Document:

Exhibit 10.4

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This AMENDED
AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is
made and entered into as of the first day of September, 2008, by and between
Sciele Pharma, Inc., a Delaware corporation (the “Company”),
and Leslie Zacks  (“Executive”),
and shall become effective as of the Effective Date (as defined below).

 

WITNESSETH:

 

WHEREAS,
Executive is currently serving as Executive Vice President and Chief Legal
and Compliance Officer   of the Company pursuant to that certain Amended and
Restated Employment Agreement, dated as of December 26, 2007, by and
between the Company and Executive (the “Existing Employment
Agreement”);

 

WHEREAS, contemporaneously herewith, the
Company has entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shionogi & Co. Ltd. (“Parent”) and Tall Bridge, Inc. (“Merger
Sub”), contemplating the acquisition by
Parent and Merger Sub of the Company, including the merger of the Company with
and into Merger Sub, with the Company as the surviving corporation;

 

WHEREAS, the parties desire to amend and
restate the terms and conditions of employment between the Company and
Executive, to be effective upon, and subject to, the consummation of the merger
of the Company and Merger Sub, as contemplated by the Merger Agreement (the “Merger”); and

 

WHEREAS, effective as of the Effective Date (provided that Executive is employed with the Company as of
the Effective Date), this Agreement shall supersede the Existing
Employment Agreement.

 

NOW, THEREFORE, in consideration of Executive’s
continued employment, the covenants and mutual agreements set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                             Employment. Throughout the Term (as
defined in Section 2 below), the Company shall employ Executive as
provided herein, and Executive hereby accepts such employment.  In accepting such employment, Executive
states that he is not now, and by accepting such employment, will not be, under
any restrictions in the performance of the duties contemplated under this
Agreement as a result of the provisions of any prior employment agreement or
non-compete or similar agreement to which Executive is or was a party.

 

2.                             Term of Employment. The term of
Executive’s employment by the Company hereunder shall commence upon
consummation of the Merger (the “Effective Date”)
and shall continue until December 31, 2012, unless sooner terminated as a
result of Executive’s death or in accordance with the provisions of Section 6
below (the “Initial Term”).  At
the conclusion of the Initial Term, this Agreement shall automatically renew

 

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for successive one-year periods
(each, a “Renewal  Term”,
and collectively with the Initial Term, the “Term”)
unless notice is provided by either party of its or his intent
not to renew this Agreement at least ninety (90) days prior to the conclusion of the
Initial Term or any Renewal Term.  Any
election by the Company not to renew this Agreement at the conclusion of the
Initial Term or any Renewal Term shall be deemed a termination without Cause (as
defined in Section 6(c) below) by the Company pursuant to Section 6(a)(iii) below
for all purposes of this Agreement, and any election by Executive not to renew this
Agreement at the conclusion of the Initial Term or any Renewal Term shall be
deemed a termination without Good Reason (as defined in Section 6(d) below)
by Executive pursuant to Section 6(b)(i) below for all
purposes of this Agreement.  In the
event that Executive’s employment with the Company terminates for any reason prior to
the Effective Date or the Merger does not occur for any reason, this
Agreement shall be void ab initio
without further action on the part of either party.

 

3.                             Duties. Throughout the Term, and
except as otherwise expressly provided herein, Executive shall be employed by
the Company as the Executive Vice President and Chief Legal and Compliance Officer of
the Company.  Executive shall devote his
full time to the performance of his duties as Executive Vice President and Chief Legal
and Compliance Officer of the Company in accordance with the Company’s
bylaws, this Agreement and the directions of the Company’s Board of Directors
(the “Board”) and, if applicable, any
executive officer of the Company who is senior to Executive.  Without limiting the generality of the
foregoing, throughout the Term, Executive shall faithfully perform his duties
as Executive
Vice President and Chief Legal and Compliance Officer at all times so as
to promote the best interests of the Company.

 

4.                             Compensation.

 

(a)                                  Salary. For any and all services performed by Executive
under this Agreement during the Term, in whatever capacity, the Company shall
pay to Executive an annual base salary (the “Salary”).
 The Salary shall be paid in the same
increments as the Company’s normal payroll, but no less frequently than
bi-monthly and prorated, however, for any period of less than a full month.  The Salary for the remainder of calendar year
2008 will remain $260,000 per annum, the Salary for calendar year 2009 will be
$342,500 per annum, and the Salary for calendar year 2010 will be $425,000 per
annum.  Thereafter, the Salary
will be reviewed annually by the Board, commencing with calendar year 2011,
and a determination shall be made by the Board at that time as to the amount of
the increase thereto for the following calendar year; provided that
Executive’s Salary with respect to any calendar year during the Initial Term commencing
with 2011 shall be not less than four percent (4%)
more than Executive’s prior year’s Salary.  Except
as described in Section 6(d) below, the Salary shall not be decreased
during the Term without the consent of Executive.

 

(b)                                 Annual Bonus.

 

(i)             Executive’s
annual incentive compensation bonus with respect to calendar year 2008 shall be
paid in accordance with the terms

 

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and
conditions of the annual incentive compensation plan in which he participates
as of the date hereof, other than with respect to the amount payable under such
plan, which shall be guaranteed to be paid at target.

 

(ii)          With
respect to each calendar year during the Term commencing with 2009, Executive
shall be eligible to receive from the Company an annual incentive compensation
bonus (the “Annual Bonus”) in a target amount equal
to a
percentage of the Salary for such year (the “Target
Annual Bonus”).  With
respect to calendar year 2009, (A) the Target Annual Bonus shall be an
amount equal to fifty percent (50%)  of
the Salary for calendar year 2009; and (B) the performance criteria shall
be mutually agreed upon following the date hereof and prior to the Effective
Date.  With respect to calendar year 2010
and thereafter during the Term, the Target Annual Bonus and performance
criteria shall be determined by the Board in its sole discretion; provided that Executive’s Target Annual Bonus shall be not
less than Executive’s prior year’s Target Annual Bonus.

 

(iii)       Except
as described in Section 6(d) below, the Target Annual Bonus shall not be
decreased during the Term without the consent of Executive.

 

(iv)      Satisfaction
of performance criteria, which determination shall be made
by the Board in its sole discretion, (A) below eighty percent (80%) shall result in
no payout of the Annual Bonus; (B) at eighty percent (80%) shall result in
a payout of the Annual Bonus at sixty-five percent (65%) of the Target Annual
Bonus; (C) above eighty percent (80%) and at or below one hundred percent
(100%) shall result in a payout of the Annual Bonus in an amount equal to the
Target Annual Bonus multiplied by the Annual Bonus Medium Multiplication
Factor, where the “Annual Bonus Medium
Multiplication Factor” equals the sum of sixty-five percent (65%)
plus the product of one-and-three-quarters percent (1.75%) multiplied by the
number of percentage points above eighty percent (80%) by which the performance
criteria are satisfied; provided that
the Annual Bonus Medium Multiplication Factor shall not exceed one hundred
percent (100%); and (D) above one hundred percent (100%) shall result in a
payout of the Annual Bonus in an amount equal to the Target Annual Bonus
multiplied by the Annual Bonus High Multiplication Factor, where the “Annual Bonus High Multiplication Factor” equals the sum of
one hundred percent (100%) plus the product of five percent (5%) multiplied by
the number of percentage points above one hundred percent (100%) by which the
performance criteria are satisfied; provided that
the Annual Bonus High Multiplication Factor shall not exceed two hundred
percent (200%) (for example, if the performance criteria were satisfied at a
92.3% level, then the Annual Bonus would be paid out at 86.525 of the Target
Annual Bonus and, if the performance criteria were satisfied at a 105.4% level,
then the applicable

 

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portion
of the Annual Bonus would be paid out at 127% of the Target Annual Bonus).

 

(v)         Subject
to Section 7 below, the Annual Bonus, if any, shall be paid to
Executive not later than March 15 of the year following the calendar year
with respect to which the Annual Bonus was earned; provided that
Executive (x) is employed with the Company on December 31 of such
calendar year and (y) has not given or received a notice of termination of
employment without Good Reason or for Cause on or prior to such December 31.

 

(c)                             Long-Term Incentive Compensation. On January 1 of each calendar year
during the Term commencing with 2009, Executive shall be eligible
to receive
from the Company an award under the Company’s long-term incentive
compensation plan (such plan, the “LTIP” and any
such award, a “LTI Award”) in a target
amount equal to a fixed amount (the “Target LTI”).

