Document:

EXHIBIT 10.7

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT
(this “Agreement”), dated this 13th day of January, 2007, but effective
as of January 15, 2007 (the “Effective Date”), is made between RELIANT
PHARMACEUTICALS, INC., a Delaware company (the “Company”), and BRADLEY
T. SHEARES, Ph.D. (the “Executive”).

 

WHEREAS, the
Company desires to employ the Executive, and the Executive desires to be
employed by the Company, upon the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual premises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE I

EMPLOYMENT TERMS AND CONDITIONS

 

1.1                               Employment.
The Company hereby employs the Executive, and the Executive agrees to accept
such employment, upon the terms and conditions herein set forth.

 

1.2                               Employment
Period. The term of employment hereunder shall commence on the Effective
Date and continue for a period ending on the fifth anniversary of the Effective
Date, subject to earlier termination as provided herein (the “Employment
Period”). Notwithstanding the preceding sentence, commencing on the fifth
(5th) anniversary of the Effective Date and on each subsequent anniversary of
such date, the Employment Period shall be extended automatically for a one (1)
year term unless at least six (6) months before the fifth (5th) anniversary of
the Effective Date (and each subsequent anniversary of the Effective Date
thereafter, if any) the Company or the Executive shall deliver written notice
to the other party that the Employment Period shall not be extended. The
employment of Executive by the Company shall not be terminated other than in
accordance with Article IV.

 

ARTICLE II

DUTIES

 

2.1                               Duties.
The Executive hereby agrees to serve as the Chief Executive Officer of the
Company, and shall have those duties, responsibilities and authority
customarily accorded a person holding such a position in a company such as the
Company. In such capacity the Executive shall report to the Board of Directors
of the Company (the “Board”). All employees of the Company shall report,
directly or indirectly, to the Executive, other than due to good corporate
governance practices and customary exceptions, subject, however, to the
agreement of the Executive, which agreement shall not be unreasonably withheld
or delayed. During the Employment Period, excluding any periods of Disability,
vacation, or sick leave to which the

 

 

Executive is entitled, Executive shall perform the
duties properly assigned to him hereunder, shall devote substantially all of
his business time, attention and effort to the affairs of the Company and shall
use his reasonable best efforts to promote the interests of the Company.

 

2.2                               Other
Activities. The Executive shall be permitted to (a) engage in civic,
philanthropic or similar activities, and teach or speak at educational, civic
institutions or organizations, which activities, upon the Company’s written
request, from time to time, shall be disclosed to the Company by the Executive,
(b) manage his personal affairs and investments, and (c) engage in other
activities consented to in advance by the Compensation Committee of the Board
(the “Compensation Committee”); provided, however, that in
the reasonable determination of the Compensation Committee or its designee
(which may be the Board or another committee of the Board), such activities
under clauses (a), (b) and (c) of this Section 2.2 do not, interfere
materially with his duties and responsibilities hereunder or otherwise violate
this Agreement. The Company acknowledges Executive currently serves on the
Board of Directors of Honeywell International Inc. and The Progressive
Corporation, and, as long as the services associated therewith remain
substantially similar to the services being provided as of the Effective Date
of this Agreement, such directorships shall not be deemed to interfere
materially with his duties and responsibilities hereunder or otherwise violate
this Agreement; provided, however, that in the event that the
Compensation Committee determines in its reasonable discretion that such board
service actually interferes materially with the Executive’s duties and
responsibilities hereunder, at the request of the Board, the Executive will
step down from one or both of his directorships.

 

2.3                               Board
of Directors. As soon as reasonably practicable following the Effective
Date, the Executive shall be appointed to the Board for so long as (a) the
Executive serves as the Chief Executive Officer of the Company, and (b) the
Company is privately held. Following the Company’s initial public offering, if
any, so long as the Executive serves as the Chief Executive Officer of the
Company, the Company shall recommend Executive for election to the Board.

 

ARTICLE III

COMPENSATION AND BENEFITS

 

3.1                               Compensation
and Benefits. In consideration of the performance of his duties for the
Company, the Executive shall be entitled to receive the Compensation and
Benefits described in this Article III.

 

3.2                               Base
Salary. During the Employment Period, the Executive shall be entitled to
receive an annual salary equal to One Million Dollars ($1,000,000) (the “Base
Salary”). The Base Salary shall be paid not less frequently than monthly
and otherwise in accordance with the Company’s regular payroll practice. The
Board shall review Base Salary at least annually and may increase Base Salary
in its sole discretion. The increased Base Salary shall thereafter be
considered the Base Salary and may not be decreased once increased.

 

3.3                               Bonus.
During the Employment Period, the Executive shall be eligible to participate in
and earn annual bonus compensation under the Company’s Executive Bonus Plan (as
amended from time to time, the “Bonus Plan”).

 

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(a)                                 Target
Bonus. The annual target bonus amount payable to the Executive shall be one
hundred percent (100%) of his Base Salary (“Annual Target Bonus”)
subject to satisfaction of performance criteria established by the Compensation
Committee, under the terms of the Bonus Plan, in consultation with the
Executive for each relevant fiscal year that the Executive is employed
hereunder. Determination of whether the Executive has met the performance
criteria will be made by the Compensation Committee in its reasonable
discretion.

 

(b)                                 Maximum
Bonus. The maximum annual bonus amount payable to Executive shall in no
event exceed one hundred fifty (150%) of his Base Salary for the relevant
fiscal year.

 

(c)                                  Pro
Rata Bonus. In the event the Company terminates this Agreement without
Cause or if the Executive terminates this Agreement with Good Reason in
accordance with Section 4.1(c) or the Executive terminates employment
due to death or Disability (as defined in Section 4.1(j) of this Agreement),
the Executive (or his Beneficiary or estate, as the case may be) shall be
entitled to payment of the Annual Target Bonus that would have been payable
under the terms of the Bonus Plan for the calendar year that includes the date
of termination (hereafter, “Termination Date”) and for which any
objective or subjective performance goals will be deemed satisfied at 100% of
target, except that such Annual Target Bonus shall be pro rated based on the
portion of such year (measured by completed and partial months employed and
counting any partial month as a whole month) that includes the Employment
Period and shall be payable in accordance with Section 3.3(d) (the “Pro
Rata Bonus”).

 

(d)                                 Timing
and Method. The Company shall pay the annual bonus payable for each year in
a lump sum cash payment, and such payment shall be made on or before March 15th
of the year immediately following the year the Executive earned such bonus
unless it is administratively not practicable to make payment by March 15 due
to unforeseen circumstances, in which case it shall be paid as soon as
administratively practical to make such payment but no later than December 31
of such year.

 

3.4                               Options.

 

(a)                                 Standard
Option. Within thirty (30) days following the Effective Date, pursuant to
the Reliant Pharmaceuticals, Inc. 2004 Equity Incentive Plan (as amended from
time to time, the “Plan”) the Company shall grant to the Executive
options to purchase Four Hundred Thousand (400,000) shares of common stock of
the Company, at an exercise price equal to the Fair Market Value (as defined in
the Plan) of the common stock per share (the “Standard Options”) on such
date. The Standard Options shall be evidenced by and subject to the terms of an
option agreement between the Company and the Executive in the form of Exhibit
A attached hereto (the “Option Agreement”) which agreement shall
provide, among other things, that the Standard Options shall vest and become
exercisable annually in four equal installments on each of the first, second,
third and fourth anniversaries of the Effective Date.

