<PAGE>
                                                                   Exhibit 10.63

            THIS EMPLOYMENT AGREEMENT (this "Agreement"), dated as of January 1,
2000 (the "Effective Date"), is made and entered into by and between Schein
Pharmaceutical, Inc., a Delaware corporation (the "Corporation"), and Paul
Kleutghen (the "Executive").

            The Executive is currently employed as a Sr. Vice President of the
Corporation pursuant to an employment agreement, dated November 29, 1993 (the
"Prior Agreement"); and

            The Corporation desires to secure the Executive's continued
participation in the manner hereinafter specified in the business of the
Corporation and to make provision for payment of reasonable compensation to the
Executive for such services and the Executive is willing to continue his or her
employment with the Corporation to perform the duties incident to such
employment upon the terms and conditions hereinafter set forth and thus to
forego opportunities elsewhere; and

            In replacement of the Prior Agreement, the parties desire to enter
into this Agreement, as of the Effective Date, setting forth the terms and
conditions of the employment relationship of the Executive with the Corporation
during the Term (as such term is hereinafter defined).

            In consideration of the premises and the mutual covenants herein
contained, the parties hereby agree as follows:

            1. Employment Duties.

            (a) Employment. The Corporation hereby agrees to employ the
Executive, and the Executive hereby agrees to serve, as Sr. Vice President,
Strategic Development of the Corporation.

            (b) Duties. The Executive will have full authority to act on behalf
of the Corporation in a manner that is consistent with his or her title and
position. In such capacity, the Executive also agrees to perform such duties and
exercise such powers commensurate with his or her position as may from time to
time be reasonably requested of him or her by such Executive's immediate
supervisor (or such other supervising officer) or the Board of Directors of the
Corporation (the "Board") or vested in him or her by the bylaws of the
Corporation. During the Term, the Executive shall:

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                                       2


            (1) devote substantially all of his or her business time, attention
      and abilities to the business of the Corporation (including its
      subsidiaries or affiliates, when so required); and

            (2) faithfully serve the Corporation and use his or her best efforts
      to promote and develop the interests of the Corporation.

            2. Term of Employment. The term (the "Term") of the Executive's
employment hereunder shall be for a period commencing on the Effective Date, and
continuing until terminated by either the Corporation or the Executive in
accordance with the terms of Paragraph 4(a) below upon giving sixty (60) days
written notice ("Non-Continuation Notice").

            3. Compensation. Subject to the terms of this Agreement and until
the termination of the Term as provided in Paragraph 2, the Corporation shall
pay compensation and provide benefits to the Executive as follows:

            (a) Base Salary. The Corporation shall pay to the Executive a base
salary of $265,000 per annum during the Term (the "Base Salary"). The Executive
shall receive his or her salary in equal installments in accordance with the
Corporation's payroll practices in effect from time to time. The Corporation
will review the Executive's Base Salary at least once per year and may, in its
discretion, increase the Base Salary in accordance with the compensation
policies of the Corporation, as in effect from time to time.

            (b) Benefit Continuation and Perquisites. The Executive shall
participate during the Term, in such pension, life insurance, health, disability
and medical insurance plans, and such other employee benefit plans and programs
(including an automobile or automobile allowance), for the benefit of employees
of the Corporation, and as may be maintained from time to time during the Term,
in each case to the extent and in the manner available to other executives or
officers of the Corporation of comparable level or position and subject to the
terms and provisions of such plans or programs.

            (c) Incentive Bonus. The Corporation may pay a bonus to the
Executive as determined by the Corporation in accordance with the Corporation's
incentive plan or policies as in effect from time to time.

            (d) Stock Options. From time to time as so approved by the Board or
the Stock Option Committee of the Board, the Executive may become eligible for
the grant of options to purchase shares of the Corporation's common stock, par
value of $0.01 per share (the "Shares"), pursuant to and subject to the terms
and conditions of the Corporation's 1999 Stock Option Plan (or other plan of the
Corporation) and any stock option agreement entered into by the Executive and
the Corporation.

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                                       3


            (e) Reimbursement of Expenses. The Corporation shall reimburse the
Executive for all reasonable expenses incurred personally by him or her on
behalf of the Corporation in accordance with the policies and procedures
applicable to similarly situated executives of the Corporation.

            (f) Additional Compensation. The Corporation shall pay the Executive
additional compensation (the "Additional Compensation") which will be payable in
four (4) annual installments as follows: $150,000 on December 31, 2000, $150,000
on December 31, 2001, $150,000 on December 31, 2002 and $150,000 on December 31,
2003.