 

(i)             With respect
to calendar year 2009, (A) the Target LTI shall be $886,250; and (B) the
performance criteria shall be mutually agreed upon following the date hereof
and prior to the Effective Date.  With
respect to calendar year 2010 and thereafter during the Term, the Target
LTI and performance criteria (which shall be based on earnings before interest,
taxes, depreciation and amortization (EBITDA)) shall be determined by the Board
in its sole discretion.

 

(ii)          Except
as described in Section 6(d) below, from the end of the Initial Term,
the Target
LTI shall not be decreased during the Term without the consent of
Executive.

 

(iii)       Satisfaction
of performance criteria, which determination shall be made
by the Board in its sole discretion, (A) below eighty percent (80%) shall result in
no payout of the applicable portion of the LTI Award; (B) at eighty
percent (80%) shall result in a payout of the applicable portion of the LTI
Award at seventy percent (70%) of the Target LTI; and (C) above eighty
percent (80%) shall result in a payout of the applicable portion of the LTI
Award in an amount equal to the Target LTI multiplied by the LTI Multiplication
Factor, where the “LTI  Multiplication Factor” equals the sum of seventy percent
(70%) plus the product of one-and-one-half percent (1.5%) multiplied by the
number of percentage points above eighty percent (80%) by which the performance
criteria are satisfied; provided that
the LTI Multiplication Factor shall not exceed one hundred percent (100%) (for
example, if the performance criteria were satisfied at a 92.3% level, then the
applicable portion of the LTI Award would be paid out at 88.45% of the Target
LTI and, if the performance criteria were satisfied at a 105.4% level, then the
applicable portion of the LTI Award would be paid out at 100% of the Target
LTI).

 

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(iv)      Each LTI
Award shall vest as follows: (A) twenty-five percent (25%) shall vest on December 31
of the calendar year in which the grant date occurs and shall be paid out on
the basis of the satisfaction of performance criteria during such calendar
year; (B) twenty-five percent (25%) shall vest on December 31 of the
first calendar year following the year in which the grant date occurs and shall
be paid out on the basis of the satisfaction of performance criteria during
such first calendar year; (C) twenty-five percent (25%) shall vest on December 31
of the second calendar year following the year in which the grant date occurs
and shall be paid out on the basis of the satisfaction of performance criteria
during such second calendar year; and (D) twenty-five percent (25%) shall
vest on December 31 of the second calendar year following the year in
which the grant date occurs and shall be paid out on the basis of the cumulative
satisfaction of performance criteria during the three calendar years commencing
with the year in which the grant date occurs.

 

(v)         Subject to Section 7
below, the applicable portion of the LTI Award, if any, shall be paid to
Executive as soon as reasonably practicable following the applicable vesting date
and, in any event, not later than March 15 of the year following
the calendar year during which the LTI Award vested; provided
that Executive (x) is employed with the Company on the applicable vesting
date and (y) has not given or received a notice of termination of
employment without Good Reason or for Cause on or prior to such vesting date.

 

(d)                            Total
Direct Compensation Opportunity. 
The sum of Executive’s Salary, Target Annual Bonus and Target LTI shall be
referred to as his “Total Direct Compensation
Opportunity”; it being understood
that Total Direct Compensation Opportunity shall not include any other
compensation, including, but not limited to, the Retention Bonus (as defined in
Section 4(e) below), and benefits. 
Executive’s Total Direct Compensation Opportunity with respect to any
calendar year during the Initial Term commencing with 2010 shall
be not less than four percent (4%) more than Executive’s
prior year’s Total Direct Compensation Opportunity.

 

(e)                             Retention Bonus.  On the
Effective Date, Executive shall be entitled to receive from the Company
a retention bonus (the “Retention Bonus”)
in an aggregate amount equal to $1,400,000. 
Subject to Section 7 below, the Retention Bonus shall vest and be paid
out in eight (8) equal semi-annual installments commencing with the six (6) month
anniversary of the Effective Date; provided that
Executive (x) is employed with the Company on the applicable vesting date
and (y) has not given or received a notice of termination of employment
without Good Reason or for Cause on or prior to such vesting date.

 

(f)                               Taxes.  Any and all
amounts payable pursuant to this Agreement shall be less any and all applicable
federal, state and local payroll and withholding taxes.

 

5

 

(g)         Board.  If Executive is a member of the Board, he shall recuse
himself from any discussions and decision-making relating to his compensation,
benefits and performance; provided that
he shall be permitted to participate in such discussions (but not any
decision-making) at the invitation of the Board.

 

(h)         Post-December 31,
2008 Effective Date.  The parties
acknowledge their expectation that the Effective Date shall occur on or before December 31,
2008.  However, if the Effective Date
occurs after December 31, 2008, then the parties shall, in good faith,
make appropriate changes to this Agreement to reflect such delay.

 

5.                             Benefits and Other Rights.

 

(a)          The Company will provide
Executive with cash advances for or reimbursement of all reasonable
out-of-pocket business expenses incurred by Executive in connection with his
employment hereunder.  Such
reimbursement, which in all cases will be made no later than sixty (60) days
after Executive incurs the expense, is conditioned upon Executive adhering to
any and all reasonable policies established by Company from time to time with
respect to such reimbursements or advances, including, but not limited to, a
requirement that Executive submit supporting evidence of any such expenses to
the Company.

 

(b)         The Company will provide
Executive and his family with the opportunity to receive group medical coverage
under the terms of the Company’s health insurance plan.  In
addition, Executive and his eligible dependents shall be eligible to
participate in all other employee benefit programs applicable to the Company’s
senior executives generally (including, but not limited to, those set forth
on Exhibit A attached hereto, during the period of eighteen
(18) months following the Effective Time, to the extent that Executive is eligible
to participate in the programs described therein as of the date hereof).

 

(c)          During the Term,
Executive shall be entitled to an aggregate of thirty-five (35) days of paid time off
(i.e., paid vacation and paid personal
days) and eight (8) days of federal holidays.  Unused paid time off shall not be carried over from
one year to the next.

 

6.                             Termination of the Agreement.

 

(a)          The Company shall have
the right to terminate this Agreement under the following circumstances:

 

	
  (i)

  	
  Executive
  shall die;

  
	
   

  	
   

  
	
  (ii)

  	
  With Cause,
  at any time upon not less than sixty (60) days’ prior written notice to
  Executive.

  
	
   

  	
   

  
	
  (iii)

  	
  Without Cause, at any
  time upon not less than sixty (60) days’ prior written notice to
  Executive.

  

 

6

 

(b)         Executive shall have the
right to terminate this Agreement under the following circumstances:

 

  (i)       Without Good Reason, at any
time upon not less than sixty (60) days’ prior written notice to the Company;
or

 

 (ii)       For Good Reason, effective at any time
upon written notice to the Company by Executive.

 

(c)          For purposes of this
Agreement, “Cause” shall mean:

 

  (i)       Executive shall be
convicted of the commission of a felony or a crime involving dishonesty, fraud
or moral turpitude;

 

 (ii)       Executive has engaged in
acts of fraud, embezzlement, theft or dishonest acts against the Company;

 

(iii)       Executive commits an act
which negatively and not insignificantly impacts the Company or its employees,
including, but not limited to, engaging in competition with the Company,
disclosing confidential information or engaging in sexual harassment,
discrimination or other human rights-type violations;

 

(iv)      Executive’s gross neglect or
willful misconduct in the discharge of his duties and responsibilities; or

 

 (v)      Executive’s repeated refusal
to follow the lawful direction of the Board or, if applicable, supervising
officers.