 

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(b)                                 Super-performance
Options. Within thirty (30) days following the Effective Date, the Company
shall grant to the Executive an option for One Hundred Thousand (100,000)
shares of common stock of the Company, at an exercise price equal to the Fair
Market Value (as defined in the Plan) on such date (the “Super-performance
Options”). The Super-performance Options shall be evidenced by and subject
to the terms of an Option Agreement in the form attached hereto as Exhibit B,
which agreement shall provide that the Super-performance Options shall vest and
become exercisable annually in five (5) equal installments on each of the
first, second, third, fourth and fifth anniversaries of the Effective Date;
provided that the stretch goals (determined as described in the next two
sentences of this Section 3.4(b)) are satisfied, as determined in the
reasonable discretion of the Compensation Committee. The stretch goals for the
first installment shall be determined by the Compensation Committee in
consultation with the Executive, no later than July 15, 2007. The stretch goals
for the remaining four (4) installments shall be determined by the Compensation
Committee in consultation with the Executive no later than January 31 of each
year in which the relevant installment of Super-performance Options is eligible
for vesting. Failure to meet the stretch goals for any year shall result in the
Super-performance Options that otherwise would have vested in such year to be
cancelled.

 

3.5                               Restricted
Stock. Within thirty (30) days following the Effective Date, Executive
shall be granted and the Company shall issue to the Executive under the Plan,
Two Hundred Thousand (200,000) shares of restricted common stock of the Company
(the “Restricted Shares”). The Restricted Shares shall be issued
pursuant and subject to the terms of a restricted stock agreement between the
Company and the Executive in the identical form of Exhibit C attached
hereto (the “Restricted Stock Agreement”), which agreement shall
provide, among other things, that the Restricted Shares shall vest annually in
four equal installments on each of the first, second, third and fourth
anniversaries of the Effective Date.

 

3.6                               Housing.
The Company will provide, at the Company’s cost, a furnished apartment for the
Executive’s use reasonably close to the Company’s corporate headquarters in
Liberty Corner, New Jersey. All expenses including, but not limited to, taxes,
utilities, maintenance, and repair obligations related to the apartment shall
be borne by the Company, and to the extent taxable the Executive shall be
entitled to a Tax Gross-Up Payment (as defined in Section 9.16(b) of the
Agreement).

 

3.7                               Transportation/Automobile.
The Company shall provide the Executive, at the Company’s expense, with the use
of a car service for business-related transportation, including to and from his
primary residence (so long as such primary residence is within one hundred
(100) miles of the Company’s headquarters), and to the extent taxable the
Executive shall be entitled to a Tax Gross-Up Payment (as defined in Section
9.16(b) of the Agreement).

 

3.8                               Business
Expenses. The Company will reimburse the Executive in accordance with the
policies and procedures of the Company maintained from time to time for all
reasonable documented business expenses incurred in the performance of his
duties for the Company.

 

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3.9                               Vacation.
The Executive shall be entitled to not less than four (4) weeks vacation during
each year of the Employment Period in accordance with the Company’s policies in
effect from time to time applicable to other members of the Company’s senior
management.

 

3.10                        Benefits.

 

(a)                                 Retirement
Benefits. Subject to generally applicable eligibility requirements, the
Executive will also be entitled to participate in all of the Company’s
retirement and deferred compensation plans, programs and arrangements
including, but not limited to, tax-qualified and non-qualified profit sharing,
401(k), pension, retirement, supplemental retirement (e.g., SERP, Excess and
Restoration plans), deferred compensation and savings plans then available to
its senior executives, as the same may be amended and in effect from time to time,
at levels and having interests commensurate with the Executive’s then current
period of service, compensation and position. The foregoing shall not require
the Company to establish or maintain any such plan, program or arrangement.

 

(b)                                 Welfare
Benefits. Subject to generally applicable eligibility requirements, the
Executive will also be eligible to participate in all of the Company’s welfare
benefit plans, programs and arrangements including, without limitation, life,
group health plans, medical, dental, vision and prescription drug benefits,
short term disability, long term disability, and life insurance or benefit
plans, then available to its senior executives, as the same may be amended and
in effect from time to time, at levels and having interests commensurate with
the Executive’s then current period of service, compensation and position. The
foregoing shall not require the Company to establish or maintain any such plan,
program or arrangement.

 

(c)                                  Perquisites
and Fringe Benefits. The Executive will be entitled to participate in all
perquisite programs and all fringe benefit programs generally available from
time to time to senior executives of the Company on the terms and conditions
then prevailing under such programs.

 

3.11                        Best
Results Parachute Payment. In the event that any payment, deemed payment or
other benefit pursuant to this Agreement, together with any other payment,
deemed payment or other benefit the Executive may receive under any other plan,
program, policy, arrangement or agreement (collectively, “Payment”)
would (a) constitute an “excess parachute payment” under section 280G of the
Internal Revenue Code (the “Code”) (an “Excess Parachute Payment”),
and (b) but for this Section 3.11 would result in the imposition on the
Executive of an excise tax under section 4999 of the Code or similar provision
of state or local law (the “Excise Tax”), then the Payment made to the
Executive shall either be (1) delivered in full, or (2) delivered in such
amount thereby resulting in no portion of such Payment being subject to the
Excise Tax, whichever of the foregoing amounts, taking into account the
applicable federal, state and local income taxes and the Excise Tax, that
results in the receipt by the Executive on an after-tax basis the greatest amount
of Payment, notwithstanding that all or some portion of such Payment may be
taxable under section 4999 of the Code. If, as a result of subsequent events or
conditions (including a subsequent Payment or absence of a subsequent Payment
under this Agreement or other plans, programs, policies, arrangements or
agreements maintained by the Company or one

 

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of its affiliates), it is determined that one or more
Payments under this Agreement to the Executive have been reduced by more than
the minimum amount required to prevent any Payment from constituting an Excess
Parachute Payment, then an additional Payment shall be promptly made to the
Executive in an amount equal to the additional amount that can be paid without
causing any Payment to constitute an Excess Parachute Payment. Unless the
Company and the Executive otherwise agree in writing, any determination
required by this Section 3.11, shall be made by a nationally recognized
certified public accounting firm designated by the Company and reasonably
acceptable to the Executive (the “Designated Accountants”). In the event
of a reduction as described in (2) above, the Executive shall be given the
choice of which Payment the Company will reduce. Such Designated Accountants
shall make reasonable assumptions and approximations concerning the application
of sections 280G and 4999 of the Code. The Company and the Executive shall
furnish to the Designated Accountants such information and documents as the
Designated Accountants reasonably request in order to make a determination
under this Section 3.11. The Company shall bear all costs the Designated
Accountants may reasonably incur in connection with any calculations
contemplated by this Section 3.11.