            4. Termination and Compensation Payable Upon Termination or
Resignation.

            (a) Earlier Termination of Term. Upon giving a Non-Continuation
Notice by either the Corporation or the Executive pursuant to Paragraph 2, and
subject to the Corporation's compliance with Paragraph 4(g), the Executive's
employment with the Corporation may be terminated or the Executive may resign
such employment prior to the expiration of the Term effective as of the end of
the sixty-day (60) day period following the date of the Non-Continuation Notice
(the "Termination Date") is given as follows:

            (1) The Corporation may terminate the Executive's employment
      hereunder for Cause (as defined hereunder), without Cause or upon the
      Executive's Disability;

            (2) The Executive's employment hereunder shall terminate
      automatically upon his or her death; or

            (3) The Executive may resign from his or her employment with the
      Corporation with or without Good Reason (as defined hereunder).

            (b) Definition of "Target Bonus". As used herein, the "Target Bonus"
shall mean the higher of (x) 30% of the Executive's then-current Base Salary,
and (y) the highest annual bonus earned by the Executive in respect of any of
the two (2) years ending immediately prior to the Termination Date.

            (c) Definition of "Cause". As used herein, "Cause" shall mean,
during the Term of this Agreement, the occurrence of any of the following:

            (1) the Executive's willful and continued failure to substantially
      perform his or her duties under this Agreement for the Corporation or its
      affiliates;

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                                       4


            (2) the commission by the Executive of fraud, misappropriation or
      intentional material damage to the property or business of the
      Corporation; or

            (3) the commission of a felony by the Executive.

            (d) Definition of "Disability". The Executive shall be considered to
have a "Disability" if he or she satisfies the definition set forth in the
Corporation's long-term disability benefit plan in which he or she is enrolled
at the time of the determination or if there is no such plan, for a continuous
period of six (6) months, he or she is unable to perform his or her duties under
this Agreement for reasons of health, and, in the opinion of a physician
appointed by the Corporation and reasonably acceptable to the Executive, such
disability will continue for a prolonged period of time.

            (e) Definition of "Good Reason". As used herein, "Good Reason" shall
mean the occurrence of any of the following:

            (1) the Corporation assigning the Executive to duties or
      responsibilities that are inconsistent, in any significant respect, with
      the scope of duties or responsibilities provided for under this Agreement;

            (2) any reduction in the Executive's Base Salary or Additional
      Compensation provided for under this Agreement; or

            (3) except where expressly approved by the Executive, (x) the
      relocation of the Executive's principal place of business from more than a
      thirty (30) mile radius of the Executive's principal place of business as
      of the date of this Agreement, other than a relocation to the
      Corporation's Florham Park, New Jersey headquarters, or (y) if the
      Executive's principal place of business as of the date of this Agreement
      was New Jersey, the relocation of his or her principal place of business
      to New York, New York at any time following the date of this Agreement.

            (f) Definition of "Change of Control". As used herein, "Change of
Control" shall mean the occurrence of any of the following:

            (1) an acquisition by any individual, entity or group (within the
      meaning of Section 13d-3 or 14d-1 of the Securities Exchange Act of 1934,
      as amended (the "Act")) (a "Person") of beneficial ownership (within the
      meaning of Rule 13d-3 promulgated under the Act) of more than 50% of the
      combined voting power of the then outstanding voting securities of the
      Corporation entitled to vote generally in the election of directors to the
      Board (the "Outstanding Corporation Voting Securities"); excluding,
      however, the following: (x) any acquisition by the Corporation, (y) any
      acquisition by an

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                                       5


      employee benefit plan (or related trust) sponsored or maintained by the
      Corporation or (z) any acquisition by any corporation pursuant to a
      reorganization, merger, consolidation or similar corporate transaction (in
      each case, a "Corporate Transaction"), if, pursuant to such Corporate
      Transaction, the conditions described in (A), (B) and (C) of clause (3) of
      this Paragraph Section 4(f) are satisfied;