 

(d)         For purposes of this
Agreement, “Good Reason” shall mean the occurrence
of any one or more of the following events which continues uncured for a period
of not less thirty (30) days following written notice given by Executive to the
Company within ninety (90) days after the later of (x) the occurrence of such
event or (y) when Executive should have reasonably become aware of such
occurrence, unless Executive specifically agrees in writing that such
event shall not be Good Reason:

 

  (i)       Any material breach of this
Agreement by the Company;

 

 (ii)       Any failure to continue
Executive as an executive-level officer of the Company;

 

(iii)       A material diminution in
Executive’s duties; or assignment to him of duties that are materially
inconsistent with his duties or materially impair his ability to function as Executive
Vice President and Chief Legal and Compliance Officer; it being
understood that, effective as of the Effective Time, (A) a
change in or assignment of duties attributable to the Company not being a
public company, (B) Executive

 

7

 

not
being a member of the Board and (C) Executive reporting to Parent or an
affiliate of Parent shall not constitute Good Reason;

 

(iv)      The requirement by the
Company that Executive relocate his primary location of the performance of
his services under this Agreement outside of the metropolitan Atlanta, Georgia
area;
it being understood that overnight or
short-term business travel in connection with the performance of Executive’s
services under this Agreement shall not constitute Good Reason; or

 

(v)         The reduction in Executive’s
Total Direct Compensation Opportunity below the amounts contemplated by Section 4 above; it being understood that (A) such a reduction as
part of a broad-based and significant reduction of compensation generally of employees
and
senior executives of Parent’s U.S. operations, as discussed and agreed upon in
good faith with Executive, and (B) a change to the terms and conditions of
the LTIP following December 31, 2012 (provided that
the overall value of the LTIP remains substantially the same) shall not
constitute Good Reason.

 

7.                             Effect of Expiration or Termination of the
Agreement.  Promptly
following the termination of the Agreement, and, except as otherwise expressly
agreed to by the Company in writing:

 

(a)                             Executive
shall immediately resign from any and all other positions or committees which
Executive holds or is a member of with the Company or any affiliate of the
Company, including, but not limited to, as an officer and director of the
Company or any affiliate of the Company.

 

(b)                            Executive
shall provide the Company with all reasonable assistance necessary to permit
the Company to continue its business operations without interruption and in a
manner consistent with reasonable business practices; provided,
however, that such transition period shall not exceed thirty (30)
days after termination nor require more than twenty (20) hours of Executive’s
time per week and Executive shall be promptly paid for such time (at an hourly
rate commensurate with a pro rata portion of his Salary) as if his employment
were not terminated and shall be reimbursed for all out-of-pocket expenses.

 

(c)                             Executive
shall deliver to the Company possession of any and all property owned or leased
by the Company which may then be in Executive’s possession or under his
control, including, but not limited to, any and all such keys, credit cards,
automobiles, equipment, supplies, books, records, files, computer equipment,
computer software and other such tangible and intangible property of any
description whatsoever.  If,
following the expiration or termination of the Term, Executive shall receive
any mail addressed to the

 

8

 

Company, then Executive shall immediately
deliver such mail, unopened and in its original envelope or package, to the
Company.

 

(d)                            Other
than as provided in this Section 7, the Company shall cease all other
benefits and/or entitlements to participate in programs or benefits, if any, as
of the effective date of termination, except medical insurance coverage that may be
continued at Executive’s own expense as provided by applicable law or written
Company policy.

 

(e)                             Upon
termination of Executive’s employment on account of Executive’s death pursuant
to Section 6(a)(i) above, the Company shall pay to Executive’s
estate a lump sum amount (the “Death Payment”)
equal to the sum of (i) one year’s Salary as then in effect; (ii) the
Annual Bonus with respect to the calendar year during which such death occurs,
at target, prorated to reflect the number of days during such calendar year
during which Executive was employed; (iii) the portion of any outstanding
LTI Award that would have otherwise vested during the performance period in
which such death occurs, at target, prorated to reflect the number of days during
such calendar year during which Executive was employed (for the avoidance of
doubt, in the case of an annual performance period, one (1) year, and, in
the case of a three (3) cumulative performance period, three (3) years);
(iv) any outstanding Retention Bonus that would have otherwise vested
during the semi-annual period in which such death occurs, prorated to reflect
the number of days during such period during which Executive was employed; (v) any
accrued but unpaid Salary through the date of such death; (vi) any accrued
but unused paid time off through the date of such death; and (vii) any
unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was earned
or vested prior to the date of such death. 
The Death Payment shall be paid to Executive not later than thirty (30)
days after such death occurs.

 

(f)                               Upon
termination of Executive’s employment pursuant to Section 6(a)(ii) above
with Cause, Section 6(b)(i) above without Good Reason or Section 2
above
on account of Executive’s non-renewal of this Agreement, the Company shall pay
Executive any accrued but unpaid Salary through the date of such termination and any
accrued but unused paid time off through the date of such termination.

 

(g)                            Upon
termination of Executive’s employment pursuant to Section 6(a)(iii) above
without Cause or Section 6(b)(ii) above for Good Reason or Section 2
above
on account of the Company’s non-renewal of this Agreement, the Company shall
provide Executive with the following payments and benefits (the “Severance”):

 

(i)             payments
made in equal consecutive installments in accordance with the Company’s regular
payroll practices during the twelve (12) months following such termination
in an aggregate amount equal to the sum of (A) two (2) times the Salary at
the highest annual rate in effect during the Term; (B) two (2) times (x) the
Annual Bonus, if any,

 

9

 

earned by Executive for the calendar year
immediately preceding such termination or (y) if Executive was not eligible
to earn an Annual Bonus with respect to such year, the Target Annual Bonus;
plus (C) the balance of all outstanding unvested LTI Awards, at target, and
any outstanding unvested Retention Bonus;

 

(ii)          payment of
any unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was
earned or vested prior to the date of such termination; and

 

(iii)       Company-paid COBRA coverage
for Executive and his eligible dependents which shall be substantially
equivalent to that provided by the Company prior to termination of Executive’s
employment, until the earlier of (A) twenty-four (24) months after the
date of such termination or (B) Executive’s acceptance of replacement coverage
from a third-party employer.

 

The Company’s obligation to provide the
Severance is subject to Executive’s execution and non-revocation of a release
of claims against the Company and its affiliates in substantially
the form on Exhibit B attached hereto.  In addition, upon Executive’s breach of any
of the covenants set forth in Sections 8, 9 or 10 below, the Company’s obligation to
provide the Severance shall immediately cease.

 

In
addition, the Company shall pay Executive any accrued
but unpaid Salary through the date of such termination and any accrued but
unused paid time off through the date of such termination.  These accrued payments, together with the
payment described in Section 6(g)(ii) above, shall be paid to
Executive not later than thirty (30) days after the date of such termination.

 

(h)                            For the
avoidance of doubt, Executive acknowledges that, upon the effectiveness of this
Agreement, he shall not have any right to terminate his employment for Good
Reason (for this Section 7(h) only, as defined in the Existing
Employment Agreement) and receive any payments and benefits in connection
therewith.

 

(i)                                If
the Company or the Company’s accountants determine that any payment called for
under this Agreement either alone or in conjunction with any other payments or
benefits made available to Executive by the Company will result in Executive
being subject to an excise tax (“Excise Tax”)
under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or if an Excise Tax is assessed against Executive as
a result of such payment or other payments and benefits, the Company shall make
a Gross-Up Payment (as defined below) to or on behalf of Executive as and when
such determination(s) and assessment(s), as appropriate, are made, subject
to the conditions of this subsection (i).  A
“Gross-Up Payment” shall mean a payment
to or on behalf of Executive that shall be sufficient to pay (x) any
Excise Tax in full, (y) any federal, state and local income tax and Social
Security or other employment tax on the

 