 

3.12                        No
Additional Compensation. Except as otherwise specifically provided in this Article
III or as determined in the discretion of the Compensation Committee and
approved by the Board, the Executive shall not be entitled to any other
compensation, salary or bonuses for services as an employee of the Company.

 

ARTICLE IV

TERMINATION AND CONSEQUENCES

 

4.1                               Termination
and Consequences.

 

(a)                                 The
Executive’s Rights to Terminate. Notwithstanding any other provision of
this Agreement to the contrary, the Executive may terminate this Agreement at
any time, on at least thirty (30) days prior written notice to the Company for
any reason. Executive’s employment will terminate automatically upon death.

 

(b)                                 The
Company’s Right to Terminate. Notwithstanding any other provision of this
Agreement to the contrary, the Company may terminate this Agreement at any time
during the Employment Period hereof with or without Cause (as defined below) or
by reason of Disability (as defined below); provided that the Company
shall give Executive at least thirty (30) days prior written notice prior to
termination without Cause or for Disability.

 

(c)                                  Consequences
of Termination without Cause or for Good Reason. In the event Company
terminates this Agreement without Cause or if the Executive terminates this Agreement
with Good Reason (as defined below), the Executive shall receive the Accrued
Rights (as defined below). Subject to the Executive executing the Release of
Claims in the form attached hereto as Exhibit D (the “Release”)
and not revoking the Release, the Executive shall be entitled to, and the
Company shall be obligated to provide, the following:

 

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1)                                     If
the Agreement is terminated prior to a Change of Control (as defined below) or
following the six (6) month anniversary of the consummation of such a Change of
Control, a lump sum payment equal to two (2) times his Base Salary as in effect
on the date of termination (“Termination Date”) no later than fifteen
(15) days after the Termination Date;

 

2)                                     If
a Change of Control (as defined below) occurs within the three (3) month period after
the Termination Date, the Executive shall be paid an additional lump sum
payment equal to one (1) times his Base Salary in effect on the Termination
Date no later than fifteen (15) days after the Change of Control;

 

3)                                     If the Agreement is
terminated on or within six (6) months after a Change of Control (as defined
below), a lump sum payment equal to three (3) times the Executive’s Base Salary
as in effect on the Termination Date no later than fifteen (15) days after the
Termination Date;

 

4)                                     Any
Standard Options granted under this Agreement that are non-exercisable on the
Termination Date shall become exercisable on such Termination Date to the
extent the options would have become exercisable had the Executive remained
continuously employed by the Company through the second (2nd) anniversary of
such Termination Date;

 

5)                                     Any
Restricted Shares granted under this Agreement that are non-vested on the
Termination Date shall become vested on such Termination Date to the extent the
Executive would have vested had the Executive remained continuously employed by
the Company through the second (2nd) anniversary of such Termination Date;

 

6)                                     If
the Agreement is terminated prior to a Change of Control, the Executive shall
be entitled to continue participation in the Company’s group health plan for
twenty-four (24) months following the Termination Date at the same cost as
active employees of the Company; provided that such continuation coverage
shall cease upon his becoming eligible to participate in a group health plan of
a subsequent employer;

 

7)                                     If
the Agreement is terminated on or after a Change of Control, Executive shall be
entitled to continue participation in the Company’s group health plan for
thirty-six (36) months following the Termination Date at the same cost as
active employees of the Company, provided that such continuation
coverage shall cease

 

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upon his becoming eligible to participate in a group
health plan of a subsequent employer; and

 

8)                                     Any
Pro Rata Bonus as defined in Section 3.3(c) of this Agreement.

 

Other than the obligations of the Company as set forth
in this Section, following such termination of Executive’s employment, the
Company shall have no further obligations to the Executive under the terms of
this Agreement.

 

For purposes herein, the term “Change of Control”
means (i) the sale, lease, exchange, license or other disposition of all or
substantially all of Company’s assets in one transaction or series of related
transactions; (ii) a merger or consolidation as a result of which the holders
of Company’s issued and outstanding voting securities immediately before such
transaction own or control less than a majority of the voting securities of the
continuing or surviving entity immediately after such transaction or (iii) the
acquisition (in one or more transactions) by any Person or Persons acting
together or constituting a “group” under Section 13(d) of the Exchange Act
together with any affiliates thereof (other than stockholders of the Company as
of the date hereof and their respective affiliates) of beneficial ownership (as
defined in Rule 13d-3 under such Exchange Act) or control, directly or
indirectly, of more than fifty percent (50%) of the total voting power of all
classes of securities entitled to vote generally in the election of the Board
or similar governing body; provided that for the purposes of the immediately
preceding clause (iii) neither a public offering of Company’s securities nor
any financing transaction or series of financing transactions shall constitute
a Change of Control. Upon a Change of Control, all Standard Options and
Restricted Shares and all other equity awards granted under this Agreement
(other than the Super-performance Options) shall become one hundred percent
(100%) vested and exercisable.

 

(d)                                 Consequences
of Termination With Cause or Without Good Reason. If the Company terminates
this Agreement with Cause or the Executive terminates this Agreement without
Good Reason, the Executive shall only have the right to the Accrued Rights.

 

(e)                                  Consequences
of Termination Due to Death or Disability. If Executive’s employment
terminates due to death or the Company terminates his employment due to
Disability, then the Executive shall have the right to (i) the Accrued Rights,
(ii) any Standard Options that are non-exercisable on the Termination Date
shall become exercisable on such Termination Date to the extent the options
would have become exercisable had the Executive remained continuously employed
by the Company through the second (2nd) anniversary of such Termination Date,
(iii) any Restricted Shares granted under this Agreement that are non-vested on
the Termination Date shall become vested on such Termination Date to the extent
the Executive would have vested had the Executive remained continuously
employed by the Company through the second (2nd) anniversary of such
Termination Date, (iv) any Pro Rata Bonus (as defined in Section 3.3(c)
of this Agreement), and (v) the health benefits specified in Section 3.10(b)
to which Executive is entitled as of the Termination Date shall be provided to

 

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Executive or his spouse for twenty-four (24) months
following the Termination Date; provided that such benefits shall be
reduced by any similar benefits provided by a subsequent employer.

 

(f)                                   Consequences
of Expiration of Employment Period. In the event the Company provides (i)
written notice at least six (6) months before the fifth (5th) anniversary of
the Effective Date, or (ii) written notice at least six (6) months before any
subsequent anniversary of the Effective Date thereafter of its intent not to
extend the Employment Period for an additional one (1) year term, the Executive
shall be entitled to the Accrued Rights and a lump sum payment equal to one (1)
times his Base Salary on the Termination Date no later than fifteen days after
the Termination Date.