            (2) a change in the composition of the Board such that the
      individuals who, as of the Effective Date, constitute the Board (the Board
      as of the Effective Date shall be hereinafter referred to as the
      "Incumbent Board") cease for any reason to constitute at least a majority
      of the Board; provided that, for purposes of this Paragraph 4(e)(2), any
      individual who becomes a member of the Board subsequent to the Effective
      Date and whose election, or nomination for election by the Corporation's
      stockholders, was approved by a majority of the members of the Board who
      also are members of the Incumbent Board (or so deemed to be pursuant to
      this proviso) shall be deemed a member of the Incumbent Board; but,
      provided further, that any such individual whose initial assumption of
      office is in connection with a Change of Control described in (1), (3) or
      (4) of this Paragraph 4(f) or whose initial assumption of office occurs as
      a result of either an actual or threatened election contest (as such terms
      are used in Rule 14a-11 of Regulation 14A promulgated under the Act) or
      other actual or threatened solicitation of proxies or consents by or on
      behalf of a Person other than the Board shall not be so deemed a member of
      the Incumbent Board; or

            (3) the approval by the stockholders of the Corporation of a
      Corporate Transaction or, if consummation of such Corporate Transaction is
      subject, at the time of such approval by stockholders, to the consent of
      any government or governmental agency, the obtaining of such consent
      (either explicitly or implicitly by consummation); excluding, however,
      such a Corporate Transaction pursuant to which (A) the beneficial owners
      (or beneficiaries of the beneficial owners) of the outstanding Shares and
      Outstanding Corporation Voting Securities immediately prior to such
      Corporate Transaction will beneficially own, directly or indirectly, more
      than 60% of, respectively, the outstanding shares of common stock of the
      corporation resulting from such Corporate Transaction and the combined
      voting power of the outstanding voting securities of such corporation
      entitled to vote generally in the election of directors, in substantially
      the same proportions as their ownership, immediately prior to such
      Corporate Transaction, of the outstanding Shares and Outstanding
      Corporation Voting Securities, as the case may be, (B) no Person (other
      than the Corporation, any employee benefit plan (or related trust) of the
      Corporation or the corporation resulting from such Corporate Transaction
      and any Person beneficially owning, immediately prior to such Corporate
      Transaction, directly or indirectly, 20% or more of the outstanding Shares
      or Outstanding Corporation Voting Securities, as the case may be) will
      beneficially own, directly or indirectly, 20% or more of, respectively,
      the

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                                       6


      outstanding shares of common stock of the corporation resulting from such
      Corporate Transaction or the combined voting power of the then outstanding
      securities of such corporation entitled to vote generally in the election
      of directors and (C) individuals who were members of the Incumbent Board
      will constitute at least a majority of the members of the board of
      directors of the corporation resulting from such Corporate Transaction; or

            (4) the approval of the stockholders of the Corporation of (A) a
      complete liquidation or dissolution of the Corporation or (B) the sale or
      other disposition of all or substantially all the assets of the
      Corporation; excluding, however, such a sale or other disposition to a
      corporation with respect to which, following such sale or other
      disposition, (x) more than 60% of the then outstanding shares of common
      stock of such corporation and the combined voting power of the then
      outstanding voting securities of such corporation entitled to vote
      generally in the election of directors will be then beneficially owned,
      directly or indirectly, by the individuals and entities who were the
      beneficial owners (or beneficiaries of the beneficial owners),
      respectively, of the outstanding Shares and Outstanding Corporation Voting
      Securities immediately prior to such sale or other disposition in
      substantially the same proportion as their ownership, immediately prior to
      such sale or other disposition, of the outstanding Shares and Outstanding
      Corporation Voting Securities, as the case may be, (y) no Person (other
      than the Corporation and any employee benefit plan (or related trust) of
      the Corporation or such corporation and any Person beneficially owning,
      immediately prior to such sale or other disposition, directly or
      indirectly, 20% or more of the outstanding Shares or Outstanding
      Corporation Voting Securities, as the case may be) will beneficially own,
      directly or indirectly, 20% or more of, respectively, the then outstanding
      shares of common stock of such corporation and the combined voting power
      of the then outstanding voting securities of such corporation entitled to
      vote generally in the election of directors and (z) individuals who were
      members of the Incumbent Board will constitute at least a majority of the
      members of the board of directors of such corporation.