10

 

payment made to pay such Excise Tax as well
as any additional Excise Tax on the Gross-Up Payment and (z) any interest
or penalties assessed by the Internal Revenue Service or any other applicable
taxing authority on Executive if such interest or penalties are attributable to
the Company’s failure to comply with its obligations under this subsection (i) or
applicable law.  Any
determination under this subsection (i) by the Company or the Company’s
accountants shall be made in accordance with Section 280G of the Code
(including any applicable related regulations (whether proposed, temporary or
final), any related Internal Revenue Service rulings and any related case law),
and shall assume that Executive shall pay Federal income taxes at the highest
marginal rate in effect for the year in which the Gross-Up Payment is made and
state and local income taxes at the highest marginal rate in effect in the
state of Executive’s residence for such year.  Executive
shall take such action (other than waiving Employee’s right to any payments or
benefits) as the Company reasonably requests under the circumstances to
mitigate or challenge such tax. If the Company reasonably requests that
Executive take action to mitigate or challenge any such tax or assessment and
Executive complies with such request, the Company shall provide Executive with
such information and such expert advice and assistance from the Company’s
accountants, lawyers and other advisors as Executive may reasonably request and
shall pay for all expenses incurred in effecting such compliance and any
related fines, penalties, interest and other assessments. Subject to the
provisions of this subsection (i), all determinations required to be made under
this subsection (i), including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by an independent public
accounting firm retained by the Company (the “Accounting
Firm”), which shall provide detailed supporting calculations both to
the Company and Executive within thirty (30) business days of the receipt of
notice from the Company or Executive, with a copy to the other party, that
there has been a payment that could trigger a Gross-Up Payment, or such earlier
time as is requested by the Company (collectively, the “Determination”), which
shall be binding upon the Company and Executive.  All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and the Company shall enter into any agreement reasonably requested by the
Accounting Firm in connection with the performance of the services hereunder.  The Gross-Up Payment under this
subsection (i) shall be made no later than sixty (60) days following such
payments; provided that the Gross-Up Payment shall
in all events be paid no later than the end of Executive’s taxable year next
following the Executive’s taxable year in which the Excise Tax (and any income
or other related taxes or interest or penalties thereon) on a payment
are remitted to the Internal Revenue Service or any other applicable taxing
authority.  As a result of any
uncertainty in the application of Section 4999 of the Code at the time of
the Determination, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (“Underpayment”)
or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to
be made hereunder.  In the event that Executive
thereafter is required

 

11

 

to make payment of any additional Excise Tax,
any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) shall be promptly paid by the Company to or for the benefit of
Executive.  In the
event the amount of the Gross-Up Payment exceeds the amount necessary to
reimburse Executive for his Excise Tax as herein set forth, such Overpayment
(together with interest at the rate provided in Section 1274(b)(2) of
the Code) shall be promptly paid by Executive to or for the benefit of the
Company.  Executive shall cooperate, to
the extent Executive’s expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.  The Company’s obligation to provide
the Gross-Up Payment is subject to Executive’s execution and non-revocation of
a release of claims against the Company and its affiliates in substantially
the form on Exhibit B attached hereto.

 

(j)             Notwithstanding any
other provision of this Agreement, if at the time of termination of Executive’s
employment he is a “specified employee” (as defined in Section 409A of the
Code) and any payment upon such termination under this Section 7 will
result in additional tax or interest to Executive under Section 409A of
the Code (including any applicable related regulations (whether proposed,
temporary or final), any related Internal Revenue Service rulings and any
related case law), he will not be entitled to such payments until the earlier
of (i) the date that is six (6) months after such termination of
employment or (ii) any earlier date that does not result in any additional
tax or interest to Executive under Section 409A of the Code.  In addition, if any provision of this
Agreement would subject Executive to any additional tax or interest under Section 409A
of the Code, then the Company shall reform such provision; provided
that the Company shall (x) maintain, to the maximum extent practicable,
the original intent of the applicable provision without subjecting Executive to
such additional tax or interest and without substantively reducing the amount payable
under such provision and (y) not incur any additional compensation
expense as a result of such reformation.

 

8.                             Confidentiality. Executive
hereby agrees that, other than in the ordinary course of performing his duties
for the Company, he shall not, directly or indirectly, at any time (whether
during or after termination of Executive’s employment with the Company for any
reason), intentionally or negligently divulge to any person or entity other
than the Company or any affiliate, without the Company’s express written
authorization, any information known to him to constitute trade secrets or
proprietary information belonging to the Company or any of its affiliates, or
other confidential financial information, operating budgets, strategic plans,
or research methods, projects or plans of the Company or any of its affiliates,
received or created by him in the course of his employment by the Company or in
connection with his duties with the Company (“Confidential
Information”).  Anything
herein to the contrary notwithstanding, the provisions of this Section 8
shall not apply (i) when disclosure is required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order Executive to disclose or
make accessible any information, (ii) with respect to any other
litigation, arbitration or

 

12

 

mediation
involving this Agreement, including, but not limited to, the enforcement of
this Agreement, or (iii) as to Confidential Information that becomes
generally known to the public or within the relevant trade or industry other
than due to Executive’s violation of this Section 8.

 

9.                             Nonsolicitation.  During Executive’s employment with the
Company and for a period specified below following the termination of Executive’s
employment for any reason (the “Relevant Period”),
Executive shall not, directly or indirectly:

 

(a)                             induce
or attempt to induce any employee of the Company or any of its affiliates to be
employed or to perform services elsewhere;

 

(b)                            hire
any employee of the Company or of any of its affiliates to be employed or to
perform services elsewhere; provided that
Executive may hire such employees if their employment is terminated by the
Company; or

 

(c)                             solicit
or attempt to solicit the trade of any individual or entity which, at the time
of such solicitation, is a customer of the Company or any of its subsidiaries,
or which the Company or any of its subsidiaries is undertaking reasonable steps
to procure as a customer at the time of or immediately preceding termination of
employment; provided, however, that this limitation (i) shall
not
apply to any wholesalers and (ii) shall only apply to any product
or service which is in competition with a product or service of the Company or
any of its subsidiaries.

 

The Relevant Period shall be twenty-four (24)
months in the case of Sections 9(a) and 9(b) above and twelve (12)
months in the case of Section 9(c) above.

 

10.                       Nondisparagement.  Executive will not at any time (whether
during or after termination of Executive’s employment with the Company for any
reason) knowingly make any statement, written or oral, or take any other action
that disparages or otherwise harms the Company, its business or reputation or
the reputation of any of its affiliates or the officers and directors of any of
them.

 

11.                       Remedies.  The covenants of Sections 8, 9 and 10 below shall
form the basis of injunctive relief and damages including expenses of
litigation (including, but not limited to, reasonable attorney’s fees upon
trial and appeal) suffered by the Company arising out of any breach of the
aforesaid covenants by Executive.

 

12.                       Indemnification.

 

(a)                             The
Company shall indemnify Executive and hold Executive harmless from and against
any and all liabilities, suits, claims, actions, causes of action, judgments,
settlements, debts and expenses (including actually and reasonably incurred
legal fees and costs) of any kind whatsoever arising from and in connection
with Executive’s employment with the Company and its affiliates, other
than any arising from Executive’s willful or criminal misconduct or gross
negligence (separately and collectively, the “Indemnifiable Claims”)
to the fullest

 

13

 

extent permitted by law.  The Company shall control Executive’s
defense against any such Indemnifiable Claims, and Executive
agrees to cooperate with the Company to mitigate costs, expenses and
other damages associated with such Indemnifiable Claims and to cooperate fully in
such defense.  The Company agrees that,
for purposes of this Section 12(a), it shall interpret and/or
apply any provision of applicable law (and, as applicable, the bylaws and/or
other organizational documents of the Company and its applicable affiliates)
with respect to Executive in a manner not less favorable than how such provision is
interpreted and applied by the Company to then active directors and officers of
the Company.

 

(b)                            The Company
shall, as of the Effective Time, cause Executive to be covered under a
prepaid directors’ and officers’ liability insurance policy on terms and
conditions no less advantageous to such individuals than the Company’s
directors’ and officers’ liability insurance policy existing as of the date hereof (the “D&O Insurance”), during the Term and for a period of
not less than six (6) years after the termination of this Agreement, but
only to the extent related to actions or omissions of such officers and
directors in their capacities as such; provided, that
in no event shall the Surviving Corporation be required, in order to maintain or procure
insurance coverage pursuant hereto, to (i) expend more than $20,000
for the
“tail” portion of such insurance or (ii) pay annual premiums for the
non-”tail” portion of such insurance that are materially greater than for comparable
coverage obtained by comparable companies on the date hereof, subject to
reasonable increase from time to time  (collectively,
the “Maximum Amount”); provided,
further, that if the amount of the annual premiums necessary to
maintain or procure such insurance coverage exceeds the Maximum Amount, the
Surviving Corporation shall procure and maintain during the Term and for
such six (6) year period as much coverage as is available for the
Maximum Amount.  The Company shall have the
right to cause coverage to be extended under the D&O Insurance by obtaining
a “tail” policy on terms and conditions no less advantageous to such former
directors or officers than the D&O Insurance, and such “tail” policy shall
satisfy the provisions of this Section 12(b).

 

(c)                             Nothing
in this Agreement shall operate to limit or extinguish any right to
indemnification, advancement of expenses, or contribution that Executive would
otherwise have, including, but not limited to, by agreement or under applicable
law.