 

(g)                                  Definition
of Good Reason. “Good Reason” means (i) an assignment to the
Executive of any duties materially and adversely inconsistent with his position
as Chief Executive Officer and those duties and responsibilities described in
Section 2.1 of this Agreement including, but not limited to, status, office, or
responsibilities as contemplated under Article II herein, (ii) a material diminution
in the duties or responsibilities of the Executive as Chief Executive Officer
or, so long as the Company is privately held, a material interference by members
of the Board with the performance by the Executive of his duties and
responsibilities as Chief Executive Officer, which material interference is
outside the scope of the reasonable actions of board members acting in their
capacity as such, (iii) a change in the Executive’s reporting
relationship such that he no longer reports directly to the Board, (iv) a
material breach by the Company of any provision of this Agreement, the 2004
Equity Incentive Plan (and any amendment and restatement of such 2004 Equity
Incentive Plan), the Standard Option Agreement, the Super-performance Option
Agreement or the Restricted Share Agreement after receipt of written notice
thereof from the Executive and failure by the Company to cure the breach within
thirty (30) days thereafter, (v) failure of the Company to cause all employees of the
Company to report, directly or indirectly, to the Executive, unless such
failure occurs due to good corporate governance practices and customary
exceptions, subject however, to the agreement of the Executive whose agreement
shall not be unreasonably withheld or
delayed, (vi) the reduction of the Executive’s Base Salary or
Annual Target Bonus opportunity, (vii) the failure of the Board to elect or re-elect the
Executive as Chief Executive Officer, or the failure of the Executive to be
elected or to continue to be re-elected to the Board (other than due to the
fact that the Executive fails or refuses to accept nomination for election or
re-election), (viii) the relocation of the Executive’s office as
assigned to him by the Company to a location more than 50 miles from the
Company’s corporate headquarters on the Effective Date and (ix) the failure of
the successor to the Company (within the scope of Section 8.1 herein) to
explicitly assume and be bound by the terms and provisions of this Agreement. In
order to constitute “Good Reason” the Executive must provide a written notice
to the Company (which notice shall contain a reasonably detailed description of
the event or events constituting Good Reason) within ninety (90) days after the
Executive becomes aware of the event or events constituting Good Reason; provided,
however, that such notice shall not be effective if within the period of
thirty (30) days after the giving of such notice, the event or events otherwise
constituting “Good Reason” are cured by the Company to the Executive’s
reasonable satisfaction.

 

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(h)                                 Definition
of Cause. “Cause” means the Executive’s (i) conviction of or a plea
of guilty or nolo contendere to a felony or a
crime involving moral turpitude which in the judgment of the Board causes or
will likely cause substantial economic damage to the Company or substantial
injury to the business reputation of the Company, (ii) commission of acts of
fraud or embezzlement, (iii) engaging in gross misconduct with respect to his
employment duties, and (iv) failure lasting at least thirty (30) consecutive
calendar days to discharge his duties under this Agreement due to gross
negligence or willful misconduct; provided, that with respect to the
matters described in the immediately preceding clauses (iii) and (iv), written
notice of the alleged failure was delivered to Executive and (if curable) he
fails to commence any action to cure such alleged failure within thirty (30)
days. Any termination for Cause shall be effective upon delivery of notice of
termination for Cause to the Executive.

 

(i)                                     Definition
of Accrued Rights. “Accrued Rights” shall consist of the following:
(i) any Base Salary accrued but unpaid through the Termination Date, (ii) any
Bonus accrued but unpaid through the Termination Date, (iii) payment for any
accrued but unused vacation through the Termination Date, and (iii) all accrued
and vested Employee Benefits.

 

(j)                                  Definition
of Disability. “Disability” means a mental or physical condition
that in the opinion of a licensed physician
(or group of licensed physicians) selected by the Compensation Committee and
approved by the Executive (or by the Executive’s authorized representative), which approval
shall not be unreasonably withheld or delayed, would render the Executive unable to perform
essential duties and responsibilities of his employment assigned at the
time the disability was incurred (as described in Section 2.1 of this Agreement
and as determined in the reasonable discretion of the Compensation Committee)
with reasonable accommodation, for a period of at least six (6) consecutive
months and is expected to be permanent or last for an indefinite duration in
excess of an additional six (6) month period. The Executive (or the Executive’s
authorized representative) shall cooperate with the Company in submitting to
such medical examinations and related testing as such licensed physician (or
group of licensed physicians) shall reasonably request from time to time.

 

ARTICLE V

SPECIAL PAYMENT PROVISIONS

 

5.1                               Special
Payment Provisions.

 

Notwithstanding any provision in the Agreement to the
contrary:

 

(a)                                 If
payment or provision of any amount or other benefit that is a “deferral of compensation”
subject to section 409A of the Code at the time otherwise specified in this
Agreement or elsewhere would subject such amount or benefit to additional tax
pursuant to section 409A(a)(1)(B) of the Code, and if payment or provision
thereof at a later date would avoid any such additional tax, then the payment
or provision thereof shall be postponed to the earliest date on which such
amount or benefit can be paid or provided without incurring such additional tax.
In the event this Section 5.1(a) requires a deferral of any payment,
such payment shall be accumulated and paid in a single lump sum on such
earliest date together with interest

 

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for the period of delay, compounded annually, equal to
the prime rate (as published in The Wall Street Journal),
and in effect as of the date the payment should otherwise have been provided.

 

(b)                                 If
any payment or benefit permitted or required under this Agreement is reasonably
determined by either party to be subject for any reason to a material risk of
additional tax pursuant to section 409A(a)(1)(B) of the Code, then the parties
shall promptly agree in good faith on appropriate provisions to avoid such risk
without materially changing the economic value of this Agreement to either
party.

 

ARTICLE VI

RECORDS AND CONFIDENTIAL DATA

 

6.1                               Records
and Confidential Data.

 

(a)                                 Acknowledgement.
The Executive acknowledges that in connection with the performance of his
duties during the term of his employment the Company will make available to the
Executive, or the Executive will have access to, certain Confidential
Information (as defined below) of the Company and its affiliates.

 

(b)                                 Confidentiality
Obligations. During and following termination of his employment with the Company
for any reason, except in connection with the performance of his duties
hereunder, the Executive shall not, without the written consent of the Board or
a person authorized thereby, disclose to any person  any Confidential Information, except for disclosure
to the Executive’s legal counsel to the extent such legal counsel needs to know
the information to protect the Executive’s legal rights under this Agreement,
provided that such legal counsel shall maintain the confidentiality of such
information and shall be bound by this Article VI to the same extent as the
Executive. The Executive shall be fully responsible for any disclosure by such
legal counsel. This covenant is not intended to, and does not limit in any way
Executive’s duties and obligations to the Company under statutory and common
law not to disclose or make personal use of the Confidential Information or
trade secrets.

 

(c)                                  Return
of Confidential Information. Following the Executive’s termination of
employment, as soon as possible after the Company’s written request, the
Executive will return to the Company all written Confidential Information which
has been provided to the Executive and the Executive will destroy all copies of
any analyses, compilations, studies or other documents prepared by the
Executive or for the Executive’s use containing or reflecting any Confidential
Information. Within ten (10) business days of the receipt of such request by
the Executive, the Executive shall, upon written request of the Company,
deliver to the Company a notarized document certifying that such written
Confidential Information has been returned or destroyed in accordance with this
Section 6(c).