            (g) Payments to the Executive Upon Termination of Employment. In the
event that the Executive's employment with the Corporation is terminated prior
to the expiration of the Term pursuant to a Non-Continuation Notice for any of
the reasons provided in Paragraph 4(a), then the Corporation shall pay to the
Executive the following amounts on the date of such termination, and shall
provide to the Executive the following benefits, as applicable:

            (1) In the event that the Executive's employment hereunder
      terminates for any reason whatsoever (including for Cause), the
      Corporation shall pay to the Executive: (i) an amount equal to his or her
      accrued but unpaid Base Salary; (ii) any

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                                       7


      incentive compensation awarded to the Executive but not yet paid for the
      year preceding the year of termination; (iii) reimbursement for any
      unreimbursed business expenses incurred in accordance with Paragraph 3(e)
      prior to the Termination Date; and (iv) any amounts or benefits due under
      any equity or benefit plan, grant or program in accordance with the terms
      of said plan, grant or program but without duplication (such amounts
      specified in clauses (i), (ii), (iii), and (iv) referred to as "Accrued
      Obligations"). In addition, for terminations other than cause, the
      Corporation will provide the Executive with up to one year of outplacement
      services chosen by the Corporation at a location convenient to the
      Executive.

            (2) In the event that: (i) the Executive's employment hereunder is
      terminated by the Corporation for any reason other than for Cause,
      Disability or death, or (ii) the Executive terminates his or her
      employment with Good Reason, in addition to the Accrued Obligations, the
      Corporation shall also pay or provide to the Executive: (A) 100% of the
      Executive's then-current Base Salary, payable in a lump sum no later than
      thirty (30) days following such termination; (B) a lump sum payment equal
      to the Target Bonus, payable no later than thirty (30) days following such
      termination; (C) any unpaid Additional Compensation, payable in a lump sum
      no later than thirty (30) days following such termination; and (D)
      continued participation in the Corporation's welfare plans (as applicable
      and including without limitation the split dollar insurance program, if
      applicable) for the twelve (12) month period following the Termination
      Date; provided that, such welfare coverage shall cease if the Executive
      obtains other full-time employment providing for comparable welfare
      benefits prior to the expiration of such twelve (12) month period. The
      benefits provided under this clause (2) are in lieu of payments under any
      severance policy of the Corporation.

            (3) In the event that: (i) the Executive's employment hereunder is
      terminated by the Corporation for any reason other than for Cause,
      Disability or death within two (2) years following a Change of Control or
      ninety (90) days prior to a Change of Control, or (ii) the Executive
      terminates his or her employment with Good Reason within two (2) years
      following a Change of Control or ninety (90) day prior to a Change of
      Control, in lieu of the amounts described in clauses 2(A) and (B) above
      and the benefits described in clause 2(D) above, in addition to the
      Accrued Obligations and payment of any unpaid Additional Compensation as
      provided in clause 2(C) above, the Corporation shall pay or provide to the
      Executive: (A) a lump sum payment equal to two (2) times the sum (x) of
      the Executive's then-current Base Salary, (y) the Target Bonus, and (z)
      any Additional Compensation payable with respect to the year of
      termination under Paragraph 3(f), payable no later than thirty (30) days
      following such termination; and (B) continued participation in the
      Corporation's welfare plans (as applicable, and including without
      limitation the split-dollar insurance program, if applicable) for the
      twenty-four (24) month period following the Termination Date;

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                                       8


      provided that, such welfare plan coverage shall cease if the Executive
      obtains other full-time employment providing for comparable welfare
      benefits prior to the expiration of such twenty-four (24) month period.
      The benefits provided under this clause (3) are in lieu of payments under
      any severance policy of the Corporation.

            (h) Waiver and Release. No payment will be made under Paragraph
4(g), unless (x) the Executive first executes and delivers to the Corporation a
release in substantially the same form attached as Appendix A to this Agreement,
and (y) to the extent any portion of such release is subject to the seven-day
revocation period prescribed by the Age Discrimination in Employment Act, as
amended, or to any similar revocation period in effect on the date of
termination of the Executive's employment, such revocation period has expired.

            5. Maximum Payment. Notwithstanding anything herein to the contrary,
if it is determined that any payment made to the Executive, whether pursuant to
the terms of this Agreement or otherwise (including but not limited to any stock
option agreement), would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986, as amended, or any interest or penalties with
respect to such excise tax (such excise tax, together with any interest or
penalties thereon, is herein referred to as an "Excise Tax"), then the Executive
shall be entitled to an additional payment or payments (a "Gross-Up Payment") in
an amount that will place him or her in the same after-tax economic position
that he or she would have enjoyed if the Excise Tax had not applied. The amount
of the Gross-Up Payment shall be determined by the nationally recognized firm of
accountants serving as the Corporation's independent auditors immediately prior
to the Change of Control which resulted in the application of the Excise Tax, in
their sole discretion, and shall be payable upon the Executive's demand.

