement.               (c) Stock Options. The parties agree that as of October 30, 2006 EMPLOYEE has beengranted options for 328,816 shares of THE COMPANY’s common stock. Of these, 95,855 options areunvested. In accordance with the Employment Agreement, these unvested options shall vest as of theSeparation Date. EMPLOYEE shall have twenty-four (24) months from such date to exercise alloptions, at the exercise price related to the respective option grants, provided that the relevantstock option plan remains in effect and such options have not otherwise expired. EMPLOYEE’Sexercise of such options is governed by Section 3.3.6(b) of the Employment Agreement as well as theterms of the applicable plan, referenced in the Employment Agreement.               (d) Restricted Stock. The parties agree that as of October 30, 2006, EMPLOYEE hasbeen granted 23,730 shares of THE COMPANY’s restricted stock. Of these, 21,098 shares areunvested. These unvested shares shall vest as of the date of EMPLOYEE’s execution of thisAgreement.               (e) In accordance with the Employment Agreement, the payments and benefits contained in thisSection 2 are contingent upon EMPLOYEE’s continued compliance with Section 4 of the EmploymentAgreement (as modified by this Agreement), as referenced in Sections 9 through 12 herein. THECOMPANY shall use its commercially reasonable efforts to provide such benefits to EMPLOYEE inaccordance with Section 3.3.5 of the Employment Agreement.          3. Earned Salary and Expenses. EMPLOYEE acknowledges and agrees that he has been paidin full for all work performed, and has received reimbursement forall business
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expenses, and is entitled to no further payments or bonuses from THE COMPANY whatsoever forservices rendered or any other reason, except as set forth herein.          4. Consideration.               (a) No Disparagement. THE COMPANY agrees to refrain from any publication or any typeof communication, oral or written, of a defamatory or disparaging nature pertaining to EMPLOYEE,except as otherwise permitted by law.               (b) Sufficiency of Consideration. No Admission of Liability. The parties agree thatthe consideration tendered to EMPLOYEE is good and sufficient consideration for this Agreement, tothe extent it imposes upon EMPLOYEE obligations in addition to those contained in the EmploymentAgreement. EMPLOYEE acknowledges that neither this Agreement, nor any consideration pursuant tothis Agreement, shall be taken or construed to be an admission or concession of any kind withrespect to alleged liability or alleged wrongdoing by THE COMPANY.          5. Indemnification and Advancement of Expenses. THE COMPANY acknowledges that it willcomply with the indemnification and advancement of expenses covenants contained in Sections 5.1,5.2, 5.3 and 5.4 of THE COMPANY’s Bylaws.          6. General Release and Waiver of Claims. Solely in connection with EMPLOYEE’semployment relationship with THE COMPANY and in accordance with Section 3.3 of the EmploymentAgreement, and in consideration of the additional promises and covenants made by THE COMPANY inthis Agreement, EMPLOYEE hereby knowingly and voluntarily compromises, settles and releases THECOMPANY from any and all past, present, or future claims, demands, obligations, or causes ofaction, whether based on tort, contract, statutory or other theories of recovery for anything thathas occurred up to and including the date of EMPLOYEE’s execution of this Agreement. The releasedclaims include those EMPLOYEE may have or has against THE COMPANY, or which may later accrue to orbe acquired by EMPLOYEE against THE COMPANY and its predecessors, successors in interest, assigns,parent and subsidiary organizations, affiliates, and partners, and its past, present, and futureofficers, directors, shareholders, agents, and employees, and their heirs and assigns. EMPLOYEEspecifically agrees to release and waive all claims for wrongful termination and any claim forretaliation or discrimination in employment under federal or state law or regulation including, butnot limited to, discrimination based on age, sex, race, disability, handicap, national origin orany claims under Title VII of the Civil Rights Act of 1964, the Age Discrimination in EmploymentAct of 1967, as amended by the Older Workers’ Benefits Protection Act (ADEA), the Americans withDisabilities Act of 1990 (ADA), the New Jersey Law Against Discrimination (LAD), the ConsolidatedOmnibus Budget Reconciliation Act (COBRA), the Employee Retirement Income Security Act (ERISA), theImmigration Reform and Control Act (IRCA), the Fair Labor Standards Act (FLSA), the ConscientiousEmployee Protection Act (CEPA), the Family Medical Leave Act (FMLA), the New Jersey Family LeaveAct (NJFLA) and the New Jersey wage and hour law. The release of claims agreed to hereinspecifically excludes any claims relating to a breach of this Agreement and anynon-employment-related counterclaims