 

(d)                                 Definition.
For the purposes of this Agreement, “Confidential Information” shall
mean all confidential and proprietary information of the Company, and its
affiliates, including, without limitation, the Company’s marketing strategies,
pricing policies or characteristics, customers and customer information,
product or product specifications, designs, software systems, leasing costs,
cost of equipment, customer lists, business or business

 

11

 

prospects, plans, proposals, codes, marketing studies,
research, reports, investigations, or other information of similar character. For
purposes of this Agreement, the Confidential Information shall not include and
the Executive’s obligations under this Article VI shall not extend to
(i) information which is or becomes generally available to the public, (ii)
information obtained by the Executive from third persons other than executives
of the Company, its subsidiaries, the Company and the Company’s affiliates not
under agreement to maintain the confidentiality of the same and (iii)
information which is required to be disclosed by the Executive by law or legal
process.

 

(e)                                  Construction.
Any reference to the Company in this Article VI shall include the
Company and/or its subsidiaries.

 

ARTICLE VII

ADDITIONAL COVENANTS

 

7.1                               Additional
Covenants.

 

(a)                                 Non-Competition.
The Executive covenants and agrees that (i) during his employment and
(ii) for a period of two (2) years following the termination of his
employment by the Company (the “Restriction Period”), the Executive
shall not directly or indirectly own an interest in, operate, join, control,
advise, consult to, work for, serve as a director of, have a financial
interest, or participate in any corporation, partnership, proprietorship, firm,
association, person, or other entity that engages in any business, activity or
service whose principle business is the discovery, development, manufacture and
sales of prescription pharmaceuticals (a “Company Activity”). This
Covenant (as defined below) applies to Company Activities in any territory or
jurisdiction in which the Company is doing business or is making an active
effort to do business during the term of the Executive’s employment. This
Covenant does not prohibit the mere passive ownership of less than five percent
(5%) of the outstanding stock of any public corporation as long as the Executive
is not otherwise in violation of this Covenant.

 

(b)                                 No
Diversion. During the Restriction Period, the Executive covenants and
agrees that the Executive shall not divert or attempt to divert or take
advantage of or attempt to take advantage of any actual or potential business
opportunities of the Company (e.g., joint ventures, other business
combinations, investment opportunities, potential investors in the Company, and
other similar opportunities) which the Executive became aware of as the result of
his employment with the Company.

 

(c)                                  Non-Recruitment.
The Executive agrees that the Company has invested substantial time and effort
in assembling its present workforce. Accordingly, the Executive covenants and
agrees that during the Restriction Period, the Executive shall not hire away,
nor directly or indirectly entice or solicit or seek to induce or influence any
of the Company’s  employees to leave
their employment.

 

(d)                                 Remedies.
The Executive acknowledges that should he violate any of the covenants
contained in Article VI, and Sections 7.1(a), 7.1(b), and 7.1(c)
above (collectively “Covenants”), it will be difficult to determine the
resulting damages to the Company and, in

 

12

 

addition to any other remedies it may have, the
Company shall be entitled to temporary injunctive relief without being required
to post a bond and permanent injunctive relief without the necessity of proving
actual damage. The Company may elect to seek one or more of these remedies at
its sole discretion on a case by case basis. Failure to seek any or all
remedies in one case does not restrict the Company from seeking any remedies in
another situation. Such action by the Company shall not constitute a waiver of
any of its rights.

 

(e)                                  Severability
and Modification of Any Unenforceable Covenant. It is the parties’ intent
that each of the Covenants be read and interpreted with every reasonable
inference given to its enforceability. However, it is also the parties’ intent
that if any term, provision or condition of the Covenants is held to be
invalid, void or unenforceable, the remainder of the provisions thereof shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated. Finally, it is also the parties’ intent that if it is determined
that any of the Covenants are unenforceable because of overbreadth, then the
Covenants shall be modified so as to make it reasonable and enforceable under
the prevailing circumstances.

 

(f)                                   Litigation.
The Executive agrees to render assistance and cooperation to the Company at its
request regarding any matter, dispute or controversy with which the Company may
become involved and of which the Executive has or may have reason to have
knowledge, information or expertise. Such services will be without additional
compensation if the Executive is then employed by the Company, and thereafter,
subject to the Executive’s reasonable availability, for an amount per day equal
to the Executive’s Base Salary on the Termination Date divided by three hundred
sixty five (365), plus reasonable and documented out-of pocket expenses,
including, travel and lodging.

 

(g)                                  Construction.
Any reference to the Company in this Article VII shall include the
Company and/or its subsidiaries.

 

ARTICLE VIII

ASSIGNMENT

 

8.1                               Assignment.
This Agreement shall be binding upon the Executive and shall not be subject to
assignment or delegation by the Executive without the Company’s express written
consent. This Agreement shall likewise be binding upon the Company and its
successors (by the sale of all or substantially all of the assets of the
Company, or a merger, consolidation, change of control or similar transaction
involving the Company) and the Company shall require any successor to assume
and agree in writing to perform the obligations of the Company under this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place.

 

ARTICLE IX

MISCELLANEOUS

 

9.1                               Public
Announcement. The Company shall give Executive reasonable opportunity to
review and comment on any public announcement (including any filing with a
governmental agency or stock exchange) relating to this Agreement or Executive’s
employment

 

13

 

by the Company. The Executive shall not make any
public announcement without the prior written consent of the Company.

 

9.2                               Approvals.
The Company represents and warrants to Executive it has taken all corporate
action necessary to authorize this Agreement.

 

9.3                               No
Obligation to Mitigate Damages and No Offset. The Executive shall not be
required to mitigate damages or the amount of any payment provided for under
this Agreement by seeking other employment. Except as specifically provided in Section
3.10(b) and for any amounts owed by the Executive to the Company as of the
Termination Date, no amounts paid to or earned by Executive following his
termination of employment with the Company shall reduce or be offset against
any amounts payable to Executive under this Agreement.

 

9.4                               Payment
of Taxes. Any payments otherwise due under this Agreement to the Executive
shall either be (i) reduced by the minimum required withholdings for federal,
state, local and/or employment taxes, or (ii) the Executive shall deliver to
the Company in cash the amount necessary for the Company to satisfy its
required tax withholding obligations.

 

9.5                               Notices.
All notices, offers or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as
properly given or made (i) if delivered personally or (ii) after the expiration
of five days from the date upon which such notice was mailed from within the
United States by certified mail, return receipt requested, postage prepaid,
(iii) upon receipt by facsimile or other electronic transmission (with written
confirmation of receipt) or (iv) after the expiration of the second business
day following deposit with documented overnight delivery service. All notices
given or made pursuant hereto shall be so given or made to the following
addresses:

 

	
  if to the
  Executive:

  	
  [to his
  last known  address as shown on the
  records of the Company]

  
	
   

  	
   

  
	
  with
  copy to:

  	
  Greenberg Traurig, LLP

  
	
   

  	
  77 West Wacker Drive

  
	
   

  	
  Suite 2500

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attention: Leslie A.
  Klein

  
	
   

  	
  Facsimile: (312)
  899-0345

  
	
   

  	
   

  
	
  if to the
  Company:

  	
  Reliant
  Pharmaceuticals, Inc.