            6. Protection of the Corporation's Interests.

            (a) Non-Competition Covenant. The Executive hereby covenants and
agrees that during the Term and for six (6) months following the end of the
Term, the Executive will not, without the prior written consent of the
Corporation, engage in Competition (as defined below) with the Corporation. For
purposes of this Agreement, if the Executive takes any of the following actions
the Executive will be engaged in "Competition": directly or indirectly accepting
employment or engaging in any business activity which would require the
Executive to be involved in the formulation, development, manufacture or sale of
any product which is the same as any product for which the Executive was engaged
in on behalf of the Corporation; provided, however, that "Competition" will not
include (x) working or engaging in any business activity with a new employer
that manufactured and sold the same product for which the Executive was engaged
in on behalf of the Corporation prior to the Executive's employment with such
new employer, (y) the mere passive ownership of securities representing less
than two percent (2%) of the vote or value of all the securities of any
enterprise and the exercise of rights

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                                       9


appurtenant thereto or (z) participation in management of any enterprise or
business operation thereof other than in connection with the operation of such
enterprise that is engaged in Competition with the Corporation.

            (b) Non-Solicitation Covenant. The Executive hereby covenants and
agrees that during the Term and for one (1) year following the end of the Term,
the Executive will not, without the prior written consent of the Corporation
attempt to, directly or indirectly, induce or influence any present or future
employee of the Corporation to give up, or to not commence, employment or a
business relationship with the Corporation.

            (c) Confidentiality. The Executive recognizes and acknowledges that
in the course of the Executive's employment with the Corporation the Executive
has obtained, or may obtain, confidential information, whether specifically
designated as such or not, and the Executive agrees to maintain in confidence
any confidential information obtained by or from the Corporation and will not,
during the Term or any time thereafter, either directly or indirectly, disclose
or use confidential information except with the prior written consent of the
Corporation or until such confidential information will be in the public domain
(other than as a result of an unauthorized disclosure by the Executive).

            (d) Disparagement. The Executive agrees not to publicly or privately
disparage the Corporation or any of the Corporation's products, services,
divisions, affiliates, related companies or current or former officers,
directors, trustees, employees, agents, administrators, representatives or
fiduciaries. Notwithstanding the foregoing, neither the Executive nor the
Corporation will be restricted from providing information about the other as
required by a court or governmental agency or by applicable law. Further, the
Corporation and the Executive shall not be restricted from reporting information
regarding his or her performance while employed by the Corporation to internal
or external auditors, special counsel or investigators, any applicable
enforcement agencies, regulatory agencies, insurance carriers or in litigation
involving the Executive or the Corporation. The Corporation agrees that it will
not publicly or privately disparage the Executive.

            (e) Remedies.

                  (i) The Executive acknowledges that a breach of any of the
      covenants contained in Paragraphs 6(a), (b), (c) or (d) may result in
      material irreparable injury to the Corporation for which there is no
      adequate remedy at law, that it will not be possible to measure damages
      for such injury precisely and that, in the event of such a breach or
      threat thereof, the Corporation shall be entitled to a temporary
      restraining order and/or a preliminary or permanent injunction,
      restraining the Executive from engaging in such prohibited activities or
      such other relief as may be required specifically to enforce any of

<PAGE>
                                       10


      the covenants contained therein. Nothing herein shall be construed as
      prohibiting the Corporation from pursuing any other remedies for such
      breach or threatened breach.

                  (ii) The restrictions set forth in Paragraphs 6(a), (b), (c)
      and (d) are considered by the parties hereto to be reasonable for the
      purposes of protecting the business of the Corporation. However, if any
      such restriction is found by a court of competent jurisdiction to be
      unenforceable because it extends for too long a period of time or over too
      great a range of activities or in too broad a geographic area, it is the
      intention of the parties that such restriction shall be interpreted to
      extend only over the maximum period of time, range of activities or
      geographic area as to which it may be enforceable.

            7. Indemnification. The Corporation agrees to indemnify, defend and
      hold harmless the Executive from and against any and all liabilities to
      which he or she may be subject as a result of his or her employment
      hereunder (as a result of his or her service as an officer or director of
      the Corporation or as an officer or director of any of its subsidiaries or
      affiliates), as well as the costs, including attorney's and other
      professional fees and disbursements, of any legal action brought or
      threatened against him or her as a result of such employment in accordance
      with the indemnification policies of the Corporation and the
      indemnification agreement entered into between the Executive and the
      Corporation, dated June 6, 1997 (the "Indemnification Agreement"), to the
      fullest extent permitted by, and subject to the limitations of, applicable
      corporate law.

