EXHIBIT
4.1


Sciele Pharma, Inc.


2007
Stock Incentive Plan











SCIELE
PHARMA, INC.


2007 STOCK INCENTIVE PLAN






Plan Document






1.                                       Establishment, Purpose, and Types of Awards


Sciele Pharma,
Inc. (the “Company”) hereby establishes this equity-based incentive compensation
plan to be known as the “Sciele Pharma 2007 Stock Incentive Plan” (hereinafter
referred to as the “Plan”), in order to provide incentives and awards to select
employees, directors, consultants, and advisors of the Company and its
Affiliates.  The Plan permits the
granting of the following types of awards (“Awards”), according to the Sections
of the Plan listed here:


	
  Section 6

  	
  Options

  
	
  Section 7

  	
  Share Appreciation Rights

  
	
  Section 8

  	
  Restricted Shares, Restricted Share Units, and
  Unrestricted Shares

  
	
  Section 9

  	
  Deferred Share Units

  
	
  Section 10

  	
  Performance Awards

  



 


The Plan is not
intended to affect and shall not affect any stock options, equity-based
compensation, or other benefits that the Company or its Affiliates may have
provided, or may separately provide in the future pursuant to any agreement,
plan, or program that is independent of this Plan.


2.                                       Defined Terms


Terms in the Plan
that begin with an initial capital letter have the defined meaning set forth in
Appendix A, unless defined elsewhere
in this Plan or the context of their use clearly indicates a different meaning.


3.                                       Shares Subject to the Plan


Subject to the
provisions of Section 13 of the Plan, the maximum number of Shares that the
Company may issue for all Awards is 2,200,000 Shares, on the premises and
provided that if this Plan becomes effective, pursuant to Section 20 below, the
Company shall not thereafter grant, award or sell any further options or shares
of Common Stock under the Company’s 2002 Stock Plan (the “2002 Plan” or the
2003 Nonqualified Stock Option Plan (the “2003 Plan”).  Notwithstanding the foregoing, the Company
will honor awards made under the 2002 Plan and the 2003 Plan and will issue
shares of Common Stock pursuant to the options granted under the 2002 Plan and
the 2003 Plan prior to the effective date of this 2007 Plan.  For all Awards, the Shares issued pursuant to
the Plan may be authorized but unissued Shares, 
Shares that the Company has reacquired or otherwise holds in treasury,
or Shares held in a trust.


Shares that are
subject to an Award that for any reason expires, is forfeited, is cancelled, or
becomes unexercisable, and Shares that are for any other reason not paid or
delivered under this Plan or the 2002 Plan or the 2003 Plan shall again, except
to the extent prohibited by Applicable 











Law, be available for
subsequent Awards under this 2007 Plan. 
In addition, the Committee may make future Awards with respect to Shares
that the Company retains from otherwise delivering pursuant to an Award under
this Plan or the 2002 and 2003 Plans either (i) as payment of the exercise
price of an Award, or (ii) in order to satisfy the withholding or employment
taxes due upon grant, exercise, vesting or distribution of an Award.  Notwithstanding the foregoing, but subject to
adjustments pursuant to Section 13 below, the number of Shares that are
available for ISO Awards shall be determined, to the extent required under
applicable tax laws, by reducing the number of Shares designated in the
preceding paragraph by the number of Shares granted pursuant to Awards (whether
or not Shares are issued pursuant to such Awards), provided that any Shares
that are either issued or purchased under the Plan and forfeited back to the
Plan, or surrendered in payment of the Exercise Price for an Award shall be
available for issuance pursuant to future ISO Awards.


4.                                       Administration


(a)           General.  The Committee shall administer the Plan in
accordance with its terms, provided that the Board may act in lieu of the
Committee on any matter.  The Committee
shall hold meetings at such times and places as it may determine and shall make
such rules and regulations for the conduct of its business as it deems
advisable.  In the absence of a duly
appointed Committee, the Board shall function as the Committee for all purposes
of the Plan.


(b)           Committee Composition.  The Board shall appoint the members of the
Committee. If and to the extent permitted by Applicable Law, the Committee may
authorize one or more Reporting Persons (or other officers) to make Awards to
Eligible Persons who are not Reporting Persons (or other officers whom the
Committee has specifically authorized to make Awards).  The Board may at any time appoint additional
members to the Committee, remove and replace members of the Committee with or
without Cause, and fill vacancies on the Committee however caused.


(c)           Powers of the Committee.  Subject to the provisions of the Plan and to
Section 15(a) in particular, the Committee shall have the authority, in its
sole discretion:


(i)            to determine Eligible Persons to
whom Awards shall be granted from time to time and the number of Shares, units,
or dollars to be covered by each Award;


(ii)           to determine, from time to time, the
Fair Market Value of Shares;


(iii)          to determine, and to set forth in
Award Agreements, the terms and conditions of all Awards, including any
applicable exercise or purchase price, the installments and conditions under
which an Award shall become vested (which may be based on performance),
terminated, expired, cancelled, or replaced, and the circumstances for vesting
acceleration or waiver of forfeiture restrictions, and other restrictions and
limitations;


(iv)          to approve the forms of Award
Agreements and all other documents, notices and certificates in connection
therewith which need not be identical either as to type of Award or among
Participants;


(v)           to construe and interpret the terms
of the Plan and any Award Agreement, to determine the meaning of their terms,
and to prescribe, amend, and rescind rules and procedures relating to the Plan
and its administration; and











(vi)          in order to fulfill the purposes of
the Plan and without amending the Plan, to modify, to cancel, or to waive the
Company’s rights with respect to any Awards, to adjust or to modify Award
Agreements for changes in Applicable Law, and to recognize differences in
foreign law, tax policies, or customs; and


(vii)         to make all other interpretations and
to take all other actions that the Committee may consider necessary or advisable
to administer the Plan or to effectuate its purposes.


Subject to
Applicable Law and the restrictions set forth in the Plan, the Committee may
delegate administrative functions to individuals who are Reporting Persons,
officers, or Employees of the Company or its Affiliates.


(d)           Deference to Committee
Determinations.  The Committee shall
have the discretion to interpret or construe ambiguous, unclear, or implied
(but omitted) terms in any fashion it deems to be appropriate in its sole
discretion, and to make any findings of fact needed in the administration of
the Plan or Award Agreements.  The
Committee’s prior exercise of its discretionary authority shall not obligate it
to exercise its authority in a like fashion thereafter.  The Committee’s interpretation and
construction of any provision of the Plan, or of any Award or Award Agreement,
shall be final, binding, and conclusive.  
The validity of any such interpretation, construction, decision or
finding of fact shall not be given de novo review if challenged in court, by
arbitration, or in any other forum, and shall be upheld unless clearly made in
bad faith or materially affected by fraud.


(e)           No Liability; Indemnification.  Neither the Board nor any Committee member,
nor any Person acting at the direction of the Board or the Committee, shall be
liable for any act, omission, interpretation, construction or determination
made in good faith with respect to the Plan, any Award or any Award
Agreement.  The Company and its
Affiliates shall pay or reimburse any member of the Committee, as well as any
Director, Employee, or Consultant who takes action on behalf of the Plan, for
all expenses incurred with respect to the Plan, and to the full extent
allowable under Applicable Law shall indemnify each and every one of them for
any claims, liabilities, and costs (including reasonable attorney’s fees)
arising out of their good faith performance of duties on behalf of the
Plan.  The Company and its Affiliates
may, but shall not be required to, obtain liability insurance for this purpose.


5.                                       Eligibility


(a)           General Rule.  Subject to the express provisions of the
Plan, the Committee shall determine from the class of Eligible Persons those
individuals to whom Awards under the Plan may be granted, the number of Shares
subject to each Award, the price (if any) to be paid for the Shares or the
Award, any terms for vesting of Awards, and in the case of Performance Awards,
in addition to the matters addressed in Section 10 below, the specific
objectives, goals and performance criteria that further define the Performance
Award.  The Committee may grant ISOs only
to Employees (including officers who are Employees) of the Company or any
Affiliate that is a “parent corporation” or “subsidiary corporation” within the
meaning of Section 424 of the Code, and may grant all other Awards to any
Eligible Person.  A Participant who has
been granted an Award may be granted an additional Award or Awards pursuant to
the terms of the Plan if the Committee shall so 











determine, if such
person is otherwise an Eligible Person and if otherwise in accordance with the
terms of the Plan.


(b)           Documentation  of Awards.  Each Award shall be evidenced by an Award
Agreement signed by the Company and, if required by the Committee, by the
Participant.  The Award Agreement shall
set forth the material terms and conditions of the Award established by the
Committee, and each Award shall be subject to all of the terms and conditions
of the Plan set forth in Sections 23, 24, and 25 unless otherwise specifically
provided in an Award Agreement.


(c)           Limits on Awards.  During the term of the Plan, no Participant
may receive Options and SAR Awards that relate to more than the total number of
Shares reserved for Awards pursuant to Section 3 above, as adjusted pursuant to
Section 13 below.