  
	
   

  	
  110 Allen Road

  
	
   

  	
  Liberty Corner, New
  Jersey 07938

  
	
   

  	
  Attention: Chief
  Financial Officer

  
	
   

  	
  Facsimile: (908)
  542-9406

  

 

14

 

	
  with
  copy to:

  	
  Latham & Watkins
  LLP

  
	
   

  	
  5800 Sears Tower

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attention: Michael A.
  Pucker

  
	
   

  	
  Facsimile: (312)
  993-9767

  

 

9.6                               Severability.
If all or any part of this Agreement is held by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
serve to invalidate any portion of this Agreement not declared to be unlawful
or invalid. Any provision so declared to be unlawful or invalid shall, if
possible, be construed in a manner which will give effect to the terms of such
provision to the fullest extent possible while remaining lawful and valid.

 

9.7                               Governing
Law. This Agreement shall be governed by and construed in accordance with
the laws of the State of New Jersey applicable to contracts executed in and to
be performed entirely within that state. The parties irrevocably agree that all
actions to enforce an arbitrator’s decision pursuant to Section 9.9
of this Agreement shall be instituted and litigated only in federal, state or
local courts sitting in Newark, New Jersey and each of such parties hereby
consents to the exclusive jurisdiction and venue of such court and waives any
objection based on forum non conveniens.

 

9.8                               WAIVER OF JURY TRIAL. THE PARTIES HEREBY
WAIVE, RELEASE AND RELINQUISH ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY ACTIONS TO ENFORCE AN ARBITRATOR’S DECISION PURSUANT
TO SECTION 9.9 OF THIS AGREEMENT.

 

9.9                               Arbitration.
Except as provided in Section 9.8 hereof, in the event that there
shall be a dispute among the parties arising out of or relating to this
Agreement, or the breach thereof, the parties agree that such dispute shall be
resolved by final and binding arbitration in Newark, New Jersey, administered
by the American Arbitration Association (the “AAA”), in accordance with
AAA’s Commercial Arbitration Rules, to which shall be added the provisions of
the Federal Rules of Civil Procedure relating to the Production of Evidence,
and the parties agree that the arbitrators may impose sanctions in their
discretion to enforce compliance with discovery and other obligations. Such
arbitration shall be presided over by a single arbitrator. If the Executive, on
the one hand, and the Company, on the other hand, do not agree on the
arbitrator within fifteen (15) days after party requests arbitration, the
arbitrator shall be selected by the Executive and the Company from a list of
five (5) potential arbitrators provided by AAA. Such list shall be provided
within twenty five (25) days of the request of any party for arbitration. The
party requesting arbitration shall delete one name from the list. The other
party shall delete one name from the list. This process shall then be repeated
in the same order, and the last remaining person on the list shall be the
arbitrator. This selection process shall take place within the two (2) business
days following both parties’ receipt of the list of five (5) potential
arbitrators. Hearings in the arbitration proceedings shall commence within
twenty (20) days of the selection of the arbitrator or as soon thereafter as
the arbitrator is available. The arbitrator shall deliver his or her opinion
within twenty (20) days after the completion of the arbitration hearings. The

 

15

 

arbitrator’s decision shall be final and binding upon
the parties, and may be entered and enforced in any court of competent
jurisdiction by either of the parties. The arbitrator shall have the power to
grant temporary, preliminary and permanent relief, including without
limitation, injunctive relief and specific performance. The arbitrator’s fees
and expenses shall be paid by the Company.

 

9.10                        Attorney’s
Fees. Without limiting Section 9.9 above, if any arbitration, proceeding, or other action is
brought under this Agreement, each party shall pay their own attorneys’ fees
and costs in that arbitration, proceeding, or action.

 

9.11                        Counterparts.
This Agreement may be executed in counterparts, each of which shall be an
original, but all of which shall constitute one and the same instrument.

 

9.12                        Entire
Understanding. This Agreement including the Plan, all Exhibits and Recitals
hereto which are incorporated herein by this reference, together with the other
agreements and documents being executed and delivered concurrently herewith by
the Executive and the Company, constitute the entire understanding among all of
the parties hereto and supersedes any prior understandings and agreements,
written or oral, among them respecting the subject matter within.

 

9.13                        Pronouns
and Headings. As used herein, all pronouns shall include the masculine,
feminine, neuter, singular and plural thereof wherever the context and facts
require such construction. The headings, titles and subtitles herein are
inserted for convenience of reference only and are to be ignored in any
construction of the provisions hereof.

 

9.14                        Amendments;
Waiver. No provisions of this Agreement may be modified, waived or
discharged unless such modification, waiver or discharge is approved by the
Board (or the Compensation Committee to the extent the Board has delegated
authority with respect to such matters) or a person or persons authorized
thereby and is agreed to in writing by the Executive and such officer(s) as may
be authorized by the Board (or the Compensation Committee to the extent the
Board has delegated authority with respect to such matters). No waiver by any
party hereto at any time of any breach by any other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
waiver of any provision of this Agreement shall be implied from any course of
dealing between or among the parties hereto or from any failure by any party
hereto to assert its right hereunder on any occasion or series of occasions.

 

9.15                        The
Executive’s Acknowledgement. The Executive acknowledges (i) that he has
consulted with or has had the opportunity to consult with independent counsel
of his own choice concerning this Agreement and has been advised to do so by
the Company, and (ii) that he has read and understands this Agreement, is fully
aware of its legal effect, and has entered into it freely based on his own
judgment.

 

16

 

9.16                        Reimbursement
of Fees.

 

(a)                                 The
Company shall pay Executive’s reasonable legal fees and expenses incurred in
connection with the completion of this Agreement, and to the extent taxable the
Executive shall be entitled to a Tax Gross-Up Payment (as defined in Section
9.16(b) of the Agreement).

 

(b)                                 The
term “Tax Gross-Up Payment” means an amount payable to Executive such
that after payment of taxes on such amount there remains a balance sufficient
to pay taxes being reimbursed.

 

9.17                        Indemnification
and D&O Insurance. The Executive will be entitled to the same
indemnification and D&O insurance coverage as other directors and officers
of the Company in effect from time to time and subject to the terms and
conditions thereof.

 

9.18                        Inconsistency.
In the event of any inconsistency between this Agreement and any other
Agreement, plan, program or practice of the Company, this Agreement shall
control.

 

9.19                        Representations.

 

(a)                                 The
Executive represents and warrants to the Company that he will not, nor will he
cause or assist any other person to, make any statement to a third party or
take any action which is intended to or would reasonably have the effect of disparaging
or harming the Company or the business reputation of Company’s directors,
employees, officers and managers; provided, however, that this
provision shall not preclude the truthful disclosure or testimony as may be
required before any tribunal or administrative agency, or under any applicable
law, regulations or rules or by any listing requirements of any securities
exchange on which any securities of the Company are listed.