            8. Reimbursement of Legal and Related Expenses. In the event that
any dispute shall arise between the Executive and the Corporation relating to
his or her rights under this Agreement on or after a Change of Control, the
Corporation shall pay to the Executive all reasonable legal fees and expenses
incurred in connection with such dispute, unless it is finally determined that
the Executive's position in such dispute was frivolous.

            9. Successors; Binding Agreement.

            (a) Assumption by Successor. The Corporation will require any
successor (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business or assets of the
Corporation expressly to assume and to agree to perform this Agreement in the
same manner and to the same extent that the Corporation would be required to
perform it if no such succession had taken place; provided, however, that no
such assumption shall relieve the Corporation of its obligations hereunder. As
used in this Agreement, the "Corporation" shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of law
or otherwise.

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                                       11


            (b) Enforceability; Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of the Executive (and his or her personal
representatives and heirs) and the Corporation and any organization which
succeeds to substantially all of the business or assets of the Corporation,
whether by means of merger, consolidation, acquisition of all or substantially
all of the assets of the Corporation or otherwise, including, without
limitation, by operation of law. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees or other beneficiaries. If the Executive should die while any amount
would still be payable to him or her hereunder if he or she had continued to
live, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to his or her beneficiary.

            10. Assignment. Neither party may assign this Agreement or any of
his or her or its rights, benefits, obligations or duties hereunder to any other
person, firm, corporation or other entity.

            11 Withholding. The Corporation shall be authorized to withhold from
any award or payment it makes under the Agreement, the amount of withholding
taxes due with respect to such award or payment and to take such other action as
may be necessary in the opinion of the Corporation to satisfy all obligations
for the payment of such taxes.

            12. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered or on the fourth business day after being placed
in the mail, postage prepaid, addressed to the parties hereto as follows
(provided that notice of change of address shall be deemed given only when
actually received):

As to the Corporation:  Schein Pharmaceutical, Inc.
                        100 Campus Drive
                        Florham Park, New Jersey 07932
                        Attention: General Counsel

As to the Executive:    To the address indicated on the signature page of this
                        Agreement (or if no address is indicated, to the last
                        known address of the Executive shown in the
                        Corporation's records)

The address of any of the parties may be changed from time to time by such party
serving notice upon the other parties.

<PAGE>
                                       12


            13. Law Applicable. This Agreement shall be governed by the laws of
New Jersey (other than New Jersey principles of conflicts of laws). Any dispute
between the parties relating to this Agreement may be heard only in the federal
or state courts of New Jersey and both parties hereby submit to the exclusive
jurisdiction of such courts.

            14. Entire Agreement; Modification. Other than any stock option
agreement between the Corporation and the Executive and the Indemnification
Agreement, this Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes and cancels all prior
or contemporaneous oral or written agreements and understandings between them
with respect to the subject matter hereof (including but not limited to the
Prior Agreement). This Agreement may not be changed or modified orally but only
by an instrument in writing signed by the parties hereto, which instrument
states that it is an amendment to this Agreement.

            15. Severability. Should any provision of this Agreement or any part
thereof be held invalid or unenforceable, the same shall not affect or impair
any other provision of this Agreement or any part thereof and the invalidity or
unenforceability of any provision of this Agreement shall not have any effect on
or impair the obligations of the Corporation or the Executive.

            16. Rules of Construction. The captions in this Agreement are for
convenience of reference only and in no way define, limit or describe the scope
or intent of any provisions or Paragraphs of this Agreement. All references in
this Agreement to particular Paragraphs are references to the Paragraphs of this
Agreement, unless some other reference is clearly indicated.

            17. Execution. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same agreement.

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                                       13


            IN WITNESS WHEREOF, the Corporation and the Executive have executed
this Agreement, all as of the day and year first above written.

                                          SCHEIN PHARMACEUTICAL, INC.

                                          By: /s/ Oliver Esnan
                                             -----------------------------------
                                                 Authorized Officer


                                          EXECUTIVE

                                          /s/ [ILLEGIBLE]
                                          --------------------------------------
                                          Address: [ILLEGIBLE]
                                                  ------------------------------
                                                  [ILLEGIBLE]
                                                  ------------------------------

<PAGE>

                                   Appendix A

                          GENERAL RELEASE OF ALL CLAIMS

      This General Release of all Claims (this "Agreement") is entered into by
and among _____________ (the "Executive"), and Schein Pharmaceutical, Inc., a
Delaware corporation (as it may be renamed from time to time, and including its
subsidiaries and affiliates) (collectively, the "Corporation"), effective as of
_________ __, ____.