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that EMPLOYEE might assert against THE COMPANY if THE COMPANY were to sue EMPLOYEE.          7. Covenant Not to Sue.               (a) Each party represents and agrees that such party has not filed any lawsuits orarbitrations against the other party, or filed or caused to be filed any charges or complaintsagainst the other party with any municipal, state or federal agency charged with the enforcement ofany law or any self-regulatory organization.               (b) THE COMPANY represents that it is currently not aware of any basis for any cause of actionagainst EMPLOYEE relative to any matter that involved THE COMPANY and that occurred up to andincluding the date of THE COMPANY’s execution of this Agreement, except, however, for the sake ofclarity, the parties acknowledge that there is currently pending shareholder litigation in whichclaims have been asserted against EMPLOYEE.               (c) EMPLOYEE agrees, not inconsistent with EEOC Enforcement Guidance or Non-Waivable EmployeeRights Under EEOC-Enforced Statutes dated April 11, 1997, and to the fullest extent permitted bylaws, not to sue or file a charge, complaint, grievance or demand for arbitration against THECOMPANY in any claim, arbitration, suit, action, investigation or other proceeding of any kindwhich relates to any matter that involved THE COMPANY, and that occurred up, to and including thedate of EMPLOYEE’s execution of this Agreement, other than those non-employment-relatedcounterclaims that EMPLOYEE might assert against THE COMPANY if THE COMPANY were to sue EMPLOYEE,unless required to do so by court order, subpoena or other directive by a court, administrativeagency, arbitration panel or legislative body, or unless required to enforce this Agreement.Nothing in this Agreement shall prevent EMPLOYEE from (i) commencing an action or proceeding toenforce this Agreement, or (ii) exercising EMPLOYEE’s right under the Older Workers BenefitProtection Act of 1990 to challenge the validity of EMPLOYEE’s waiver of ADEA claims set forth inthis Agreement.          8.**Consideration and Revocation Periods: Effective Date.**EMPLOYEE also understandsand acknowledges that the ADEA requires THE COMPANY to provide EMPLOYEE with at least twenty one(21) calendar days to consider this Agreement (“Consideration Period”) prior to its execution.EMPLOYEE also understands that he is entitled to revoke this Agreement at any time during the seven(7) days following EMPLOYEE’s execution of this Agreement (“Revocation Period”) by notifying THECOMPANY in writing of his revocation. This Agreement shall become effective on the day after theseven-day Revocation Period has expired unless timely notice of EMPLOYEE’s revocation has beendelivered to THE COMPANY (the “Effective Date”).          9. Return of Company Property. On his Separation Date EMPLOYEE agrees forthwith todeliver to THE COMPANY all of THE COMPANY’s property in his possession or under his custody andcontrol, including but not limited to all keys, and tangible
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items, notebooks, documents, records and other data relating to research or experimentsconducted by any person relating to the products, formulas, formulations, processes or methods ofmanufacture of THE COMPANY, and to its customers and pricing of products, except that EMPLOYEEshall be entitled to keep the Blackberry device provided to him by THE COMPANY. EMPLOYEErepresents to THE COMPANY that all confidential and proprietary information of THE COMPANY storedon the Blackberry device has been returned to THE COMPANY.          