 

(b)                                 The
Company represents and warrants to Executive that its senior executives will
not, nor will it cause or assist any other person to, make any statement to a
third party or take any action which is intended to or would reasonably have
the effect of disparaging or harming the Executive or his business reputation;
provided, however, that this provision shall not preclude the truthful
disclosure or testimony as may be required before any tribunal or
administrative agency, or under any applicable law, regulations or rules or by
any listing requirements of any securities exchange on which any securities of
the Company are listed.

 

9.20                        Binding
Effect. This Agreement shall be binding on and inure to the benefit of the
Company and its successors and permitted assigns. This Agreement shall also be
binding on and inure to the benefit of the Executive and his heirs, executors,
administrators and legal representatives. If the Executive dies before all
amounts payable to him hereunder have been paid, the unpaid amounts to be paid
under this Agreement will be paid to his beneficiary designated by the
Executive (“Beneficiary”) or, if none (or if otherwise not permitted),
to his estate.

 

17

 

9.21                        Survival
of Rights and Obligations. All of Executive’s rights and the Company’s
obligations hereunder, including Executive’s rights to compensation and
benefits (including under Article III and Article IV hereof),
Executive’s obligations under Article VI and Article VII, and
Executive’s and Company’s rights and obligations under Article IX
hereof, (as well as any provisions of this Agreement necessary to give effect
thereto) shall survive the termination of Executive’s employment and/or the
termination of this Agreement.

 

[Signature
Page Follows]

 

18

 

IN WITNESS WHEREOF, this
Agreement has been executed as of the date and year first above written.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  RELIANT PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Bradley T. Sheares,
  Ph.D.

  

 

19

 

EXHIBIT A

 

STANDARD
OPTION AGREEMENT

 

20

 

EXHIBIT B

 

SUPER-PERFORMANCE
OPTION AGREEMENT

 

21

 

EXHIBIT C

 

RESTRICTED
STOCK AGREEMENT 

 

22

 

EXHIBIT D

 

RELEASE
OF CLAIMS 

 

23EXHIBIT 10.8

 

January
17, 2005

 

PERSONAL
AND CONFIDENTIAL

 

Joseph
S. Zakrzewski

9167
Pointe Court

Fishers,
Indiana 46038

 

Dear
Joe:

 

Reliant
Pharmaceuticals, Inc., a Delaware corporation (“Reliant” or the “Company”),
with its headquarter offices at 110 Allen Road in Liberty Corner, New Jersey
07938, is pleased to extend this “Offer of Employment” to you.

 

The
following is an outline of the terms of your employment offer:

 

	
  Initial Start Date:

  	
  February 1, 2004

  
	
   

  	
   

  
	
  Job Title:

  	
  Chief Operating Officer

  
	
   

  	
   

  
	
  Reporting:

  	
  You will report directly to the Chief Executive Officer of the
  Company. In the event that there is no CEO, you will report to the Board of
  Directors of the Company.

  
	
   

  	
   

  
	
  Commitment:

  	
  Full time.

  
	
   

  	
   

  
	
  Base Salary:

  	
  Your semi-monthly base salary is $18,750 payable the 15th
  and last day of each month (or on such other dates as determined by the
  Company for payment of base salary to senior executives, but not less
  frequently than once per month), and is annualized to $450,000, minus the
  appropriate taxes and withholdings.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Incentive Bonus Eligibility:

  	
  

  As an employee of Reliant, you will be eligible to participate in an
  incentive compensation plan with a potential range of up to seventy-five
  percent (75%) of base salary, which, if earned and awarded will be paid
  annually no later than the end of the first quarter of the following year.
  You must be employed by Reliant at the end of a given calendar year in order
  to be eligible, and you must also meet specific objectives that are intended
  to be established by Reliant in consultation with you. However in the case of
  your death while you are employed by Reliant or in the event Reliant
  terminates your employment without “Cause” (as defined below) or you
  terminate your employment with “Good Reason” (as defined below), any amounts
  earned and awarded pursuant to the incentive compensation plan will be
  pro-rated based on your final

  

 

 

	
   

  	
  employment date and will be payable no later than the end of the
  first quarter of the following year.

  
	
   

  	
   

  
	
  Special Bonus:

  	
  Upon commencement of employment with Reliant, you will be entitled to
  a special one time bonus in the amount $200,000, which amount will be reduced
  on a dollar for dollar basis by the amount of any cash bonus payment
  (specifically excluding stock grant/restricted stock) that you receive from
  Eli Lilly and Company in respect of fiscal year 2004 (“2004 Lilly Bonus”)
  (regardless of when paid). The special bonus will be paid on the last
  business day of Q1’05. In the event that you receive some or all of your 2004
  Lilly Bonus after such time as Reliant has paid you the special bonus
  described in this paragraph, the Company will offset any such 2004 Lilly
  Bonus amounts against future payments that Reliant owes to you (if any) in a
  manner agreeable to you and Reliant; provided that if you and Reliant are
  unable to agree, then in such manner as shall be reasonably determined by the
  Compensation Committee of the Board of Directors of Reliant (the “Compensation
  Committee”). Should there be no amounts against which to offset such 2004
  Lilly Bonus amounts, you will reimburse the Company for any such amounts on a
  reasonable time table mutually agreed between you and the Company, but in any
  event prior to the beginning of Q2’06. In the event that you are terminated
  by Reliant with “Cause” or you terminate your employment with Reliant
  voluntarily without “Good Reason”, in each case, prior to the first
  anniversary of your employment with Reliant, you will reimburse Reliant for
  the full amount of any special bonus paid to you under this paragraph within
  30 days of your separation from Reliant.

  
	
   

  	
   

  
	
  Relocation Allowance:

  	
  

  Reliant will reimburse you for reasonable and documented relocation expenses
  in connection with your move from Indiana to New Jersey including but not
  limited to a reasonable number of house hunting trips to New Jersey for you
  and your family. You will also be reimbursed for up to $50,000 of documented
  miscellaneous expenses that you incur in connection with the sale of your
  existing home and the purchase and financing of a new home, including,
  closing costs and commissions on your home in Indiana, closing costs on your
  new home in the New Jersey area, and mortgage rate differential adjustments.
  For the avoidance of doubt, Reliant will not reimburse you for the purchase price
  of your new home in New Jersey or for any personal property associated
  therewith.

  
	
   

  	
   

  
	
  Equity Participation:

  	
  

  Upon commencement of employment with the Company you will be granted options
  to acquire 300,000 shares of Reliant Common Stock,

  

 

2

 

	
   

  	
  with a strike price of $20.00/share. Such options will vest annually
  over a period of four (4) years at a rate of 25% per year, and the vesting
  commencement date for such options will be your first day as a full-time
  employee of Reliant. In addition to the initial option grant, you will be
  eligible to participate in the Company’s Equity Incentive Plan pursuant to
  which you may be granted options to purchase Common Stock of the Company. Any
  grant of such options (beyond the initial 300,000) is solely in the
  discretion of the Company and subject to approval of the Compensation
  Committee. Any such options will be granted at no less than fair market value
  (as determined by the Compensation Committee) as of the date of the grant,
  will vest annually over a four (4) year period at a rate of 25% per year and
  be subject to the other terms and conditions of the Company’s Equity
  Incentive Plan (as will the initial 300,000 options). Subject to the
  foregoing, your annual option grant target range (beyond the initial 300,000
  shares) is between 50,000 and 75,000 options.