 

13.                       Enforcement Costs. If any legal
action or other proceeding is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any provisions of this Agreement, the successful or prevailing
party shall be entitled to recover reasonable attorney’s fees, court costs and
all expenses, even if not taxable as court costs (including, but not limited
to, all such fees, costs and expenses incident to appeal and other
post-judgment proceedings), incurred in that action or proceeding, in addition
to any other relief to which such party may be entitled. Attorneys’ fees shall
include, without limitation, paralegal fees, investigative

 

14

 

fees, administrative costs,
sales and use taxes and all other charges billed by the attorney to the
prevailing party.

 

14.                       Notices. Any and all notices
necessary or desirable to be served hereunder shall be in writing and shall be:

 

(a)                    Personally
delivered, or

 

(b)                   Sent by certified
mail, postage prepaid, return receipt requested, or guaranteed overnight
delivery by a nationally recognized express delivery company, in each case
addressed to the intended recipient at the address set forth below.

 

For notices sent to the Company:

 

Sciele Pharma, Inc.

Five Concourse Parkway, Suite 1800

Atlanta, Georgia 30328

Attn: Chief Executive Officer

Facsimile: (678) 992-1043

 

For notices sent to Executive:

 

Leslie
Zacks

509 Princeton Way

Atlanta, GA 30307

 

Either party may amend the addresses for
notices to such party hereunder by delivery of a written notice thereof
served upon the other party as provided herein. Any notice sent by certified
mail as provided above shall be deemed delivered on the third (3rd) business
day next following the postmark date which it bears.

 

15.                       Entire Agreement. This Agreement
sets forth the entire agreement of the parties hereto with respect to the
subject matter hereof, and specifically supersedes any other agreement or
understanding among the parties hereto related to the subject matter hereof,
including, but not limited to, as of the Effective Date, the Existing
Employment Agreement and any other agreement covering the subject
matter hereof (including, but not limited to, indemnification and directors’ and officer’s
insurance).  This Agreement may not be
modified or revised except pursuant to a written instrument signed by the party
against whom enforcement is sought.

 

16.                       Severability. In the event that any
provision or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions or portions of this
Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law.

 

15

 

17.                       Waiver. Failure to
insist upon strict compliance with any of the terms or conditions hereof shall
not be deemed a waiver of such term or condition, and the waiver or
relinquishment of any right or remedy hereunder at any one or more times shall
not be deemed a waiver or relinquishment of such right or remedy at any other
time or times.

 

18.                       Arbitration. Any claims,
disputes or controversies arising out of or relating to this Agreement between
the parties shall be submitted to arbitration by the parties. The arbitration
shall be conducted in Atlanta, Georgia in accordance with the rules of the
American Arbitration Association then in existence and the following
provisions: Either party may serve upon the other party by guaranteed overnight
delivery by a nationally recognized express delivery service, written demand
that the dispute, specifying in detail its nature, be submitted to arbitration.
Within seven (7) business days after the service of such demand, each of
the parties shall appoint an arbitrator and serve written notice by guaranteed
overnight delivery by a nationally recognized express delivery service, of such
appointment upon the other party. The two arbitrators appointed shall appoint a
third arbitrator. The decision of two arbitrators in writing under oath shall
be final and binding upon the parties. The arbitrators shall decide who is to
pay the expenses of the arbitration. If the two arbitrators appointed fail to
agree upon a third arbitrator within ten (10) days after their
appointment, then an application may be made by either party, upon notice to
the other party, to any court of competent jurisdiction for the appointment of
a third arbitrator, and any such appointment shall be binding upon both
parties.

 

19.                       Governing
Law.  This Agreement and the rights
and obligations of the parties hereto shall be governed by and construed in
accordance with the law of the State of Georgia, without regard to its
conflicts of laws provisions. Subject to Section 18 above, each party hereto hereby (a) agrees
that the state and federal courts of the Northern District of Georgia shall
have exclusive jurisdiction and venue of any litigation which may be initiated
with respect to this Agreement or to enforce rights granted hereunder and (b) consents
to the personal jurisdiction and venue of such courts for such purposes.

 

20.                       Benefit
and Assignability.  This
Agreement shall inure to the benefit of and be binding upon the Company and its
successors and assigns. The rights and obligations of Executive hereunder are
personal to him, and are not subject to voluntary or involuntary alienation,
transfer, delegation or assignment.

 

[Signatures on Next Page]

 

16

 

IN WITNESS WHEREOF, the parties hereto have executed
this Amended and Restated Employment Agreement as of the day and year first
above written.

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Leslie Zacks

  
	
   

  	
  Name: Leslie Zacks

  
	
   

  	
   

  
	
   

  	
  COMPANY:
  

  
	
   

  	
   

  
	
   

  	
  SCIELE
  PHARMA, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Patrick P. Fourteau

  
	
   

  	
   

  	
  Name:
  Patrick P. Fourteau

  

 

17

 

Exhibit A

Benefits

 

	
  Executive Supplemental Life Insurance

  	
   

  	
  $500,000 policy; builds projected cash value to cover premiums on a
  $250,000 policy at age 55 or in four (4) years if over 55.

  
	
   

  	
   

  	
   

  
	
  Executive Supplemental Disability Coverage

  	
   

  	
  Individual, portable disability policy targeted to provide
  approximately 66 2/3 % of pay combined with Group LTD policy. Policy amounts
  are reviewed every two (2) years.

  
	
   

  	
   

  	
   

  
	
  Annual Executive Physical

  	
   

  	
  Provided through Emory University’s Executive Healthcare System.

  
	
   

  	
   

  	
   

  
	
  Financial Planning

  	
   

  	
  Financial planning and tax preparation assistance provided through a
  local Atlanta firm.

  
	
   

  	
   

  	
   

  
	
  Company
  Executive Deferred Compensation Plan

  	
   

  	
  Allows deferral of up to 75% of salary and up to 100% of annual
  and long-term incentive awards.

  

 

A-1

 

Exhibit B

 

WAIVER AND RELEASE AGREEMENT

 

This
Waiver and Release Agreement (this “Agreement”) is
made and entered into as of the
         day of
                    ,
20    , by and between Sciele Pharma, Inc., a Delaware
corporation (the “Company”), and                         
(“Executive”).

 

1.                                       Release: 
Executive, for himself/herself, his/her heirs, agents, executors and
administrators, hereby releases and discharges the Company and its current and
former subsidiaries, parents, affiliates, joint ventures, officers, directors,
employees, partners, owners, attorneys and agents (collectively, the “Company Releasees”) from all debts, obligations, promises, covenants,
collective bargaining obligations, agreements, contracts, endorsements, bonds,
controversies, suits or causes of actions known or unknown, suspected or
unsuspected, of every kind and nature whatsoever, which may heretofore have
existed or which may now exist, including, but not limited, to those arising
under the Age Discrimination in Employment Act, as modified by the Older
Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964,
as amended, 42 U.S.C. Section 2000e et seq.,
the Worker Adjustment Retraining and Notification Act, 29 U.S.C. Section 2101,
et seq., the Employee Retirement Income
Security Act of 1974, as amended, 29 U.S.C. Section 1001 et seq., the Americans with Disabilities Act, as amended,
42 U.S.C. Section 12101 et seq., the
Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981
et seq., the Rehabilitation Act of 1973,
as amended, 29 U.S.C. Section 701 et seq., the
Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws regarding
employment discrimination and/or federal, state or local laws of any type or
description regarding employment, as well as any claim for breach of contract,
wrongful discharge, breach of any express or implied promise, misrepresentation,
fraud, retaliation, violation of public policy, infliction of emotional
distress, defamation, promissory estoppel, invasion of privacy or any other
theory or claim, whether legal or equitable, including, but not limited to, any
claims arising from or derivative of Executive’s employment with the Company
and Executive’s termination of employment with the Company or otherwise.  This release is for any and all relief,
without regard to its form or characterization. 
Executive acknowledges that he/she has not been discriminated against on
the basis of age, sex, handicap, race, ethnicity, religion or any other
protected class status.

 

THIS MEANS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE WILL HAVE WAIVED ANY RIGHT HE/SHE MAY HAVE TO BRING A LAWSUIT OR
MAKE ANY CLAIM OF ANY KIND WHATSOEVER AGAINST ANY OF THE COMPANY RELEASEES
BASED ON ANY ACTIONS OR OMISSIONS

 

B-1

 

OF ANY OF THE COMPANY RELEASEES ON OR PRIOR
TO THE DATE OF SIGNING THIS AGREEMENT.