(d)           Replacement Awards.  Subject to Applicable Laws (including any
associated Shareholder approval requirements) and the provisions of Section 15
below, the Committee may, in its sole discretion and upon such terms as it
deems appropriate, require as a condition of the grant of an Award to a
Participant that the Participant surrender for cancellation some or all of the
Awards that have previously been granted to the Participant under this Plan or
otherwise.  An Award that is conditioned upon
such surrender may or may not be the same type of Award, may cover the same (or
a lesser or greater) number of Shares as such surrendered Award, may have other
terms that are determined without regard to the terms or conditions of such
surrendered Award, and may contain any other terms that the Committee deems
appropriate.   In the case of Options,
these other terms may not involve an Exercise Price that is lower than the
exercise price of the surrendered Option unless the Company’s shareholders
approve the grant itself or the program under which the grant is made pursuant
to the Plan.


6.                                       Option Awards


(a)           Types; Documentation.  Subject to Section 5(a), the Committee may in
its discretion grant Options pursuant to Award Agreements that are delivered to
Participants.  Each Option shall be
designated in the Award Agreement as an ISO or a Non-ISO, and the same Award
Agreement may grant both types of Options. 
At the sole discretion of the Committee, any Option may be exercisable,
in whole or in part, immediately upon the grant thereof, or only after the
occurrence of a specified event, or only in installments, which installments
may vary.  Options granted under the Plan
may contain such terms and provisions not inconsistent with the Plan that the
Committee shall deem advisable in its sole and absolute discretion.


(b)           ISO $100,000 Limitation.  To the extent that the aggregate Fair Market
Value of Shares with respect to which Options designated as ISOs first become
exercisable by a Participant in any calendar year (under this Plan and any
other plan of the Company or any Affiliate) exceeds $100,000, such excess
Options shall be treated as Non-ISOs. 
For purposes of determining whether the $100,000 limit is exceeded, the
Fair Market Value of the Shares subject to an ISO shall be determined as of the
Grant Date.  In reducing the number of
Options treated as ISOs to meet the $100,000 limit, the most recently granted
Options shall be reduced first.  In the
event that Section 422 of the Code is amended to alter the limitation set forth
therein, the limitation of this Section 6(b) shall be automatically adjusted
accordingly.











(c)           Term of Options.  Each Award Agreement shall specify a term at
the end of which the Option automatically expires, subject to earlier termination
provisions contained in Section 6(h) hereof; provided, that, the term of any
Option may not exceed ten years from the Grant Date.  In the case of an ISO granted to an Employee
who is a Ten Percent Holder on the Grant Date, the term of the ISO shall not exceed
five years from the Grant Date.


(d)           Exercise Price.  The exercise price of an Option shall be
determined by the Committee in its sole discretion and shall be set forth in
the Award Agreement, provided that –


(i)                                   if an ISO is
granted to an Employee who is a Ten Percent Holder on the Grant Date, the per
Share exercise price shall not be less than 110% of the Fair Market Value per
Share on the Grant Date, and


(ii)                                for all
other Options, such per Share exercise price shall not be less than 100% of the
Fair Market Value per Share on the Grant Date.


(e)           Exercise of Option.  The times, circumstances and conditions under
which an Option shall be exercisable shall be determined by the Committee in
its sole discretion and set forth in the Award Agreement.  The Committee shall have the discretion to
determine whether and to what extent the vesting of Options shall be tolled
during any unpaid leave of absence; provided, however, that in the absence of
such determination, vesting of Options shall be tolled during any such leave
approved by the Company.


(f)            Minimum Exercise Requirements.  An Option may not be exercised for a fraction
of a Share.  The Committee may require in
an Award Agreement that an Option be exercised as to a minimum number of
Shares, provided that such requirement shall not prevent a Participant from
purchasing the full number of Shares as to which the Option is then
exercisable.


(g)           Methods of Exercise.  Prior to its expiration pursuant to the terms
of the applicable Award Agreement, and subject to the times, circumstances and
conditions for exercise contained in the applicable Award Agreement, each
Option may be exercised, in whole or in part (provided that the Company shall
not be required to issue fractional shares), by delivery of written notice of
exercise to the secretary of the Company accompanied by the full exercise price
of the Shares being purchased.  In the
case of an ISO, the Committee shall determine the acceptable methods of payment
on the Grant Date and it shall be included in the applicable Award
Agreement.  The methods of payment that
the Committee may in its discretion accept or commit to accept in an Award
Agreement include:


(i)            cash or check payable to the Company
(in U.S. dollars);


(ii)           other Shares that (A) are owned by
the Participant who is purchasing Shares pursuant to an Option, (B) have a Fair
Market Value on the date of surrender equal to the aggregate exercise price of
the Shares as to which the Option is being exercised, (C) were not acquired by
such Participant pursuant to the exercise of an Option, unless such Shares have
been owned by such Participant for at least six months or such other period as
the Committee may determine, (D) are all, at the time of such surrender, free
and clear of any and all claims, pledges, liens and encumbrances, or any
restrictions which would in any manner restrict the transfer of such shares to
or by the Company (other than such 











restrictions
as may have existed prior to an issuance of such Shares by the Company to such
Participant), and (E) are duly endorsed for transfer to the Company;


(iii)          a cashless exercise program that the
Committee may approve, from time to time in its discretion, pursuant to which a
Participant may concurrently provide irrevocable instructions (A) to such
Participant’s broker or dealer to effect the immediate sale of the purchased
Shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the exercise price of the Option
plus all applicable taxes required to be withheld by the Company by reason of
such exercise, and (B) to the Company to deliver the certificates for the
purchased Shares directly to such broker or dealer in order to complete the
sale; or


(iv)          any combination of the foregoing
methods of payment.


The Company shall
not be required to deliver Shares pursuant to the exercise of an Option until
payment of the full exercise price therefore is received by the Company.


(h)           Termination of Continuous Service.  The Committee may establish and set forth in
the applicable Award Agreement the terms and conditions on which an Option
shall remain exercisable, if at all, following termination of a Participant’s
Continuous Service.  The Committee may
waive or modify these provisions at any time. 
To the extent that a Participant is not entitled to exercise an Option
at the date of his or her termination of Continuous Service, or if the
Participant (or other person entitled to exercise the Option) does not exercise
the Option to the extent so entitled within the time specified in the Award
Agreement or below (as applicable), the Option shall terminate and the Shares
underlying the unexercised portion of the Option shall revert to the Plan and
become available for future Awards.  In
no event may any Option be exercised after the expiration of the Option term as
set forth in the Award Agreement.


The following
provisions shall apply to the extent an Award Agreement does not specify the
terms and conditions upon which an Option shall terminate when there is a
termination of a Participant’s Continuous Service:


(i)            Termination other than
Upon Disability or Death or for Cause.  In the event of termination of a Participant’s
Continuous Service (other than as a result of Participant’s death, disability,
retirement or termination for Cause), the Participant shall have the right to
exercise an Option at any time within 60 days following such termination to the
extent the Participant was entitled to exercise such Option at the date of such
termination.


(ii)           Disability.  In the event of termination of a Participant’s
Continuous Service as a result of his or her being Disabled, the Participant
shall have the right to exercise an Option at any time within one year
following such termination to the extent the Participant was entitled to
exercise such Option at the date of such termination.


(iii)          Retirement.  In the event of termination of a Participant’s
Continuous Service as a result of Participant’s retirement, the Participant
shall have the right to exercise the Option at any time within six months
following such termination to the extent the Participant was entitled to
exercise such Option at the date of such termination (provided 











that
an ISO exercised more than three months after termination of the Participant’s
Continuous Service shall to that extent be treated an a Non-ISO).


(iv)          Death.  In the event of the death of a Participant
during the period of Continuous Service since the Grant Date of an Option, or
within 60 days following termination of the Participant’s Continuous Service,
the Option may be exercised, at any time within one year following the date of
the Participant’s death, by the Participant’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent the right to exercise the Option had vested at the date of death
or, if earlier, the date the Participant’s Continuous Service terminated.


(v)           Cause.  If the Committee determines that a
Participant’s Continuous Service terminated due to Cause, the Participant shall
immediately forfeit the right to exercise any Option, and it shall be
considered immediately null and void.


If there is a blackout period imposed by the
Securities and Exchange Commission or the Company in either case that prohibits
the buying or selling or Shares during any part of the ten (10) day period
before the expiration of any Option based on the termination of a Participant’s
Continuous Service (as described above), the period for exercising the Options
shall be extended until ten (10) extends beyond when such blackout period
ends.   Notwithstanding any provision
hereof or within an Award Agreement, no Option shall ever be exercisable after
the expiration date of its original term as set forth in the Award Agreement.


(i)            Reverse
Vesting.  The Committee in its sole
discretion may allow a Participant to exercise unvested Options according to
such terms and conditions as the Committee may authorize in its discretion.