10. Confidential Information. EMPLOYEE acknowledges that during EMPLOYEE’s employmentwith THE COMPANY, EMPLOYEE has had access to Confidential Information (as defined in Section 4.1 ofthe Employment Agreement). In accordance with and subject to the covenants contained in Section4.2 of the Employment Agreement, EMPLOYEE shall not at any time (other than as may be required inconnection with the performance by him of any remaining duties or obligations under the EmploymentAgreement), directly or indirectly, use, communicate, disclose or disseminate any ConfidentialInformation in any manner whatsoever (except as may be required under legal process by subpoena orother court order).          11. Covenants Not to Solicit. As EMPLOYEE acknowledged in the Employment Agreement,and in accordance with Section 4.3 thereof, for a period of two (2) years following the SeparationDate, EMPLOYEE shall be restrained from, directly or indirectly, hiring, offering to hire, enticingaway or in any other manner persuading or attempting to persuade any officer, employee, agent,lessor, lessee, licensor, licensee, customer, prospective customer or supplier of THE COMPANY todiscontinue or alter his or its relationship with THE COMPANY. This covenant shall not beapplicable to the hiring or offer to hire of employees who have previously been terminated by orwho have separated from THE COMPANY, so long as any such separation was not due to conduct ofEMPLOYEE as prohibited herein.          12. Covenants Not to Compete. As EMPLOYEE acknowledged in the Employment Agreement,EMPLOYEE shall be restricted in regard to his post-employment business undertakings. Specifically,in accordance with Section 4.4 of the Employment Agreement, for a period of one (1) year followingthe Separation Date, EMPLOYEE shall be restrained from, directly or indirectly, on his own behalfor for his own benefit, or on behalf of or for the benefit of another (other than THE COMPANY),own, operate, manage, engage in, participate in, be employed by, affiliate with, or providematerial assistance to, contract for services for or with, render advice or services to orotherwise assist in any capacity, directly or indirectly (whether as an officer, director, partner,agent, investor, consultant, contractor, employee, equityholder, lender, counselor, or otherwise)any Competitive Enterprise, as defined in Section 4.5 of the Employment Agreement. Nothing hereinshall prevent EMPLOYEE from owning up to five percent (5%) of a Competitive Enterprise.Notwithstanding any provision to the contrary contained in the Employment Agreement or in thisAgreement, including without limitation, Sections 4.4 and 4.5 of the Employment Agreement or inthis Section 12, from and after the date of this Agreement, there shall be no prohibition,restriction or any other conditions whatsoever against or relating to EMPLOYEE’s serving as adirector, financial consultant or advisor to any third party’s business, whether a corporation,limited liability company,
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partnership, individual or otherwise, and whether or not such business constitutes a“Competitive Enterprise”, “Third Party Relationship” or “Employer Source” (as such terms aredefined in the Employment Agreement), so long as EMPLOYEE will not knowingly and intentionallyprovide such activity that would have the effect of diverting THE COMPANY’s business or divertingTHE COMPANY’s business opportunities with current business partners. The parties heretoacknowledge that all relevant provisions of the Employment Agreement, including Article 4 thereof,are hereby amended to reflect the foregoing agreement of the parties.          13. Confidentiality. EMPLOYEE agrees to keep both the existence and the terms of thisAgreement completely confidential, except that EMPLOYEE may discuss this Agreement with EMPLOYEE’sattorney, accountant, or other professional person who may assist EMPLOYEE in evaluating,reviewing, or negotiating this Agreement, and as otherwise permitted or required under applicablelaw and EMPLOYEE understands and agrees that his disclosure of the terms of this Agreement contraryto the terms set forth herein will constitute a breach of this Agreement; provided, that EMPLOYEEmay disclose his covenants not to solicit or compete, set forth in Paragraph 11 and 12 of thisAgreement, or in the relevant provisions of the Employment Agreement, to a successor employer orpotential successor employer.          14. No Disparagement. EMPLOYEE agrees to refrain from any publication or any type ofcommunication, oral or written, of a defamatory or disparaging nature pertaining to THE COMPANY,its past, present and future officers, directors or employees, except as otherwise permitted bylaw.          