 

2.                                       Covenant Not to Sue:  Executive understands and agrees that, to the
fullest extent permitted by law, Executive is precluded from filing or pursuing
any legal claim of any kind against any of the Company Releasees at any time in
the future, in any federal, state or municipal court, administrative agency or
other tribunal, arising out of any of the claims that Executive has released
and waived by virtue of executing this Agreement.  Executive agrees not to file or pursue any
such legal claims.  Excluded from this
release and covenant not to sue is any right or claim that cannot be waived by
law, including, but
not limited to, (a) any
rights or claims of the Executive that arise after this Agreement becomes
effective; (b) any vested rights under any tax-qualified and/or retirement
plan(s) maintained by the Company or its affiliates; (c) any rights
under any indemnification agreement(s) between the Executive and the
Company, any rights to and claims for indemnification or as an insured under
any directors’ and officers’ liability insurance policy in connection with the
Executive’s service as a director, officer, employee or agent of the Company or
any of its subsidiaries or affiliates, under their respective certificates of
incorporation and bylaws, or otherwise as provided by law; (d) Executive’s
right to participate in an investigation conducted by any government agency; (e) the
independent right and responsibility of the Equal Employment Opportunity
Commission (the “EEOC”) to enforce the law; (f) Executive’s
right to seek a determination of the validity of whether his/her waiver of
his/her rights under the ADEA was voluntary and knowing; (g) Executive’s
right to enforce this Agreement and (h) Executive’s right to receive
payments and benefits under Sections 7(g), 7(i), 12 and 13 of his/her Amended
and Restated Employment Agreement dated as of August     ,
2008.  Executive understands, however, that, while
this Agreement does not affect his/her right to file a charge or participate in
an investigation or proceeding conducted by the EEOC or any other federal,
state or local court or agency, it does bar any claim he/she might have to
receive monetary damages should any agency pursue any claims on Executive’s
behalf.

 

3.                                       Knowledge and Understanding:   Executive acknowledges that:

 

(a)                    he/she has been advised in writing
(by this Agreement) to consult with an attorney prior to executing this
Agreement;

 

(b)                   he/she has been given a period of
twenty-one (21) days to consider this Agreement and, if he/she elects to sign
it before that time, acknowledges that he/she has done so voluntarily; and

 

(d)                   he/she is fully aware of his/her
rights and has carefully read and has fully come to understand all provisions
of this Agreement before signing.

 

B-2

 

4.                                       Effective Date:  Executive will have seven (7) days after
signing this Agreement to revoke it.  Any
revocation will be in writing and addressed to [Name and
Address].  This Agreement will
not become effective until the earliest date after (a) both parties have
executed this Agreement and (b) Executive’s seven (7) day revocation
period has passed without revocation.

 

5.                                       Reasonable Cooperation:  Executive agrees to make himself/herself
reasonably available and to cooperate with the Company and its affiliates and
their respective counsel in connection with any investigation, administrative
proceeding or litigation relating to any matter in which he/she was involved or
of which he/she has knowledge as a result of his/her employment with the Company.  The Company shall reimburse the Executive for
reasonable expenses (including, but not limited to, lost wages, transportation
costs, and postage or telephone charges) that the Executive incurs in assisting
the Company or any affiliate pursuant to this Section 5 within fifteen
(15) days after the Company receives Executive’s request for reimbursement,
along with satisfactory written substantiation of the claimed expenses.

 

6.                                       Successors:  This Agreement will apply to Executive, as
well as his/her heirs, agents, executors and administrators.  The Agreement also will apply to, and inure
to the benefit of, the predecessors, successors and assigns of the Company and
its respective current and former subsidiaries, parents, affiliates, joint
ventures, officers, directors, employees, partners, owners, attorneys and
agents.

 

7.                                       Severability:  The parties explicitly acknowledge and agree
that the provisions of this Agreement are both reasonable and enforceable.  However, the provisions of this Agreement are
severable, and the invalidity of any one or more provisions will not affect or
limit the enforceability of the remaining provisions.  If any provision of this Agreement is held
unenforceable for any reason, then such provision will be enforced to the
maximum extent permitted by law.

 

8.                                       No Admission:  Executive acknowledges that neither the
Company’s execution of this Agreement nor the Company’s performance of its
terms shall constitute an admission by the Company of any wrongdoing by it or
any of the other Company Releasees with respect to Executive in connection with
any matter.

 

9.                                       Applicable Law:  This Agreement will be interpreted, enforced
and governed under the laws of the State of Georgia.

 

10.                                 Jurisdiction:  Any action brought by or on behalf of
Executive, his/her agents, heirs, administrators, or executors against any of
the Company Releasees relating to or arising from this Agreement or Executive’s
employment with or separation from the Company will be maintained in a court in
Atlanta, Georgia.

 

B-3

 

11.                                 Complete Agreement:  Executive represents and acknowledges that in
executing this Agreement he/she does not rely upon and has not relied upon any
representations or statements not set forth herein made by the Company or any
of the other Company Releasees with regard to the subject matter, basis or
effect of this Agreement or otherwise. 
It is mutually understood and agreed that this Agreement constitutes the
entire understanding between the Company and Executive relating to the subject
matter hereof.

 

The parties have each executed this Agreement
on the dates indicated below.

 

PLEASE READ CAREFULLY.  THIS AGREEMENT IS A LEGAL DOCUMENT AND
INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS, INCLUDING, BUT NOT LIMITED,
TO ALL CLAIMS AS REFERENCED ABOVE, TO THE FULLEST EXTENT PERMITTED BY LAW.

 

BY SIGNING THIS AGREEMENT, EXECUTIVE
ACKNOWLEDGES AND AFFIRMS THAT HE/SHE IS COMPETENT, THAT HE/SHE HAS BEEN
AFFORDED TWENTY-ONE (21) DAYS TO REVIEW AND CONSIDER THIS AGREEMENT WITH AN
ATTORNEY OF HIS/HER CHOICE AND HAS SEVEN (7) DAYS TO REVOKE HIS/HER
SIGNATURE, THAT HE/SHE HAS READ AND UNDERSTANDS AND ACCEPTS THIS DOCUMENT AS
FULLY AND FINALLY WAIVING AND RELEASING ANY AND ALL CLAIMS, DEMANDS, DISPUTES
AND ANY DIFFERENCES OF ANY KIND WHATSOEVER WHICH HE/SHE MAY HAVE HAD, NOW
HAS OR IN THE FUTURE MAY HAVE AGAINST THE COMPANY OR ANY OF THE OTHER
COMPANY RELEASEES ARISING OUT OF OR RELATING TO HIS/HER EMPLOYMENT WITH THE
COMPANY, HIS/HER COMPENSATION AND BENEFITS WITH THE COMPANY AND/OR HIS/HER
TERMINATION OF EMPLOYMENT WITH THE COMPANY UP TO AND INCLUDING THE DATE OF THIS
AGREEMENT, EXCLUDING CLAIMS THAT THE LAW DOES NOT PERMIT EXECUTIVE TO WAIVE BY
SIGNING THIS AGREEMENT, AND HE/SHE  FURTHER
ACKNOWLEDGES AND AFFIRMS THAT NO REPRESENTATIONS, PROMISES OR INDUCEMENTS HAVE
BEEN MADE TO HIM/HER EXCEPT AS SET FORTH IN THIS AGREEMENT, THAT HE/SHE  HAS SIGNED THIS AGREEMENT FREELY AND
VOLUNTARILY INTENDING TO BE LEGALLY BOUND

 

B-4

 

BY ITS TERMS, AND THAT HE/SHE HAS DONE SO
WITH FULL UNDERSTANDING OF ITS BINDING LEGAL CONSEQUENCES.

 

B-5

 

IN WITNESS WHEREOF, the parties hereto have executed
this Waiver and Release Agreement as of the day and year first above written.

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

B-6

 

WAIVER OF TWENTY-ONE (21) DAY REVIEW
PERIOD

 

I acknowledge that in connection with the foregoing Waiver and Release
Agreement (the “Agreement”) between Sciele Pharma, Inc.
(“Company”) and me, [Name of Executive],
the Company has advised me that pursuant to the Older Workers Benefit
Protection Act, I have twenty-one (21) days to review the
Agreement before I execute it and return it to the Company.