  
	
   

  	
   

  
	
  Make Whole:

  	
  If prior to the first anniversary of your employment with the Company
  a Change of Control (as defined below) occurs at a price per share of Common
  Stock calculated on a fully diluted basis (the “CoC Share Price”) of
  less than $26.67, provided you are employed by the Company on the date of the
  Change of Control, the Company will pay you an incremental amount not to
  exceed $2,000,000, equal to the product of (i) 300,000 and (ii) the
  difference between $26.67 and the CoC Share Price.

  
	
   

  	
   

  
	
   

  	
  If after the first anniversary but prior to the second anniversary of
  your employment with the Company a Change of Control (as defined below)
  occurs at a CoC Share Price of less than $23.33, provided you are employed by
  the Company on the date of the Change of Control, the Company will pay you an
  incremental amount not to exceed $1,000,000, equal to the product of (i)
  300,000 and (ii) the difference between $23.33 and the CoC Share Price.

  
	
   

  	
   

  
	
   

  	
  To the extent that any of the foregoing payments will subject you to
  an excise tax under Section 4999 of the Internal Revenue Code as an excess
  parachute payment, then you may elect to have the amount of such payments
  reduced to the extent necessary to avoid application of such excise tax, but
  only if such reduction would result in your receiving a greater amount than
  if you received the full amount and paid the excise tax.

  
	
   

  	
   

  
	
   

  	
  For the purposes of this letter agreement, “Change of Control” shall mean (i) the sale, lease, exchange,
  license or other disposition of all or substantially all of Company’s assets
  in one transaction or series of related transactions; (ii) a merger or
  consolidation as a result of which the holders of Company’s issued and
  outstanding voting securities

  

 

3

 

	
   

  	
  immediately before such transaction own or control less than a
  majority of the voting securities of the continuing or surviving entity
  immediately after such transaction and/or (iii) the acquisition (in one or
  more transactions) by any person or persons acting together or constituting a
  “group” under Section 13(d) of the Securities Exchange Act of 1934, as
  amended, together with any affiliates thereof of beneficial ownership (as
  defined in Rule 13d-3 under such Exchange Act) or control, directly or
  indirectly, of at least eighty percent (80%) of the total voting power of all
  classes of securities entitled to vote generally in the election of the
  Company’s board of directors or similar governing body (other than any person
  or group owning at least such voting power on the date hereof); provided that
  for the purposes of the immediately preceding clause (iii) neither a public
  offering of Company’s securities nor any debt or equity financing transaction
  or series of financing transactions shall constitute a Change of Control.

  
	
   

  	
   

  
	
  Benefits:

  	
  During your employment with Reliant, you will be eligible for
  Reliant’s then current employee benefits program applicable to your position,
  subject to all plan terms and eligibility requirements. The benefits for
  which you may be eligible are more fully described in the applicable plan
  summaries and related documents. The benefits currently offered to full-time
  employees include group medical, dental, vision and prescription coverage,
  group life and AD&D insurance, long-term and short-term disability
  insurance, 401(k) plan, flexible spending account, and select holidays. You
  will be eligible in accordance with Reliant’s policy for Combined-Time Off of
  eighteen (18) days plus two floating holidays.

  
	
   

  	
   

  
	
  Termination:

  	
  If your employment with the
  Company is terminated by Reliant without “Cause” or by you with “Good Reason”
  and you execute a general release of claims in a form reasonably satisfactory
  to Reliant (provided that such form shall not contain a non-compete
  provision), you will be entitled to your salary and other benefits accrued
  through the date of termination, as well as one year base salary compensation
  and any amounts due to you under the incentive compensation plan (but only to
  the extent earned and awarded), paid in accordance with the usual and
  customary payroll practices established by the Company, and you shall also be
  entitled to receive medical benefits upon the same terms as active employees
  of the Company during such one year period. Following such one year period
  you will be entitled to enroll in ‘COBRA’ in accordance with applicable law.
  For purposes of this letter agreement, “Cause” shall mean  (i) any act or omission of fraud or dishonesty by you, (ii) your
  conviction, or entry of a plea of guilty or nolo contendere to charges of, any felony or
  other crime involving moral turpitude, (iii) any act or omission by you that
  is materially injurious to the Company, provided that you shall have 30 days
  after written notice

  

 

4

 

	
   

  	
  from the Company to cure or
  correct such act or omission (but only if such act or omission can be fully
  cured or corrected within such 30 days period), (iv)  your continuing failure to perform the material duties of your
  position after you have been given written notice from the Company and 30
  days to cure such failure. “Good Reason” shall mean (i) the material
  reduction of your duties and responsibilities; (ii) Reliant’s continuing
  failure to perform any of its material obligations under this letter
  agreement; or (iii) the relocation of your principal place of business to a
  location that is more than 50 miles from its location as of the commencement
  of your employment; provided that, the Company shall have 30 days following
  written notice from you to cure or correct the condition or event that would
  otherwise constitute Good Reason.

  
	
   

  	
   

  
	
  Non-Solicitation:

  	
  You agree that Reliant has invested substantial time and effort in
  assembling its present workforce. Accordingly, you covenant and agree that
  during the term of your employment and for a period of twelve (12) months
  following the termination, for any reason, of your employment with the
  Company, you will not, directly or indirectly, entice or solicit or seek to
  induce or influence any of the Company’s executives or other key employees to
  leave their employment with the Company.

  
	
   

  	
   

  
	
  Payments:

  	
  Unless otherwise specifically provided herein, all payments described
  in this letter agreement shall be made in accordance with the Company’s
  normal payroll or reimbursement practices and shall be subject to withholding
  to the extent required by applicable law.

  

 

Although
we hope that your employment with us is mutually satisfactory, please note that
your employment at Reliant is “at will.” 
This means that you may resign from Reliant at any time with or without
cause, and Reliant has the right to terminate your employment relationship with
or without cause at any time. Neither this letter agreement nor any other
communication, either written or oral, should be construed as a contract of
employment for any particular duration.

 

Our
offer is contingent on being able to deliver satisfactory evidence of identity
and employment eligibility as required by Federal law on your start date. Your
employment is also contingent upon your execution of an employee
confidentiality and assignment of invention agreement in form and substance
satisfactory to Reliant.

 

[Signature Page Follows]

 

5

 

Please
sign and date this letter agreement in the space indicated and return it to my
attention to evidence your understanding and acceptance of the terms set forth
herein.

 

 

	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  RELIANT
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Ernest
  Mario, Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Agreed
  to and Accepted:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Joseph
  S. Zakrzewski

  	
   

  
	
   

  	
   

  
	
  Date:
  January     , 2005

  	
   

  
				

 

6

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