15. Technology, Products and Inventions. EMPLOYEE shall comply with Section 4.6 ofthe Employment Agreement with regard to Intellectual Property, research and development, and thelike, as well as copyright and property rights thereto.          16. Disclosure of Information. EMPLOYEE represents and warrants that he is not awareof any material non-public information concerning THE COMPANY, its business or its affiliates thathe has not disclosed to the Board of Directors of THE COMPANY prior to the date of this Agreementor that is required to be disclosed by THE COMPANY in its filings under the Securities Exchange Actof 1934 with the Securities and Exchange Commission (“SEC”) and that has not been so disclosed.          17. Cooperation. EMPLOYEE hereby agrees that:               (a) EMPLOYEE will make himself reasonably available to THE COMPANY either by telephone or, ifreasonably necessary, in person upon reasonable advance notice, to assist THE COMPANY in connectionwith any matter relating to services performed by him on behalf of THE COMPANY prior to theSeparation Date.               (b) EMPLOYEE further agrees that he will take reasonable actions to cooperate fully with THECOMPANY in relation to any investigation or hearing with the SEC or any other governmental agency,as well as in the defense or prosecution of any claims or actions now in existence, including butnot limited to ongoing commercial litigation matters,shareholder
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derivative actions, and class action law suits, or which may be brought or threatened in thefuture against or on behalf of THE COMPANY, its directors, shareholders, officers, or employees.               (c) EMPLOYEE will take reasonable actions to cooperate in connection with such claims oractions referred to in Section 17(b) above including, without limitation, his being available tomeet with THE COMPANY to prepare for any proceeding (including depositions, fact-findings,arbitrations or trials), to provide affidavits, to assist with any audit, inspection, proceeding orother inquiry, and to act as a witness in connection with any litigation or other legal proceedingaffecting THE COMPANY.               (d) EMPLOYEE further agrees that should he be contacted (directly or indirectly) by anyindividual or any person representing an individual or entity that is or may be legally orcompetitively adverse to THE COMPANY in connection with any claims or legal proceedings against THECOMPANY, he will promptly notify THE COMPANY of that fact in writing. Such notification shallinclude a reasonable description of the content of the communication with the legally orcompetitively adverse individual or entity.               (e) Notwithstanding the provisions herein, EMPLOYEE acknowledges that his cooperationobligation requires him to participate truthfully and accurately in all matters contemplated underSection 17. THE COMPANY shall reimburse EMPLOYEE for all out-of-pocket expenses incurred byEMPLOYEE as a result of or arising out of any actions taken by EMPLOYEE pursuant to this Section17, including without limitation, all travel, meal and lodging expenses. THE COMPANY shall not berequired to reimburse EMPLOYEE for any attorneys fees incurred as a result of or arising out of anyactions taken by EMPLOYEE pursuant to this Section 17.          18. Injunctive Relief. EMPLOYEE acknowledges that his failure to abide by Sections 10through 13 and Section 15 of this Agreement, and their counterparts in the Employment Agreement (asamended herein), will result in immediate and irreparable damage to THE COMPANY and will entitleTHE COMPANY to injunctive relief from a court having appropriate jurisdiction.          19. Representation by Attorney. EMPLOYEE acknowledges that he has been given theopportunity to be represented by independent counsel in reviewing this Agreement, and that EMPLOYEEunderstands the provisions of this Agreement and knowingly and voluntarily agrees to be bound bythem.          20. No Reliance Upon Representations. EMPLOYEE hereby represents and acknowledgesthat in executing this Agreement, EMPLOYEE does not rely and has not relied upon any representationor statement made by THE COMPANY or by any of THE COMPANY’s past or present agents,representatives, employees or attorneys with regard to the subject matter, basis or effect of thisAgreement other than as set forth in this Agreement.