7.                                       Share Appreciation Rights (SARs)


(a)           Grants.  The Committee may in its discretion grant
Share Appreciation Rights to any Eligible Person in any of the following forms:


(i)            SARs related to Options.  The Committee may grant SARs either
concurrently with the grant of an Option or with respect to an outstanding
Option, in which case the SAR shall extend to all or a portion of the Shares
covered by the related Option.  An SAR
shall entitle the Participant who holds the related Option, upon exercise of
the SAR and surrender of the related Option, or portion thereof, to the extent
the SAR and related Option each were previously unexercised, to receive payment
of an amount determined pursuant to Section 7(e) below.  Any SAR granted in connection with an ISO
will contain such terms as may be required to comply with the provisions of
Section 422 of the Code and the regulations promulgated thereunder.


(ii)           SARs Independent of
Options.  The Committee may
grant SARs which are independent of any Option subject to such conditions as
the Committee may in its discretion determine and set forth in the applicable
Award Agreement.


(iii)          Limited SARs.  The Committee may grant SARs exercisable only
upon or in respect of a Change in Control or any other specified event, and
such limited SARs may relate to or operate in tandem or combination with or
substitution for Options or other SARs, or on a stand-alone basis, and may be
payable in cash or Shares based on the spread 











between
the exercise price of the SAR, and (A) a price based upon or equal to the Fair
Market Value of the Shares during a specified period, at a specified time
within a specified period before, after or including the date of such event, or
(B) a price related to consideration payable to Company’s shareholders
generally in connection with the event.


(b)           Exercise Price.  The per Share exercise price of a SAR shall
be determined in the sole discretion of the Committee, shall be set forth in
the applicable Award Agreement, and shall be no less than 100% of the Fair
Market Value of one Share on the Grant Date, subject to adjustments by the
Committee in accordance with Code Section 409A, after its delivery to the
Company.  The exercise price of an SAR
related to an Option shall be the same as the exercise price of the related
Option.


(c)           Exercise of SARs.  An SAR may not have a term exceeding ten
years from its Grant Date.  Unless the
Award Agreement otherwise provides, an SAR related to an Option will be
exercisable at such time or times, and to the extent, that the related Option
will be exercisable; provided that the Award Agreement shall not, without
the approval of the shareholders of the Company, provide
for a vesting period for the exercise of the SAR that is more favorable to the
Participant than the exercise period for the related Option.  An SAR granted independently of any other
Award will be exercisable pursuant to the terms of the Award Agreement.  Whether an SAR is related to an Option or is
granted independently, the SAR may only be exercised when the Fair Market Value
of the Shares underlying the SAR exceeds the exercise price of the SAR.


(d)           Effect on Available Shares.  All SARs that may be settled in Shares shall
be counted in full against the number of Shares available for awards under the
Plan, regardless of the number of Shares actually issued upon settlement of the
SARs.


(e)           Payment.   Upon exercise of an SAR related to an Option
and the attendant surrender of an exercisable portion of any related Award, the
Participant will be entitled to receive payment of an amount determined by
multiplying –


(i)            the excess of the Fair Market Value
of a Share on the date of exercise of the SAR over the exercise price per Share
of the SAR, by


(ii)           the number of Shares with respect to
which the SAR has been exercised.


(iii)          Notwithstanding the foregoing, an SAR
granted independently of an Option (i) may limit the amount payable to the
Participant to a percentage, specified in the Award Agreement but not exceeding
one-hundred percent (100%), of the amount determined pursuant to the preceding
sentence, and (ii) shall be subject to any payment or other restrictions that
the Committee may at any time impose in its discretion, including restrictions
intended to conform the SARs with Section 409A of the Code.


(f)            Form and Terms of Payment.  Unless otherwise provided in an Award
Agreement, all SARs shall be settled in Shares as soon as practicable after
exercise.  Subject to Applicable Law, the
Committee may, in its sole discretion, provide in an Award Agreement that the
amount determined under Section 7(e) above shall be settled solely in cash,
solely in Shares (valued at their Fair Market Value on the date of exercise of
the SAR), or partly in cash and partly in Shares, with cash paid in lieu of
fractional shares.











(g)           Termination of Employment or
Consulting Relationship.  The
Committee shall establish and set forth in the applicable Award Agreement the
terms and conditions under which an SAR shall remain exercisable, if at all,
following termination of a Participant’s Continuous Service.  The provisions of Section 6(h) above shall
apply to the extent an Award Agreement does not specify the terms and
conditions upon which an SAR shall terminate when there is a termination of a
Participant’s Continuous Service.


8.                                       Restricted Shares, Restricted Share Units, and Unrestricted Shares


(a)           Grants.  The Committee may in its sole discretion
grant restricted shares (“Restricted Shares”) to any Eligible Person and shall
evidence such grant in an Award Agreement that is delivered to the Participant
and that sets forth the number of Restricted Shares, the purchase price for
such Restricted Shares (if any), and the terms upon which the Restricted Shares
may become vested.  In addition, the
Company may in its discretion grant to any Eligible Person the right to receive
Shares after certain vesting requirements are met (“Restricted Share Units”),
and shall evidence such grant in an Award Agreement that is delivered to the
Participant which sets forth the number of Shares (or formula, that may be
based on future performance or conditions, for determining the number of
Shares) that the Participant shall be entitled to receive upon vesting and the
terms upon which the Shares subject to a Restricted Share Unit may become
vested.  The Committee may condition any
Award of Restricted Shares or Restricted Share Units to a Participant on receiving
from the Participant such further assurances and documents as the Committee may
require to enforce the restrictions.  In
addition, the Committee may grant Awards hereunder in the form of unrestricted
shares (“Unrestricted Shares”), which shall vest in full upon the date of grant
or such other date as the Committee may determine or which the Committee may
issue pursuant to any program that the Committee may approve under which one or
more Eligible Persons (selected by the Committee in its sole discretion) may
elect to pay for such Shares or to receive Unrestricted Shares in lieu of cash
bonuses that would otherwise be paid.


(b)           Vesting and Forfeiture.  The Committee shall set forth in an Award
Agreement granting Restricted Shares or Restricted Share Units, the terms and
conditions under which the Participant’s interest in the Restricted Shares or
the Shares subject to Restricted Share Units will become vested and
non-forfeitable.  Except as set forth in
the applicable Award Agreement or the Committee otherwise determines, upon
termination of a Participant’s Continuous Service for any reason, the
Participant shall forfeit his or her Restricted Shares and Restricted Share
Units to the extent the Participant’s interest therein has not vested on or
before such termination date; provided that (i) unless otherwise provided in an
Award Agreement, full vesting shall occur if the Participant’s Continuous
Service ends due to the Participant’s death, being Disabled, or Retirement, and
(ii); if a Participant purchases the Restricted Shares and forfeits them for
any reason, the Company shall return the purchase price to the Participant only
if and to the extent set forth in an Award Agreement.


(c)           Issuance of Restricted Shares
Prior to Vesting.  Restricted  Shares will be evidenced  by a book entry in the Company’s
records.  Upon vesting, a Participant may
request a physical certificate for vested Shares, and the Committee may in its
discretion direct the Company to issue such certificate at any time after
vesting, provided  that the Company may
issue the Shares to an account maintained in the Participant’s name by a
transfer agent if the Participant has not provided contrary instructions.











(d)           Issuance of Shares upon Vesting.  As soon as practicable after vesting of a
Participant’s Restricted Shares (or of the right to receive Shares underlying
Restricted Share Units) and the Participant’s satisfaction of applicable tax
withholding requirements, the Company shall release to the Participant, free
from the vesting restrictions, one Share for each vested Restricted Share (or
issue one Share free of the vesting restriction for each vested Restricted
Share Unit), unless an Award Agreement provides otherwise.  No fractional shares shall be distributed,
and cash shall be paid in lieu thereof.


(e)           Dividends Payable on Vesting.  Unless otherwise provided in an Award
Agreement, the number of Shares subject to any Restricted Share or Restricted
Share Unit Award shall be adjusted to 
reflect any stock dividends which are declared and paid to the holders
of Shares between the Grant Date and the date such Share is released from the
vesting restrictions in the case of Restricted Shares or issued in the case of
Restricted Share Units.  To the extent
that the Company pays any cash dividends on the Shares subject to any
Restricted Share or Restricted Share Unit Award, the Participant shall be
entitled (unless an Award Agreement provides otherwise) to receive a cash
payment from the Company, when such cash dividend is paid to holders of such Shares,  with the payment to the Participant being
equal to the product of the per Share cash dividend paid and the number of
Shares subject to the Participant’s Award.


(f)            Section 83(b) Elections.  A Participant may make an election under
Section 83(b) of the Code (the “Section 83(b) Election”) with respect to
Restricted Shares.  If a Participant who
has received Restricted Share Units promptly provides the Committee with
written notice of his or her intention to make a Section 83(b) Election with
respect to the Shares subject to such Restricted Share Units, the Committee may
in its discretion convert the Participant’s Restricted Share Units into
Restricted Shares, on a one-for-one basis, in full satisfaction of the
Participant’s Restricted Share Unit Award. 
The Participant may then make a Section 83(b) Election with respect to
those Restricted Shares.  Shares with
respect to which a Participant makes a Section 83(b) Election shall not be
eligible for deferral pursuant to Section 9 below.