      In consideration of the promises set forth in the Employment Agreement
between the Executive and the Corporation, dated ____________ __, _____, (the
"Employment Agreement"), as well as any promises set forth in this Agreement,
the Executive and the Corporation agree as follows:

(1)   Return of Property

      All Corporation files, access keys, desk keys, ID badges and credit cards,
      and such other property of the Corporation as the Corporation may
      reasonably request, in the Executive's possession must be returned no
      later than the date of the Executive's termination from the Corporation
      (the "Termination Date").

(2)   General Release and Waiver of Claims

      Except as provided in the last sentence of this paragraph (2), in
      consideration of the payments made and to be made, and benefits provided
      and to be provided, to the Executive pursuant to the Employment Agreement,
      the Executive hereby unconditionally and forever releases, discharges and
      waives any and all claims of any nature whatsoever, whether legal,
      equitable or otherwise, which the Executive may have against the
      Corporation arising at any time on or before the Termination Date, other
      than the Excluded Obligations. This release of claims extends to any and
      all claims of any nature whatsoever, other than with respect to the
      Excluded Obligations, whether known, unknown or capable or incapable of
      being known as of the Termination Date or thereafter. This Agreement is a
      release of all claims of any nature whatsoever by the Executive against
      the Corporation, other than with respect to the Excluded Obligations, and
      includes, other than as herein provided, any and all claims, demands,
      causes of action, liabilities whether known or unknown including those
      caused by, arising from or related to the Executive's employment
      relationship with the Corporation including, without limitation, any and
      all alleged discrimination or acts of discrimination which occurred or may
      have occurred on or before the Termination Date based upon race, color,
      sex, creed, national origin, age, disability or any other violation of any
      Equal Employment Opportunity Law, ordinance, rule, regulation or order,
      including, but not limited to, Title VII of the Civil Rights Act of 1964,
      as

<PAGE>

      amended; the Civil Rights Act of 1991; the Age Discrimination in
      Employment Act, as amended (as further described in Section 4 below); the
      Americans with Disabilities Act; claims under the Employee Retirement
      Income Security Act of 1974, as amended ("ERISA"); or any other Federal,
      state or local laws or regulations regarding employment discrimination or
      termination of employment. This also includes claims for wrongful
      discharge, fraud, or misrepresentation under any statute, rule, regulation
      or under the common law.

      The Executive agrees and understands and knowingly agrees to this release
      because it is his or her intent in executing this Agreement to forever
      discharge the Corporation from any and all present, future, foreseen or
      unforeseen causes of action except for the obligations of the Corporation
      set forth in the Employment Agreement.

      Notwithstanding the foregoing, the Executive does not release, discharge
      or waive any rights (the "Excluded Obligations") (i) to payments and
      benefits provided for in the applicable subsection of Paragraph 4 of the
      Employment Agreement, (ii) to payments provided for under Paragraphs 5 and
      8 of the Employment Agreement, and (iii) to indemnification that he or she
      may have under the By-Laws of the Corporation, the laws of the State of
      Delaware, any indemnification agreement between the Executive and the
      Corporation or any insurance coverage maintained by or on behalf of the
      Corporation.

(3)   Release and Waiver of Claims Under the Age Discrimination in Employment
      Act

      The Executive acknowledges that the Corporation advised him or her to
      consult with an attorney of his or her choosing, and through this
      Agreement advises him or her to consult with his or her attorney with
      respect to possible claims under the Age Discrimination in Employment Act
      of 1967, as amended ("ADEA"), and the Executive acknowledges that he or
      she understands that ADEA is a Federal statute that prohibits
      discrimination, on the basis of age, in employment, benefits, and benefit
      plans. The Executive wishes to waive any and all claims under the ADEA
      that he or she may have, as of the Termination Date, against the
      Corporation, and their respective shareholders, employees, or successors,
      and hereby waives such claims. The Executive further understands that by
      signing this Agreement he or she is in fact waiving, releasing and forever
      giving up any claim under the ADEA against the Corporation that may have
      existed on or prior to the Termination Date. The Executive acknowledges
      that the Corporation have informed him or her that he or she has, at his
      or her option, twenty-one (21) days following the Termination Date in
      which to sign the waiver of this claim under ADEA, and he or she does
      hereby knowingly and voluntarily waive said twenty-one (21) day period.
      The Executive also understands that he or she has seven (7) days following
      the date on which he or she signs this Agreement within which to revoke
      the release contained in this paragraph by providing to the Corporation a
      written

<PAGE>

      notice of his or her revocation of the release and waiver contained in
      this paragraph. The Executive further understands that this right to
      revoke the release contained in this paragraph relates only to this
      paragraph and does not act as a revocation of any other term of this
      Agreement.