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          21. Tax Advice.                (a) THE COMPANY makes no representations regarding the federal or state tax consequences ofthe payments or benefits referred to above and provided for herein, and shall not be responsiblefor any tax liability, interest or penalty including but not limited to those which may arise underInternal Revenue Service Code Section 409A, incurred by EMPLOYEE which in any way arises out of oris related to said payments or benefits. With the exception of the regular payroll deductions forfederal and state withholding and employment taxes, EMPLOYEE agrees that it shall be his soleresponsibility to pay any amount that may be due and owing as federal or state taxes, interest andpenalties, including but not limited to those which may arise under Internal Revenue Service CodeSection 409A, arising out of the payments or benefits provided for herein.               (b) EMPLOYEE agrees and understands that he is not relying upon THE COMPANY or its counsel forany tax advice regarding the tax treatment of the payments made or benefits received pursuant tothis Agreement, and EMPLOYEE agrees that he is responsible for determining the tax consequences ofall such payments and benefits hereunder, including but not limited to those which may arise underInternal Revenue Service Code Section 409A, and for paying taxes, if any, that he may owe withrespect to such payments or benefits.               (c) EMPLOYEE and THE COMPANY further agree that they and their attorneys will give mutualnotice of any claims by the Internal Revenue Service (“IRS”), or any other taxing authority orother governmental agency (whether federal, state or local), which may be made against EMPLOYEE orTHE COMPANY and its attorneys arising out of or relating to the payments or benefits hereunder.          22. Employment Agreement. The parties acknowledge and agree that all pertinent termsof the Employment Agreement (as amended herein) shall remain in full force and effect and areenforceable, to the extent any such terms therein survive or govern the period after the Term ofthat Employment Agreement. The event of revocation of this Separation and Release Agreement inaccordance with Section 8 herein in no way affects the validity or enforceability of the EmploymentAgreement (except as and to the extent amended herein); and in the event of revocation, to theextent any pertinent terms of this Agreement reiterate or confirm the terms of the EmploymentAgreement, the Employment Agreement shall govern.          23. Entire Agreement. When read in conjunction with the Employment Agreement, thisAgreement constitutes the entire Agreement between the parties relating to EMPLOYEE’s separationfrom and release of employment-related claims against THE COMPANY, and it shall not be modifiedexcept in writing signed by the party to be bound.          24. Severability. If a court finds any provision of this Agreement invalid orunenforceable as applied to any circumstance, the remainder of this Agreement and the applicationof such provision shall be interpreted so as best to effect the intent of the parties hereto. Theparties further agree to replace any such void or unenforceableprovision of this
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Agreement with a valid and enforceable provision that will achieve, to the extent possible,the economic, business, or other purposes of the void or unenforceable provision.          25. Governing Law and Jurisdiction. Notwithstanding any provision of the EmploymentAgreement to the contrary, this Agreement shall be governed by the laws of the State of New Jerseyand any claims hereunder shall be pursued in the state or federal courts located in the State ofNew Jersey.          26. Survival of Terms. EMPLOYEE understands and agrees that the terms set out in thisAgreement, including the confidentiality, non-compete and non-solicitation provisions, shallsurvive (for any applicable periods specified herein) the signing of this Agreement and the receiptof benefits thereunder.          27. Construction. The terms and language of this Agreement are the result of arm’slength negotiations between both parties hereto and their attorneys. Consequently, there shall beno presumption that any ambiguity in this Agreement should be resolved in favor of one party andagainst another. Any controversy concerning the construction of this Agreement shall be decidedneutrally without regard to authorship.          28. Copies. This Agreement may be executed in counterparts, and each counterpart,when executed, shall have the efficacy of a signed original.          29. Attorney Fees. The Company shall reimburse EMPLOYEE for documented attorney’s feeand expenses incurred by EMPLOYEE in connection with the drafting and negotiation of thisAgreement, up to and including a maximum reimbursement amount of ten thousand dollars ($10,000.00).[SIGNATURE LINES CONTAINED ON NEXT PAGE]
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     **EMPLOYEE AGREES THAT: (1) HE HAS FULLY READ THIS AGREEMENT; (2) HE HAS TAKEN THE TIMENECESSARY TO REVIEW COMPLETELY AND FULLY UNDERSTAND THIS AGREEMENT; AND (3) HE FULLY UNDERSTANDSTHIS AGREEMENT, ACCEPTS IT, AGREES TO IT, AND AGREES THAT IT IS FULLY BINDING UPON HIM FOR ALLPURPOSES.**      **EMPLOYEE******