(g)           Deferral Elections.  At any time within the thirty-day period (or
other shorter or longer period that the Committee selects in its sole
discretion) in which a Participant who is a member of a select group of
management or highly compensated employees (within the meaning of the Code)
receives an initial Award of either Restricted Shares or Restricted Share Units
(or before the calendar year in which such a Participant receives a subsequent
Award, subject to adjustments by the Committee in accordance with Code Section
409A), the Committee may permit the Participant to irrevocably elect, on a form
provided by and acceptable to the Committee, to defer the receipt of all or a
percentage of the Shares that would otherwise be transferred to the Participant
upon the vesting of such Award.  If the
Participant makes this election, the Shares subject to the election, and any
associated dividends and interest, shall be credited to an account established
pursuant to Section 9 hereof on the date such Shares would otherwise have been
released or issued to the Participant pursuant to Section 8(d) above, and no
vesting shall occur (other than for death or Disability if provided pursuant to
the Award Agreement) within the 12-month period following the date of the
Participant’s election.


9.                                       Deferred Share Units


(a)           Elections to Defer.  The Committee may permit any Eligible Person
who is a Director, Consultant or member of a select group of management or
highly compensated employees 











(within the meaning of
the Code) to irrevocably elect, on a form provided by and acceptable to the
Committee (the “Election Form”), to forego the receipt of cash or other
compensation (including the Shares deliverable pursuant to any Award other than
Restricted Shares for which a Section 83(b) Election has been made), and in
lieu thereof to have the Company credit to an internal Plan account (the “Account”)
a number of deferred share units (“Deferred Share Units”) having a Fair Market
Value equal to the Shares and other compensation deferred.  These credits will be made at the end of each
calendar month during which compensation is deferred.  Each Election Form shall take effect on the
first day of the next calendar year (or on the first day of the next calendar
month in the case of an initial election by a Participant who first receives an
Award, subject to adjustments by the Committee in accordance with Code Section
409A) after its delivery to the Company, subject to Section 8(g) regarding
deferral of Restricted Shares and Restricted Share Units and to Section 10(e) regarding
deferral of Performance Awards, unless the Company sends the Participant a
written notice explaining why the Election Form is invalid within five business
days after the Company receives it. 
Notwithstanding the foregoing sentence: (i) Election Forms shall be
ineffective with respect to any compensation that a Participant earns before
the date on which the Company receives the Election Form, and (ii) the
Committee may unilaterally make Awards in the form of Deferred Share Units,
regardless of whether or not the Participant foregoes other compensation.


(b)           Vesting.  Unless an Award Agreement expressly provides
otherwise, each Participant shall be 100% vested at all times in any Shares
subject to Deferred Share Units.


(c)           Issuances of Shares.  The Company shall provide a Participant with
one Share for each Deferred Share Unit in five substantially equal annual
installments that are issued before the last day of each of the five calendar
years that end after the date on which the Participant’s Continuous Service
terminates, unless –


(i)            the Participant has properly elected
a different form of distribution, on a form approved by the Committee, that
permits the Participant to select any combination of a lump sum and annual
installments that are completed within ten years following termination of the
Participant’s Continuous Service, and


(ii)           the Company received the Participant’s
distribution election form at the time the Participant elects to defer the
receipt of cash or other compensation pursuant to Section 9(a), provided that
such election may be changed through any subsequent election that (i) is
delivered to the Company at least one year before the date on which
distributions are otherwise scheduled to commence pursuant to the Participant’s
election, and (ii) defers the commencement of distributions by at least five
years from the originally scheduled commencement date.


Fractional shares shall not be issued, and instead shall be paid out in
cash.


(d)           Crediting of Dividends.  Unless otherwise provided in an Award
Agreement or in a Participant’s deferral election agreement, whenever Shares
are issued to a Participant pursuant to Section 9(c) above, such Participant
shall also be entitled to receive, with respect to each Share issued, a number
of Shares equal to the sum of (i) any stock dividends, which were declared and
paid to the holders of Shares between the Grant Date and the date such Share is
issued, and (ii) a number of Shares equal to the Shares that the Participant
could have purchased at Fair Market Value on the















payment date of any cash
dividends for Shares if the Participant had received such cash dividends
between the Grant Date and the settlement date for the Deferred Share Units.


(e)           Emergency Withdrawals.  In the event a Participant suffers an
unforeseeable emergency within the contemplation of this Section and Section
409A of the Code, the Participant may apply to the Company for an immediate
distribution of all or a portion of the Participant’s Deferred Share
Units.  The unforeseeable emergency must
result from a sudden and unexpected illness or accident of the Participant, the
Participant’s spouse, or a dependent (within the meaning of Section 152(a) of
the Code) of the Participant, casualty loss of the Participant’s property, or
other similar extraordinary and unforeseeable conditions beyond the control of
the Participant.  Examples of purposes
which are not considered unforeseeable emergencies include post-secondary
school expenses or the desire to purchase a residence.  In no event will a distribution be made to
the extent the unforeseeable emergency could be relieved through reimbursement
or compensation by insurance or otherwise, or by liquidation of the Participant’s
nonessential assets to the extent such liquidation would not itself cause a
severe financial hardship.  The amount of
any distribution hereunder shall be limited to the amount necessary to relieve
the Participant’s unforeseeable emergency plus amounts necessary to pay taxes
reasonably anticipated as a result of the distribution.  The Committee shall determine whether a
Participant has a qualifying unforeseeable emergency and the amount which
qualifies for distribution, if any.  The
Committee may require evidence of the purpose and amount of the need, and may
establish such application or other procedures as it deems appropriate.


(f)            Unsecured Rights to Deferred
Compensation.  A Participant’s right
to Deferred Share Units shall at all times constitute an unsecured promise of
the Company to pay benefits as they come due. 
The right of the Participant or the Participant’s duly-authorized
transferee to receive benefits hereunder shall be solely an unsecured claim
against the general assets of the Company. 
Neither the Participant nor the Participant’s duly-authorized transferee
shall have any claim against or rights in any specific assets, shares, or other
funds of the Company.


10.                                 Performance Awards


(a)           Performance Units.  Subject to the limitations set forth in
paragraph (c) hereof, the Committee may in its discretion grant Performance
Units to any Eligible Person and shall evidence such grant in an Award
Agreement that is delivered to the Participant which sets forth the terms and
conditions of the Award which may be paid in cash, in Shares, or such
combination of cash and Shares as the Committee in its sole discretion shall
determine.


(b)           Performance Compensation Awards.  Subject to the limitations set forth in
paragraph (c) hereof, the Committee may, at the time of grant of a Performance
Unit, designate such Award as a “Performance Compensation Award” (payable in
cash or Shares) in order that such Award constitutes “qualified
performance-based compensation” under Code Section 162(m), in which event the
Committee shall have the power to grant such Performance Compensation Award
upon terms and conditions that qualify it as “qualified performance-based
compensation” within the meaning of Code Section 162(m).  With respect to each such Performance
Compensation Award, the Committee shall establish, in writing within the time
required under Code Section 162(m), a “Performance Period,” “Performance
Measure(s)”, and “Performance Formula(e)” (each such term being hereinafter
defined).  Once established for a
Performance Period, the Performance Measure(s) and Performance Formula(e) shall
not be amended or otherwise modified to the extent such 











amendment or
modification would cause the compensation payable pursuant to the Award to fail
to constitute qualified performance-based compensation under Code Section
162(m).


A Participant shall be
eligible to receive payment in respect of a Performance Compensation Award only
to the extent that the Performance Measure(s) for such Award is achieved and
the Performance Formula(e) as applied against such Performance Measure(s)
determines that all or some portion of such Participant’s Award has been earned
for the Performance Period.  As soon as
practicable after the close of each Performance Period, the Committee shall
review and certify in writing whether, and to what extent, the Performance Measure(s)
for the Performance Period have been achieved and, if so, determine and certify
in writing the amount of the Performance Compensation Award to be paid to the
Participant and, in so doing, may use negative discretion to decrease, but not
increase, the amount of the Award otherwise payable to the Participant based
upon such performance.


(c)           Limitations on Awards.  The maximum Performance Unit Award and the
maximum Performance Compensation Award that any one Participant may receive for
any one Performance Period shall not together exceed the total number of Shares
reserved under Section 3 above for Awards, or, for Performance Units to be
settled in cash, the equivalent Fair Market Value of such Shares as of the
award date.  The Committee shall have the
discretion to provide in any Award Agreement that any amounts earned in excess
of these limitations will either be credited as Deferred Share Units, or as
deferred cash compensation under a separate plan of the Company (provided in
the latter case that such deferred compensation either bears a reasonable rate
of interest or has a value based on one or more predetermined actual
investments).  Any amounts for which
payment to the Participant is deferred pursuant to the preceding sentence shall
be paid to the Participant in a future year or years not earlier than, and only
to the extent that, the Participant is either not receiving compensation in
excess of these limits for a Performance Period, or is not subject to the
restrictions set forth under Section 162(b) of the Code.


(d)           Definitions.