 

I hereby waive my right to this twenty-one
(21) day review period and wish to execute the Agreement prior to the
conclusion of this twenty-one (21) day period. 
However, I understand that I have seven (7) days to revoke this
waiver should I change my mind.  I
further understand that the Agreement shall not be binding on the Company or me
until seven (7) days after I sign the Agreement.

 

 

	
  BY:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  [Name of Executive]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED THIS        DAY OF
                                ,
  20    .

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCIELE PHARMA, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  	
   

  	
   

  
										

 

B-7Exhibit 10.5

 

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

 

This AMENDED AND RESTATED EMPLOYMENT
AGREEMENT (this “Agreement”) is made and entered
into as of the first day of September, 2008, by and between Sciele Pharma, Inc., a
Delaware corporation (the “Company”), and Larry
Dillaha (“Executive”), and shall become
effective as of the Effective Date (as defined below).

 

WITNESSETH:

 

WHEREAS, Executive is currently serving as Executive
Vice President and Chief Medical Officer of the Company pursuant to that
certain Amended and Restated Employment Agreement, dated as of December 26,
2007, by and between the Company and Executive (the “Existing Employment Agreement”);

 

WHEREAS, contemporaneously herewith, the
Company has entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Shionogi & Co. Ltd. (“Parent”) and Tall Bridge, Inc. (“Merger
Sub”), contemplating the acquisition by
Parent and Merger Sub of the Company, including the merger of the Company with
and into Merger Sub, with the Company as the surviving corporation;

 

WHEREAS, the parties desire to amend and
restate the terms and conditions of employment between the Company and
Executive, to be effective upon, and subject to, the consummation of the merger
of the Company and Merger Sub, as contemplated by the Merger Agreement (the “Merger”); and

 

WHEREAS, effective as of the Effective Date (provided that Executive is employed with the Company as of
the Effective Date), this Agreement shall supersede the Existing
Employment Agreement.

 

NOW, THEREFORE, in consideration of Executive’s
continued employment, the covenants and mutual agreements set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto do hereby agree as follows:

 

1.                             Employment.
Throughout the Term (as defined in Section 2 below), the Company shall
employ Executive as provided herein, and Executive hereby accepts such
employment.  In accepting such employment,
Executive states that he is not now, and by accepting such employment, will not
be, under any restrictions in the performance of the duties contemplated under
this Agreement as a result of the provisions of any prior employment agreement
or non-compete or similar agreement to which Executive is or was a party.

 

2.                             Term of
Employment. The term of Executive’s employment by the Company
hereunder shall commence upon consummation of the Merger (the “Effective Date”) and shall continue until December 31,
2012, unless sooner terminated as a result of Executive’s death or in
accordance with the provisions of Section 6 below (the “Initial Term”).  At the
conclusion of the Initial Term, this Agreement shall automatically renew 

 

1

 

for successive
one-year periods (each, a “Renewal  Term”, and collectively with the Initial Term, the “Term”) unless notice is provided by either party of its or his intent
not to renew this Agreement at least ninety (90) days prior to the conclusion of the
Initial Term or any Renewal Term.  Any
election by the Company not to renew this Agreement at the conclusion of the
Initial Term or any Renewal Term shall be deemed a termination without Cause (as
defined in Section 6(c) below) by the Company pursuant to Section 6(a)(iii) below
for all purposes of this Agreement, and any election by Executive not to renew this
Agreement at the conclusion of the Initial Term or any Renewal Term shall be
deemed a termination without Good Reason (as defined in Section 6(d) below)
by Executive pursuant to Section 6(b)(i) below for all
purposes of this Agreement.  In the
event that Executive’s employment with the Company terminates for any reason prior to
the Effective Date or the Merger does not occur for any reason, this
Agreement shall be void ab initio without
further action on the part of either party.

 

3.                             Duties.
Throughout the Term, and except as otherwise expressly provided herein,
Executive shall be employed by the Company as the Executive Vice President and Chief Medical
Officer of the Company.  Executive
shall devote his full time to the performance of his duties as Executive
Vice President and Chief Medical Officer of the Company in accordance
with the Company’s bylaws, this Agreement and the directions of the Company’s
Board of Directors (the “Board”) and, if
applicable, any executive officer of the Company who is senior to Executive.  Without limiting the generality of the
foregoing, throughout the Term, Executive shall faithfully perform his duties
as Executive
Vice President and Chief Medical Officer at all times so as to promote
the best interests of the Company.

 

4.                             Compensation.

 

(a)                    Salary. For any and all services performed by Executive
under this Agreement during the Term, in whatever capacity, the Company shall
pay to Executive an annual base salary (the “Salary”).
 The Salary shall be paid in the same
increments as the Company’s normal payroll, but no less frequently than
bi-monthly and prorated, however, for any period of less than a full month.  The Salary for the remainder of calendar year
2008 will remain $260,000 per annum, the Salary for calendar year 2009 will be
$342,500 per annum, and the Salary for calendar year 2010 will be $425,000 per
annum.  Thereafter, the Salary
will be reviewed annually by the Board, commencing with calendar year 2011,
and a determination shall be made by the Board at that time as to the amount of
the increase thereto for the following calendar year; provided that
Executive’s Salary with respect to any calendar year during the Initial Term commencing
with 2011 shall be not less than four percent (4%)
more than Executive’s prior year’s Salary.  Except
as described in Section 6(d) below, the Salary shall not be decreased
during the Term without the consent of Executive.

 

(b)                   Annual Bonus.

 

(i)             Executive’s
annual incentive compensation bonus with respect to calendar year 2008 shall be
paid in accordance with the terms 

 

2

 

and
conditions of the annual incentive compensation plan in which he participates
as of the date hereof, other than with respect to the amount payable under such
plan, which shall be guaranteed to be paid at target.

 

(ii)          With
respect to each calendar year during the Term commencing with 2009,
Executive shall be eligible to receive from the Company an annual incentive
compensation bonus (the “Annual Bonus”)
in a target amount equal to a percentage of the Salary for such
year (the “Target Annual Bonus”).  With respect to calendar year 2009, (A) the
Target Annual Bonus shall be an amount equal to fifty percent (50%) of the
Salary for calendar year 2009; and (B) the performance criteria shall be
mutually agreed upon following the date hereof and prior to the Effective
Date.  With respect to calendar year 2010
and thereafter during the Term, the Target Annual Bonus and performance
criteria shall be determined by the Board in its sole discretion; provided that Executive’s Target Annual Bonus shall be not
less than Executive’s prior year’s Target Annual Bonus.

 

(iii)       Except
as described in Section 6(d) below, the Target Annual Bonus shall not be
decreased during the Term without the consent of Executive.

 

(iv)      Satisfaction
of performance criteria, which determination shall be made
by the Board in its sole discretion, (A) below eighty percent (80%) shall result in
no payout of the Annual Bonus; (B) at eighty percent (80%) shall result in
a payout of the Annual Bonus at sixty-five percent (65%) of the Target Annual
Bonus; (C) above eighty percent (80%) and at or below one hundred percent
(100%) shall result in a payout of the Annual Bonus in an amount equal to the
Target Annual Bonus multiplied by the Annual Bonus Medium Multiplication
Factor, where the “Annual Bonus Medium
Multiplication Factor” equals the sum of sixty-five percent (65%)
plus the product of one-and-three-quarters percent (1.75%) multiplied by the
number of percentage points above eighty percent (80%) by which the performance
criteria are satisfied; provided that
the Annual Bonus Medium Multiplication Factor shall not exceed one hundred
percent (100%); and (D) above one hundred percent (100%) shall result in a
payout of the Annual Bonus in an amount equal to the Target Annual Bonus
multiplied by the Annual Bonus High Multiplication Factor, where the “Annual Bonus High Multiplication Factor” equals the sum of
one hundred percent (100%) plus the product of five percent (5%) multiplied by
the number of percentage points above one hundred percent (100%) by which the
performance criteria are satisfied; provided that
the Annual Bonus High Multiplication Factor shall not exceed two hundred
percent (200%) (for example, if the performance criteria were satisfied at a
92.3% level, then the Annual Bonus would be paid out at 86.525 of the Target
Annual Bonus and, if the performance criteria were satisfied at a 105.4% level,
then the applicable 

 

3

 

portion
of the Annual Bonus would be paid out at 127% of the Target Annual Bonus).