(4)   Proceedings

      The Executive has not filed, and agrees not to initiate or cause to be
      initiated on his or her behalf, any complaint, charge, claim or proceeding
      against the Corporation before any local, state or Federal agency, court
      or other body relating to his or her employment or the termination of his
      or her employment, other than with respect to the obligations of the
      Corporation to the Executive under the Employment Agreement (each
      individually, a "Proceeding"), and agrees not to voluntarily participate
      in any Proceeding. The Executive waives any right he or she may have to
      benefit in any manner from any relief (whether monetary or otherwise)
      arising out of any Proceeding.

(5)   Remedies

      In the event the Executive initiates or voluntarily participates in any
      Proceeding, or if he or she fails to abide by any of the terms of this
      Agreement or his or her post-termination obligations contained in the
      Employment Agreement, or if he or she revokes the ADEA release contained
      in Paragraph 3 of this Agreement within the seven-day period provided
      under Paragraph 3, the Corporation may, in addition to any other remedies
      it may have, reclaim any amounts paid to him or her under the termination
      provisions of the Employment Agreement or terminate any benefits or
      payments that are subsequently due under the Employment Agreement, without
      waiving the release granted herein. The Executive acknowledges and agrees
      that the remedy at law available to the Corporation for breach of any of
      his or her post-termination obligations under the Employment Agreement or
      his or her obligations under Paragraphs 2, 3 and 4 of this Agreement would
      be inadequate and that damages flowing from such a breach may not readily
      be susceptible to being measured in monetary terms. Accordingly, the
      Executive acknowledges, consents and agrees that, in addition to any other
      rights or remedies which the Corporation may have at law, in equity or
      under this Agreement, upon adequate proof of his or her violation of any
      such provision of this Agreement, the Corporation shall be entitled to
      immediate injunctive relief and may obtain a temporary order restraining
      any threatened or further breach, without the necessity of proof of actual
      damage.

      The Executive understands that by entering into this Agreement he or she
      will be limiting the availability of certain remedies that he or she may
      have against the Corporation and limiting also his or her ability to
      pursue certain claims against the Corporation.

<PAGE>

(6)   Severability Clause

      In the event any provision or part of this Agreement is found to be
      invalid or unenforceable, only that particular provision or part so found,
      and not the entire Agreement, will be inoperative.

(7)   Non-Admission

      Nothing contained in this Agreement will be deemed or construed as an
      admission of wrongdoing or liability on the part of the Corporation.

(8)   Governing Law

      This Agreement shall be governed by and construed in accordance with the
      laws of the State of Delaware, applicable to agreements made and to be
      performed in that State, without regard to conflicts of law principles;
      and the parties agree to the jurisdiction of the U.S. District Court for
      the District of Delaware, and agree to appear in any action in such courts
      by service of process by certified mail, return receipt requested, at the
      following addresses:

      To the Corporation:     100 Campus Drive
                              Florham Park, New Jersey 07932
                              Attention: General Counsel

      To the Executive:       To the address indicated on the signature page of
                              this Agreement (or if no address is indicated, to
                              the last known address of the Executive as shown
                              in the Corporation's records)

THE EXECUTIVE ACKNOWLEDGES THAT HE OR SHE HAS READ THIS AGREEMENT AND THAT HE OR
SHE FULLY KNOWS, UNDERSTANDS, AND APPRECIATES ITS CONTENTS, AND THAT HE OR SHE
HEREBY EXECUTES THE SAME AND MAKES THIS AGREEMENT AND THE RELEASE AND AGREEMENTS
PROVIDED FOR HEREIN VOLUNTARILY AND OF HIS OR HER OWN FREE WILL.

<PAGE>
                                       5


      IN WITNESS WHEREOF, the parties have executed this AGREEMENT as of the
date first set forth above.

                                               SCHEIN PHARMACEUTICAL, INC.

                                               By:
                                                  ------------------------------
                                                  Authorized Officer


                                               EXECUTIVE

                                               ---------------------------------

                                               Address:
                                                       -------------------------

                                                       -------------------------