(i)            “Performance Formula” means, for a
Performance Period, one or more objective formulae or standards established by
the Committee for purposes of determining whether or the extent to which an
Award has been earned based on the level of performance attained or to be
attained with respect to one or more Performance Measure(s).  Performance Formulae may vary from
Performance Period to Performance Period and from Participant to Participant
and may be established on a stand-alone basis, in tandem or in the alternative.


(ii)           “Performance Measure” means one or
more of the following selected by the Committee to measure Company, Affiliate,
and/or business unit performance for a Performance Period, whether in absolute
or relative terms (including, without limitation, terms relative to a peer
group or index): basic, diluted, or adjusted earnings per share; sales or
revenue; earnings before interest, taxes, and other adjustments (in total or on
a per share basis); basic or adjusted net income; returns on equity, assets,
capital, revenue or similar measure; economic value added; working capital;
total shareholder return; earnings before interest, taxes, depreciation and
amortization (“EBITDA”); acquisition/sale of assets; cash flow per share; book
value per share; costs; sales; volume; cash flow (as the Committee may define
such term); product development, product market share, research, licensing,
litigation, human resources, information services, mergers, acquisitions, sales
of assets of Affiliates or business units. 
Each such measure shall be, to the extent applicable, determined in 











accordance
with generally accepted accounting principles as consistently applied by the
Company (or such other standard applied by the Committee) and, if so determined
by the Committee, and in the case of a Performance Compensation Award, to the
extent permitted under Code Section 162(m), adjusted to omit the effects of
extraordinary items, gain or loss on the disposal of a business segment,
unusual or infrequently occurring events and transactions and cumulative
effects of changes in accounting principles. 
Performance Measures may vary from Performance Period to Performance
Period and from Participant to Participant, and may be established on a stand-alone
basis, in tandem or in the alternative.


(iii)          “Performance Period” means one or more
periods of time (of not less than one fiscal year of the Company), as the
Committee may designate, over which the attainment of one or more Performance
Measure(s) will be measured for the purpose of determining a Participant’s
rights in respect of an Award.


(e)           Deferral Elections. At any
time prior to the date that is at least six months before the close of a
Performance Period (or shorter or longer period that the Committee selects)
with respect to an Award of either Performance Units or Performance
Compensation, the Committee may permit a Participant who is a member of a
select group of management or highly compensated employees (within the meaning
of the Code) to irrevocably elect, on a form provided by and acceptable to the
Committee, to defer the receipt of all or a percentage of the cash or Shares
that would otherwise be transferred to the Participant upon the vesting of such
Award.  If the Participant makes this
election, the cash or Shares subject to the election, and any associated
interest and dividends, shall be credited to an account established pursuant to
Section 9 hereof on the date such cash or Shares would otherwise have been
released or issued to the Participant pursuant to Section 10(a) or Section
10(b) above.


11.                                 Taxes


(a)           General. As a condition to the
issuance or distribution of Shares pursuant to the Plan, the Participant (or in
the case of the Participant’s death, the person who succeeds to the Participant’s
rights) shall make such arrangements as the Company may require for the
satisfaction of any applicable federal, state, local or foreign withholding tax
obligations that may arise in connection with the Award and the issuance of
Shares.  The Company shall not be
required to issue any Shares until such obligations are satisfied, and may
unilaterally withhold Shares for this purpose. 
If the Committee allows or effectuates the withholding or surrender of
Shares to satisfy a Participant’s tax withholding obligations, the Committee shall
not allow Shares to be withheld in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.


(b)           Default Rule for Employees. In
the absence of any other arrangement authorized by the Committee or set forth
in the Award Agreement, and to the extent permitted under Applicable Law, each
Participant shall be deemed to have elected to have the Company withhold from
the Shares or cash to be issued pursuant to an Award that number of Shares having
a Fair Market Value determined as of the applicable Tax Date (as defined below)
or cash equal to the minimum applicable tax withholding and employment tax
obligations associated with an Award.  If
such withholding of Shares is not permitted for any reason, the Company shall
satisfy any required withholding through withholding from cash compensation
otherwise payable to the Participant. 
For purposes of this Section 11, the Fair Market Value of the Shares to
be withheld shall be determined 











on the date that the
amount of tax to be withheld is to be determined under the Applicable Law (the “Tax
Date”).


(c)           Surrender of Shares. If
permitted by the Committee, in its discretion, a Participant may satisfy the
minimum applicable tax withholding and employment tax obligations associated
with an Award by surrendering Shares to the Company (including Shares that
would otherwise be issued pursuant to the Award) that have a Fair Market Value
determined as of the applicable Tax Date equal to the amount required to be withheld.  In the case of Shares previously acquired
from the Company that are surrendered under this Section 11, such Shares must
have been owned by the Participant for more than six months on the date of
surrender (or such longer period of time the Company may in its discretion
require).


(d)           Income Taxes and Deferred
Compensation.  Participants are
solely responsible and liable for the satisfaction of all taxes and penalties
that may arise in connection with Awards (including any taxes arising under
Section 409A of the Code), and the Company shall not have any obligation to
indemnify or otherwise hold any Participant harmless from any or all of such
taxes.  The Committee shall have the
discretion to organize any deferral program, to require deferral election
forms, and to grant or to unilaterally modify any Award in a manner that (i)
conforms with the requirements of Section 409A of the Code with respect to
compensation that is deferred and that vests after December 31, 2004, (ii) that
voids any Participant election to the extent it would violate Section 409A of
the Code, and (iii) for any distribution election that would violate Section
409A of the Code, to make distributions pursuant to the Award at the earliest
to occur of a distribution event that is allowable under Section 409A of the
Code or any distribution event that is both allowable under Section 409A of the
Code and is elected by the Participant, subject to any valid second election to
defer, provided that the Committee permits second elections to defer in
accordance with Section 409A(a)(4)(C). 
The Committee shall have the sole discretion to interpret the
requirements of the Code, including Section 409A, for purposes of the Plan and
all Awards.


12.                                 Non-Transferability of Awards


(a)           General.  Except as set forth in this Section 12, or as
otherwise approved by the Committee, Awards may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution.  The
designation of a beneficiary by a Participant will not constitute a
transfer.  An Award may be exercised,
during the lifetime of the holder of an Award, only by such holder, the
duly-authorized legal representative of a Participant who is Disabled, or a
transferee permitted by this Section 12.


(b)           Limited Transferability Rights.  Notwithstanding anything else in this Section
12, a Participant may transfer, on such terms and conditions as the Committee
deems appropriate, any Award in the form of a Non-ISO, Share-settled SAR,
Restricted Shares, Unrestricted Shares, or Performance Shares, either (i) by
instrument to the Participant’s “Immediate Family” (as defined below), (ii) by
instrument to an inter vivos or testamentary trust (or other entity) in which
the Award is to be passed to the Participant’s designated beneficiaries, or
(iii) by gift to charitable institutions. 
Any transferee of the Participant’s rights shall succeed and be subject
to all of the terms of the applicable Award Agreement and the 2007 Plan. “Immediate
Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, domestic partner, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, and shall include adoptive relationships.











13.                                 Adjustments Upon Changes in Capitalization, Merger or Certain Other
Transactions


(a)           Changes
in Capitalization.  The Committee
shall equitably adjust the number of Shares covered by each outstanding Award,
and the number of Shares that have been authorized for issuance under the Plan
but as to which no Awards have yet been granted or that have been returned to
the Plan upon cancellation, forfeiture, or expiration of an Award, as well as
the price per Share covered by each such outstanding Award, to reflect any
increase or decrease in the number of issued Shares resulting from a
stock-split, reverse stock-split, stock dividend, combination, recapitalization
or reclassification of the Shares, or any other increase or decrease in the
number of issued Shares effected without receipt of consideration by the
Company.  In the event of any such
transaction or event, the Committee may provide in substitution for any or all
outstanding Awards under the Plan such alternative consideration (including
securities of any surviving entity) as it may in good faith determine to be
equitable under the circumstances and may require in connection therewith the
surrender of all Awards so replaced.  In
any case, such substitution of securities shall not require the consent of any
person who is granted Awards pursuant to the Plan.  Except as expressly provided herein, or in an
Award Agreement, if the Company issues for consideration shares of stock of any
class or securities convertible into shares of stock of any class, the issuance
shall not affect, and no adjustment by reason thereof shall be required to be
made with respect to the number or price of Shares subject to any Award.


(b)           Dissolution or Liquidation.  In the event of the dissolution or liquidation
of the Company other than as part of a Change of Control, each Award will
terminate immediately prior to the consummation of such action, subject to the
ability of the Committee to exercise any discretion authorized in the case of a
Change in Control.


(c)           Change in Control.  Extent to the extent provided otherwise in an
Award Agreement or in an unexpired employment agreement, in the event of a
Change in Control, the Committee may in its sole and absolute discretion and
authority, without obtaining the approval or consent of the Company’s
shareholders or any Participant with respect to his or her outstanding Awards,
take one or more of the following actions:


(i)            arrange for or otherwise provide
that each outstanding Award shall be assumed or a substantially similar award
shall be substituted by a successor corporation or a parent or subsidiary of
such successor corporation (the “Successor Corporation”);


(ii)           accelerate the vesting of Awards so
that Awards shall vest (and, to the extent applicable, become exercisable) as
to the Shares that otherwise would have been unvested and provide that
repurchase rights of the Company with respect to Shares issued upon exercise of
an Award shall lapse as to the Shares subject to such repurchase right;


(iii)          arrange or otherwise provide for the
payment of cash or other consideration to Participants in exchange for the
satisfaction and cancellation of outstanding Awards;


(iv)          terminate upon the consummation of the
transaction, provided that the Committee may in its sole discretion provide for
vesting of all or some outstanding Awards in full as of a date immediately
prior to consummation of the Change of Control. 
To the extent that an Award is not exercised prior to consummation of a
transaction in which the 











Award
is not being assumed or substituted, such Award shall terminate upon such
consummation; or


(v)           make such other modifications,
adjustments or amendments to outstanding Awards or this Plan as the Committee
deems necessary or appropriate, subject however to the terms of Section 15(a)
below.


Notwithstanding
the above, unless otherwise provided in an Award Agreement, in the event a
Participant holding an Award assumed or substituted by the Successor
Corporation in a Change in Control incurs an Involuntarily Termination by the
Successor Corporation in connection with, or within 12 months (or other period
either set forth in an Award Agreement, or as increased thereafter by the
Committee to a period longer than 12 months) following consummation of, the
Change in Control, then any assumed or substituted Award held by the terminated
Participant at the time of termination shall accelerate and become fully vested
(and exercisable in full in the case of Options and SARs), and any repurchase
right applicable to any Shares shall lapse in full, unless an Award Agreement
provides for a more restrictive acceleration or vesting schedule or more
restrictive limitations on the lapse of repurchase rights or otherwise places
additional restrictions, limitations and conditions on an Award.  The acceleration of vesting and lapse of
repurchase rights provided for in the previous sentence shall occur immediately
prior to the effective date of the Participant’s termination, unless an Award
Agreement provides otherwise.


(d)           Certain Distributions.  In the event of any distribution to the
Company’s shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Committee may, in its discretion,
appropriately adjust the price per Share covered by each outstanding Award to
reflect the effect of such distribution.


14.                                 Time of Granting Awards.


The date of grant
(“Grant Date”) of an Award shall be the date on which the Committee makes the
determination granting such Award or such other date as is determined by the
Committee, provided that in the case of an ISO, the Grant Date shall be the
later of the date on which the Committee makes the determination granting such
ISO or the date of commencement of the Participant’s employment relationship
with the Company.


15.                                 Modification of Awards and Substitution of Options.


(a)           Modification, Extension, and
Renewal of Awards.  Within the
limitations of the Plan, the Committee may modify an Award to accelerate the
rate at which an Option or SAR may be exercised (including without limitation
permitting an Option or SAR to be exercised in full without regard to the
installment or vesting provisions of the applicable Award Agreement or whether
the Option or SAR is at the time exercisable, to the extent it has not
previously been exercised), to accelerate the vesting of any Award, to extend
or renew outstanding Awards or to accept the cancellation of outstanding Awards
to the extent not previously exercised.  However,  the Committee may not cancel an outstanding
Option whose exercise price is greater than Fair Market Value at the time of
cancellation for the purpose of reissuing the Option to the Participant at a
lower exercise price or granting a replacement award of a different type.  Notwithstanding the foregoing provision, no
modification of an outstanding Award shall materially and adversely affect 











such Participant’s
rights thereunder (with such an affect being presumed to arise from a
modification that would trigger a violation of Section 409A of the Code),
unless either (i) the Participant provides written consent, or (ii) before a
Change in Control, the Committee determines in good faith that the modification
is not materially adverse to the Participant.  
Furthermore, neither the Company nor the
Committee shall, without shareholder approval, allow for a “repricing” within
the meaning of federal securities laws applicable to proxy statement
disclosures.


(b)           Substitution of Options.  Notwithstanding any inconsistent provisions
or limits under the Plan, in the event the Company or an Affiliate acquires
(whether by purchase, merger or otherwise) all or substantially all of
outstanding capital stock or assets of another corporation or in the event of
any reorganization or other transaction qualifying under Section 424 of the
Code, the Committee may, in accordance with the provisions of that Section,
substitute Options for options under the plan of the acquired company provided
(i) the excess of the aggregate fair market value of the shares subject to an
option immediately after the substitution over the aggregate option price of
such shares is not more than the similar excess immediately before such
substitution and (ii) the new option does not give persons additional benefits,
including any extension of the exercise period.


16.                                 Term of Plan.


The Plan shall
continue in effect for a term of ten (10) years from its effective date as
determined under Section 20 below, unless the Plan is sooner terminated under
Section 17 below.


17.                                 Amendment and Termination of the Plan.


(a)           Authority to Amend or Terminate.  Subject to Applicable Laws, the Board may
from time to time amend, alter, suspend, discontinue, or terminate the Plan.


(b)           Effect of Amendment or Termination.
 No amendment, suspension, or termination
of the Plan shall materially and adversely affect Awards already granted (with
such an affect being presumed to arise from a modification that would trigger a
violation of Section 409A of the Code) unless either it relates to an
adjustment pursuant to Section 13 or modification pursuant to Section 15(a)
above, or it is otherwise mutually agreed between the Participant and the
Committee, which agreement must be in writing and signed by the Participant and
the Company.  Notwithstanding the
foregoing, the Committee may amend the Plan to eliminate provisions which are
no longer necessary as a result of changes in tax or securities laws or
regulations, or in the interpretation thereof.


18.                                 Conditions Upon Issuance of Shares.


Notwithstanding
any other provision of the Plan or any agreement entered into by the Company
pursuant to the Plan, the Company shall not be obligated, and shall have no
liability for failure, to issue or deliver any Shares under the Plan unless
such issuance or delivery would comply with Applicable Law, with such
compliance determined by the Company in consultation with its legal counsel.


19.                                 Reservation of Shares.


The Company,
during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the
Plan.











20.                                 Effective Date.


This Plan shall
become effective on the date which it has received approval by a vote of a
majority of the votes cast at a duly held meeting of the Company’s shareholders
(or by such other shareholder vote that the Committee determines to be
sufficient for the issuance of Shares or stock options according to the Company’s
governing documents and applicable state law).


21.                                 Controlling Law.


All disputes relating
to or arising from the Plan shall be governed by the internal substantive laws
(and not the laws of conflicts of laws) of the State of Delaware, to the extent
not preempted by United States federal law. 
If any provision of this Plan is held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions shall
continue to be fully effective.


22.                                 Laws And Regulations.


(a)           U.S. Securities Laws.  This Plan, the grant of Awards, and the
exercise of Options and SARs under this Plan, and the obligation of the Company
to sell or deliver any of its securities (including, without limitation,
Options, Restricted Shares, Restricted Share Units, Unrestricted Shares,
Deferred Share Units, and Shares) under this Plan shall be subject to all
Applicable Law.  In the event that the
Shares are not registered under the Securities Act of 1933, as amended (the “Act”),
or any applicable state securities laws prior to the delivery of such Shares,
the Company may require, as a condition to the issuance thereof, that the
persons to whom Shares are to be issued represent and warrant in writing to the
Company that such Shares are being acquired by him or her for investment for
his or her own account and not with a view to, for resale in connection with,
or with an intent of participating directly or indirectly in, any distribution
of such Shares within the meaning of the Act, and a legend to that effect may
be placed on the certificates representing the Shares.


(b)           Other Jurisdictions.  To facilitate the making of any grant of an
Award under this Plan, the Committee may provide for such special terms for
Awards to Participants who are foreign nationals or who are employed by the
Company or any Affiliate outside of the United States of America as the Committee
may consider necessary or appropriate to accommodate differences in local law,
tax policy or custom.  The Company may
adopt rules and procedures relating to the operation and administration of this
Plan to accommodate the specific requirements of local laws and procedures of
particular countries.  Without limiting
the foregoing, the Company is specifically authorized to adopt rules and
procedures regarding the conversion of local currency, taxes, withholding
procedures and handling of stock certificates which vary with the customs and
requirements of particular countries. 
The Company may adopt sub-plans and establish escrow accounts and trusts
as may be appropriate or applicable to particular locations and countries.


23.           No Shareholder Rights.


Neither a Participant
nor any transferee of a Participant shall have any rights as a shareholder of
the Company with respect to any Shares underlying any Award until the date of
issuance of a share certificate to a Participant or a transferee of a Participant
for such Shares in accordance with the Company’s governing instruments and
Applicable Law.  Prior to the issuance of
Shares pursuant 











to an Award, a Participant shall not have
the right to vote or to receive dividends or any other rights as a shareholder
with respect to the Shares underlying the Award, notwithstanding its exercise
in the case of Options and SARs.  No
adjustment will be made for a dividend or other right that is determined based
on a record date prior to the date the stock certificate is issued, except as
otherwise specifically provided for in this Plan.


24.           No Employment Rights.


The Plan shall not
confer upon any Participant any right to continue an employment, service or
consulting relationship with the Company, nor shall it affect in any way a
Participant’s right or the Company’s right to terminate the Participant’s
employment, service, or consulting relationship at any time, with or without
Cause.


25.           Termination, Rescission and Recapture of Awards.


(a)          Each Award under the Plan is intended
to align the Participant’s long-term interest with those of the Company.  If the Participant engages in certain
activities discussed below, either during employment or after employment with
the Company terminates for any reason, the Participant is acting contrary to
the long-term interests of the Company. 
Accordingly, but only to the extent expressly provided in an Award
Agreement, the Company may terminate any outstanding, unexercised, unexpired,
unpaid, or deferred Awards (“Termination”), rescind any exercise, payment or
delivery pursuant to the Award (“Rescission”), or recapture any Common Stock
(whether restricted or unrestricted) or proceeds from the Participant’s sale of
Shares issued pursuant to the Award (“Recapture”), if the Participant does not
comply with the conditions of subsections (b) and (c) hereof (collectively, the
“Conditions”).


(b)          A Participant shall not, without the
Company’s prior written authorization, disclose to anyone outside the Company,
or use in other than the Company’s business, any proprietary or confidential
information or material, as those or other similar terms are used in any
applicable patent, confidentiality, inventions, secrecy, or other agreement
between the Participant and the Company with regard to any such proprietary or
confidential information or material.


(c)          Pursuant to any agreement between the
Participant and the Company with regard to intellectual property (including but
not limited to patents, trademarks, copyrights, trade secrets, inventions,
developments, improvements, proprietary information, confidential business and
personnel information), a Participant shall promptly disclose and assign to the
Company or its designee all right, title, and interest in such intellectual
property, and shall take all reasonable steps necessary to enable the Company
to secure all right, title and interest in such intellectual property in the
United States and in any foreign country.


(d)          Upon exercise, payment, or delivery of
cash or Common Stock pursuant to an Award, the Participant shall certify on a
form acceptable to the Company that he or she is in compliance with the terms
and conditions of the Plan and, if a severance of Continuous Service has
occurred for any reason, shall state the name and address of the Participant’s
then-current employer or any entity for which the Participant performs business
services and the Participant’s title, and shall identify any organization or
business in which the Participant owns a greater-than-five-percent equity
interest.











(e)           If the Company determines, in its
sole and absolute discretion, that (i) a Participant has materially violated
any of the Conditions or (ii) during his or her Continuous Service, or within
six (6) months after its termination for any reason, a Participant (a) has
rendered services to or otherwise directly or indirectly engaged in or
assisted, any organization or business that, in the judgment of the Company in
its sole and absolute discretion, is or is working to become competitive with
the Company; (b) has solicited any non-administrative employee of the Company
to terminate employment with the Company; or (c) has engaged in activities
which are materially prejudicial to or in conflict with the interests of the
Company, including any breaches of fiduciary duty or the duty of loyalty, then
the Company may, in its sole and absolute discretion, impose a Termination,
Rescission, and/or Recapture with respect to any or all of the Participant’s
relevant Awards, Shares, and the proceeds thereof.


(f)            Within ten days after receiving
notice from the Company of any such activity described in Section 25(e) above,
the Participant shall deliver to the Company the Shares acquired pursuant to
the Award, or, if Participant has sold the Shares, the gain realized, or
payment received as a result of the rescinded exercise, payment, or delivery;
provided, that if the Participant returns Shares that the Participant purchased
pursuant to the exercise of an Option (or the gains realized from the sale of
such Common Stock), the Company shall promptly refund the exercise price,
without earnings, that the Participant paid for the Shares.  Any payment by the Participant to the Company
pursuant to this Section 21 shall be made either in cash or by returning to the
Company the number of Shares that the Participant received in connection with
the rescinded exercise, payment, or delivery. 
It shall not be a basis for Termination, Rescission or Recapture if
after termination of a Participant’s Continuous Service, the Participant
purchases, as an investment or otherwise, stock or other securities of such an
organization or business, so long as (i) such stock or other securities are
listed upon a recognized securities exchange or traded over-the-counter, and
(ii) such investment does not represent more than a five percent (5%) equity
interest in the organization or business.


(g)           Notwithstanding the foregoing
provisions of this Section, the Company has sole and absolute discretion not to
require Termination, Rescission and/or Recapture, and its determination not to
require Termination, Rescission and/or Recapture with respect to any particular
act by a particular Participant or Award shall not in any way reduce or
eliminate the Company’s authority to require Termination, Rescission and/or
Recapture with respect to any other act or Participant or Award.  Nothing in this Section shall be construed to
impose obligations on the Participant to refrain from engaging in lawful
competition with the Company after the termination of employment that does not
violate subsections (b) or (c) of this Section, other than any obligations that
are part of any separate agreement between the Company and the Participant or
that arise under applicable law.


(h)           All administrative and discretionary
authority given to the Company under this Section shall be exercised by the
most senior human resources executive of the Company or such other person or
committee (including without limitation the Committee) as the Committee may
designate from time to time.


(i)            Notwithstanding any provision of
this Section, if any provision of this Section is determined to be
unenforceable or invalid under any applicable law, such provision will be
applied to the maximum extent permitted by applicable law, and shall
automatically be deemed amended in a manner consistent with its objectives to
the extent necessary to conform to any limitations required 











under applicable
law.  Furthermore, if any provision of
this Section is illegal under any applicable law, such provision shall be null
and void to the extent necessary to comply with applicable law.


Notwithstanding
the foregoing, but subject to any contrary terms set forth in any Award
Agreement,  this Section shall not be
applicable:  (i) to any Participant who
is not, on the Award Date, an Employee of the Company or its Affiliates; and
(ii) to any Participant from and after his or her termination of Continuous
Service after a Change in Control.


26.           Recoupment of Awards.


(a)           Unless otherwise specifically
provided in an Award Agreement, and to the extent permitted by Applicable Law,
the Committee may in its sole and absolute discretion, without obtaining the
approval or consent of the Company’s shareholders or any Participant with
respect to his or her outstanding Awards, require that each Participant agrees
to reimburse the Company for all or any portion of any Awards granted under
this Plan (“Reimbursement”), or the Committee 
require the Termination or Rescission of, or the Recapture associated
with, any Award, if—


(i)            the
granting, vesting, or payment of such Award was predicated upon the achievement
of certain financial results that were subsequently the subject of a material
financial restatement;


(ii)           the
Committee’s view the Participant engaged in fraud or misconduct that caused or
partially caused the need for a material financial restatement by the Company
or any Affiliate and are described in Section 26(b) hereof; and


(iii)          a lower granting, vesting, or payment
of such Award would have occurred based upon the restated financial results.


In each instance, the Committee will, to the extent practicable and
allowable under applicable laws, require Reimbursement, Termination or
Rescission of, or Recapture relating to, any such Award granted to a
Participant, including reimbursement for any gains realized on the exercise of
Options or SARs attributable to such Awards, plus a reasonable rate of
interest, effecting the cancellation of Restricted Shares, Restricted Share
Units, Unrestricted Shares, Deferred Share Units, Performance Awards, and
outstanding Options and SARs; provided that the Company will not seek
Reimbursement, Termination or Rescission of, or Recapture relating to, any such
Awards that were paid or vested more than three years prior to the date the
applicable restatement is disclosed.


(b) Materiality.  For
purposes of this Section 26, the Company shall only be entitled to recoup
Awards in the event of having a significant adverse effect on the
Company  and involving (i) the willful failure to
substantially perform his duties; (ii) the Participant’s commission of any
material act or acts of fraud, embezzlement, dishonesty, or other willful
misconduct; (iii) the Participant’s material unauthorized use or disclosure of
any proprietary information or trade secrets of the Company or any other party
to whom the Participant owes an obligation of nondisclosure as a result of his
or her relationship with the Company; or (iv) the Participant’s willful and
material breach of any of his or her obligations under any written agreement or
covenant with the Company.















SCIELE PHARMA, INC.


2007
STOCK INCENTIVE PLAN






Appendix A: Definitions






As used in the Plan, the
following definitions shall apply:


“Affiliate” means, with respect to
any Person (as defined below), any other Person that directly or indirectly
controls or is controlled by or under common control with such Person.  For the purposes of this definition, “control,”
when used with respect to any Person, means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person or the power to elect directors, whether through the ownership of
voting securities, by contract or otherwise; and the terms “affiliated,” “controlling”
and “controlled” have meanings correlative to the foregoing.


“Applicable Law” means the legal
requirements relating to the administration of options and share-based plans
under applicable U.S. federal and state laws, the Code, any applicable stock
exchange or automated quotation system rules or regulations (to the extent the
Committee determines in its discretion that compliance with such rules or
regulations) and the applicable laws of any other country or jurisdiction where
Awards are granted, as such laws, rules, regulations and requirements shall be
in place from time to time.


“Award” means any award made
pursuant to the Plan, including awards made in the form of an Option, an SAR, a
Restricted Share, a Restricted Share Unit, an Unrestricted Share, a Deferred
Share Unit, and a Performance Award, or any combination thereof, whether
alternative or cumulative, authorized by and granted under this Plan.


“Award Agreement” means any written
document setting forth the terms of an Award that has been authorized by the
Committee. The Committee shall determine the form or forms of documents to be
used, and may change them from time to time for any reason.


“Board” means the Board of Directors
of the Company.


“Cause” for
termination of a Participant’s Continuous Service will have the meaning set
forth in any unexpired employment agreement between the Company and the
Participant. In the absence of such an agreement, “Cause” will exist if the
Participant is terminated from employment or other service with the Company or
an Affiliate for any of the following reasons: (i) the Participant’s willful failure
to substantially perform his or her duties and responsibilities to the Company
or deliberate violation of a material Company policy; (ii) the Participant’s
commission of any material act or acts of fraud, embezzlement, dishonesty, or
other willful misconduct; (iii) the Participant’s material unauthorized use or
disclosure of any proprietary information or trade secrets of the Company or
any other party to whom the Participant owes an obligation of nondisclosure as
a result of his or her relationship with the Company; or (iv) Participant’s
willful and material breach of any of his or her obligations under any written
agreement or covenant with the Company.












The Committee
shall in its discretion determine whether or not a Participant is being
terminated for Cause.  The Committee’s
determination shall, unless arbitrary and capricious, be final and binding on
the Participant, the Company, and all other affected persons.  The foregoing definition does not in any way
limit the Company’s ability to terminate a Participant’s employment or
consulting relationship at any time, and the term “Company” will be interpreted
herein to include any Affiliate or successor thereto, if appropriate.


“Change in Control” means any of the
following:


(iv)          The
acquisition (other than by a direct purchase of shares from the Parent) by any “person,”
including a “syndication” or “group”, as those terms are used in
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (other than any such person currently owning in excess of the following
amount), of securities representing 25% or more of the combined voting power of
the Parent’s then outstanding voting securities, which is any security that
ordinarily possesses the power to vote in the election of the Board of
Directors of a corporation without the happening of any precondition or
contingency;


(v)           The
Parent is merged or consolidated with another corporation and immediately after
giving effect to the merger or consolidation less than 80% of the outstanding
voting securities of the surviving or resulting entity are then beneficially
owned in the aggregate by (a) the stockholders of the Parent immediately
prior to such merger or consolidation, or (b) if a record date has been
set to determine the stockholders of the Parent entitled to vote on such merger
or consolidation, the stockholders of the Parent as of such record date;


(vi)          If
at any time during a calendar year a majority of the directors of the Parent
are not persons who were directors at the beginning of the calendar year;


(vii)         The Parent transfers substantially all
of its assets to another corporation which is a less than 80% owned subsidiary
of the Parent; or


(viii)        The
Parent approves a plan or proposal for dissolution on liquidation of the Parent


Notwithstanding the foregoing, a “Change in Control” shall not be
deemed to have occurred by virtue of the consummation of any transaction or
series of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the same
proportionate ownership in an entity which owns all or substantially all of the
assets of the Company immediately following such transaction or series of transactions.


“Code” means the U.S. Internal
Revenue Code of 1986, as amended.


“Committee” means one or more
committees or subcommittees of the Board appointed by the Board to administer
the Plan in accordance with Section 4 above. 
With respect to any decision involving an Award intended to satisfy the
requirements of Section 162(m) of the Code, the Committee shall consist of two
or more Directors of the Company who are “outside directors” within the meaning
of Section 162(m) of the Code.  With
respect to any decision relating to a 



 2
 








Reporting
Person, the Committee shall consist of two or more Directors who are
disinterested within the meaning of Rule 16b-3.


“Company” means Sciele Pharma,
Inc. a Delaware  corporation; provided,
however, that in the event the Company reincorporates to another jurisdiction,
all references to the term “Company” shall refer to the Company in such new
jurisdiction.


“Consultant” means any person,
including an advisor, who is engaged by the Company or any Affiliate to render
services and is compensated for such services.


“Continuous Service” means the
absence of any interruption or termination of service as an Employee, Director,
or Consultant.  Continuous Service shall
not be considered interrupted in the case of: 
(i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Committee, provided that such leave is for a period of not more
than 90 days, unless reemployment upon the expiration of such leave is
guaranteed by contract or statute, or unless provided otherwise pursuant to
Company policy adopted from time to time; (iv) changes in status from Director
to advisory director or emeritus status; or (iv) in the case of transfers
between locations of the Company or between the Company, its Affiliates or their
respective successors.  Changes in status
between service as an Employee, Director, and a Consultant will not constitute
an interruption of Continuous Service.


“Deferred Share Units” mean Awards
pursuant to Section 9 of the Plan.


“Director” means a member of the
Board, or a member of the board of directors of an Affiliate.


“Disabled” means a condition under
which a Participant  —


(a)           is unable to engage in any
substantial gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or


(b)           is, by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, received income replacement benefits for a period of not less than 3
months under an accident or health plan covering employees of the Company.


“Eligible Person” means any
Consultant, Director or Employee and includes non-Employees to whom an offer of
employment has been or is being extended.


“Employee” means any person whom the
Company or any Affiliate classifies as an employee (including an officer) for
employment tax purposes, whether or not that classification is correct.  The payment by the Company of a director’s
fee to a Director shall not be sufficient to constitute “employment” of such
Director by the Company.


“Exchange Act” means the Securities
Exchange Act of 1934, as amended.


“Fair Market Value” means, as of any
date (the “Determination Date”) means: (i) the closing price of a Share on the
New York Stock Exchange or the American Stock Exchange 



 3
 








(collectively, the “Exchange”),
on the Determination Date, or, if shares were not traded on the Determination
Date, then on the nearest preceding trading day during which a sale occurred;
or (ii) if such stock is not traded on the Exchange but is quoted on NASDAQ or
a successor quotation system, (A) the last sales price (if the stock is then
listed as a National Market Issue under The Nasdaq Global Market) or (B) the
mean between the closing representative bid and asked prices (in all other
cases) for the stock on the Determination Date as reported by NASDAQ or such
successor quotation system; or (iii) if such stock is not traded on the
Exchange or quoted on NASDAQ but is otherwise traded in the over-the-counter,
the mean between the representative bid and asked prices on the Determination
Date; or (iv) if subsections (i)-(iii) do not apply, the fair market value
established in good faith by the Board.


“Grant Date” has the meaning set
forth in Section 14 of the Plan.


“Incentive Share Option or ISO”
hereinafter means an Option intended to qualify as an incentive stock option
within the meaning of Section 422 of the Code, as designated in the applicable
Award Agreement.


“Involuntary Termination” means
termination of a Participant’s Continuous Service under the following
circumstances occurring on or after a Change in Control:  (i) termination without Cause by the Company
or an Affiliate or successor thereto, as appropriate; or (ii) voluntary
termination by the Participant within 60 days following (A) a material
reduction in the Participant’s job responsibilities, provided that neither a
mere change in title alone nor reassignment to a substantially similar position
shall constitute a material reduction in job responsibilities; (B) an
involuntary relocation of the Participant’s work site to a facility or location
more than 50 miles from the Participant’s principal work site at the time of
the Change in Control; or (C) a material reduction in Participant’s  total compensation other than as part of an
reduction by the same percentage amount in the compensation of all other
similarly-situated Employees, Directors or Consultants.


“Non-ISO” means an Option not
intended to qualify as an ISO, as designated in the applicable Award Agreement.


“Option” means any stock option
granted pursuant to Section 6 of the Plan.


“Participant” means any holder of
one or more Awards, or the Shares issuable or issued upon exercise of such
Awards, under the Plan.


“Performance Awards” mean
Performance Units and Performance Compensation Awards granted pursuant to
Section 10.


“Performance Compensation Awards”
mean Awards granted pursuant to Section 10(b) of the Plan.


“Performance Unit” means Awards
granted pursuant to Section 10(a) of the Plan which may be paid in cash, in
Shares, or such combination of cash and Shares as the Committee in its sole
discretion shall determine.


“Person” means any natural person,
association, trust, business trust, cooperative, corporation, general
partnership, joint venture, joint-stock company, limited partnership, limited 



 4
 








liability company, real
estate investment trust, regulatory body, governmental agency or
instrumentality, unincorporated organization or organizational entity.


“Plan” means this Sciele Pharma 2007
Stock Incentive Plan.


“Reporting Person” means an officer,
Director, or greater than ten percent shareholder of the Company within the meaning
of Rule 16a-2 under the Exchange Act, who is required to file reports pursuant
to Rule 16a-3 under the Exchange Act.


“Restricted Shares” mean Shares
subject to restrictions imposed pursuant to Section 8 of the Plan.


“Restricted Share Units” mean Awards
pursuant to Section 8 of the Plan.


“Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act, as amended from time to time, or any
successor provision.


“SAR” or “Share Appreciation Right”
means Awards granted pursuant to Section 7 of the Plan.


“Share” means a share of common
stock of the Company,  as adjusted in
accordance with Section 13 of the Plan.


“Ten Percent Holder” means a person
who owns stock representing more than ten percent (10%) of the combined voting
power of all classes of stock of the Company or any Affiliate.


“Unrestricted Shares” mean Shares
awarded pursuant to Section 8 of the Plan.



 5