 

(v)         Subject
to Section 7 below, the Annual Bonus, if any, shall be paid to
Executive not later than March 15 of the year following the calendar year
with respect to which the Annual Bonus was earned; provided that
Executive (x) is employed with the Company on December 31 of such
calendar year and (y) has not given or received a notice of termination of
employment without Good Reason or for Cause on or prior to such December 31.

 

(c)          Long-Term
Incentive Compensation. On January 1 of each calendar year during the
Term commencing with 2009, Executive shall be eligible to receive
from the Company an award under the Company’s long-term incentive
compensation plan (such plan, the “LTIP” and any
such award, a “LTI Award”) in a target
amount equal to a fixed amount (the “Target LTI”).

 

(i)             With
respect to calendar year 2009, (A) the Target LTI shall be $886,250; and (B) the
performance criteria shall be mutually agreed upon following the date hereof
and prior to the Effective Date.  With
respect to calendar year 2010 and thereafter during the Term, the Target
LTI and performance criteria (which shall be based on earnings before interest,
taxes, depreciation and amortization (EBITDA)) shall be determined by the Board
in its sole discretion.

 

(ii)          Except
as described in Section 6(d) below, from the end of the Initial Term,
the Target
LTI shall not be decreased during the Term without the consent of
Executive.

 

(iii)       Satisfaction
of performance criteria, which determination shall be made
by the Board in its sole discretion, (A) below eighty percent (80%) shall result in
no payout of the applicable portion of the LTI Award; (B) at eighty
percent (80%) shall result in a payout of the applicable portion of the LTI
Award at seventy percent (70%) of the Target LTI; and (C) above eighty
percent (80%) shall result in a payout of the applicable portion of the LTI Award
in an amount equal to the Target LTI multiplied by the LTI Multiplication
Factor, where the “LTI  Multiplication Factor” equals the sum of seventy percent
(70%) plus the product of one-and-one-half percent (1.5%) multiplied by the
number of percentage points above eighty percent (80%) by which the performance
criteria are satisfied; provided that
the LTI Multiplication Factor shall not exceed one hundred percent (100%) (for
example, if the performance criteria were satisfied at a 92.3% level, then the
applicable portion of the LTI Award would be paid out at 88.45% of the Target
LTI and, if the performance criteria were satisfied at a 105.4% level, then the
applicable portion of the LTI Award would be paid out at 100% of the Target
LTI).

 

4

 

(iv)      Each LTI
Award shall vest as follows: (A) twenty-five percent (25%) shall vest on December 31
of the calendar year in which the grant date occurs and shall be paid out on
the basis of the satisfaction of performance criteria during such calendar
year; (B) twenty-five percent (25%) shall vest on December 31 of the
first calendar year following the year in which the grant date occurs and shall
be paid out on the basis of the satisfaction of performance criteria during such
first calendar year; (C) twenty-five percent (25%) shall vest on December 31
of the second calendar year following the year in which the grant date occurs
and shall be paid out on the basis of the satisfaction of performance criteria
during such second calendar year; and (D) twenty-five percent (25%) shall
vest on December 31 of the second calendar year following the year in
which the grant date occurs and shall be paid out on the basis of the
cumulative satisfaction of performance criteria during the three calendar years
commencing with the year in which the grant date occurs.

 

(v)         Subject to Section 7
below, the applicable portion of the LTI Award, if any, shall be paid to
Executive as soon as reasonably practicable following the applicable vesting date
and, in any event, not later than March 15 of the year following
the calendar year during which the LTI Award vested; provided
that Executive (x) is employed with the Company on the applicable vesting
date and (y) has not given or received a notice of termination of
employment without Good Reason or for Cause on or prior to such vesting date.

 

(d)                            Total
Direct Compensation Opportunity. 
The sum of Executive’s Salary, Target Annual Bonus and Target LTI shall be
referred to as his “Total Direct Compensation
Opportunity”; it being understood
that Total Direct Compensation Opportunity shall not include any other
compensation, including, but not limited to, the Retention Bonus (as defined in
Section 4(e) below), and benefits. 
Executive’s Total Direct Compensation Opportunity with respect to any
calendar year during the Initial Term commencing with 2010 shall
be not less than four percent (4%) more than Executive’s
prior year’s Total Direct Compensation Opportunity.

 

(e)                             Retention Bonus.  On the
Effective Date, Executive shall be entitled to receive from the Company
a retention bonus (the “Retention Bonus”)
in an aggregate amount equal to $1,400,000. 
Subject to Section 7 below, the Retention Bonus shall vest and be paid
out in eight (8) equal semi-annual installments commencing with the six (6) month
anniversary of the Effective Date; provided that
Executive (x) is employed with the Company on the applicable vesting date
and (y) has not given or received a notice of termination of employment
without Good Reason or for Cause on or prior to such vesting date.

 

(f)                               Taxes.  Any and all
amounts payable pursuant to this Agreement shall be less any and all applicable
federal, state and local payroll and withholding taxes.

 

5

 

(g)                            Board.  If Executive is a member of the Board, he shall recuse
himself from any discussions and decision-making relating to his compensation,
benefits and performance; provided that
he shall be permitted to participate in such discussions (but not any
decision-making) at the invitation of the Board.

 

(h)                            Post-December 31,
2008 Effective Date.  The parties
acknowledge their expectation that the Effective Date shall occur on or before December 31,
2008.  However, if the Effective Date
occurs after December 31, 2008, then the parties shall, in good faith,
make appropriate changes to this Agreement to reflect such delay.

 

5.                             Benefits and Other Rights.

 

(a)                             The
Company will provide Executive with cash advances for or reimbursement of all
reasonable out-of-pocket business expenses incurred by Executive in connection
with his employment hereunder.  Such
reimbursement, which in all cases will be made no later than sixty (60) days
after Executive incurs the expense, is conditioned upon Executive adhering to
any and all reasonable policies established by Company from time to time with
respect to such reimbursements or advances, including, but not limited to, a
requirement that Executive submit supporting evidence of any such expenses to
the Company.

 

(b)                            The
Company will provide Executive and his family with the opportunity to receive
group medical coverage under the terms of the Company’s health insurance plan.  In addition, Executive and his eligible
dependents shall be eligible to participate in all other employee benefit
programs applicable to the Company’s senior executives generally (including,
but not limited to, those set forth on Exhibit A attached hereto, during
the period of eighteen (18) months following the Effective Time, to the
extent that Executive is eligible to participate in the programs described
therein as of the date hereof).

 

(c)                             During
the Term, Executive shall be entitled to an aggregate of thirty-five (35) days of
paid time off (i.e., paid vacation and paid
personal days) and eight (8) days of federal holidays.  Unused paid time off shall not be carried over from
one year to the next.

 

6.                             Termination of the Agreement.

 

(a)                             The
Company shall have the right to terminate this Agreement under the following
circumstances:

 

	
  (i)

  	
  Executive
  shall die;

  
	
   

  	
   

  
	
  (ii)

  	
  With Cause,
  effective at any time upon written notice to Executive
  by the Company; or

  
	
   

  	
   

  
	
  (iii)

  	
  Without Cause,
  effective at any time upon written notice to Executive by the Company.

  

 

6

 

(b)                            Executive
shall have the right to terminate this Agreement under the following
circumstances:

 

  (i)       Without Good Reason, at any
time upon not less than sixty (60) days’ prior written notice to the Company;
or

 

 (ii)       For Good Reason, effective at any time
upon written notice to the Company by Executive.

 

(c)                             For
purposes of this Agreement, “Cause” shall
mean:

 

  (i)       Executive shall be
convicted of the commission of a felony or a crime involving dishonesty, fraud
or moral turpitude;

 

 (ii)       Executive has engaged in
acts of fraud, embezzlement, theft or dishonest acts against the Company;

 

(iii)       Executive commits an act
which negatively and not insignificantly impacts the Company or its employees,
including, but not limited to, engaging in competition with the Company,
disclosing confidential information or engaging in sexual harassment,
discrimination or other human rights-type violations;

 

(iv)      Executive’s gross neglect or
willful misconduct in the discharge of his duties and responsibilities; or

 

 (v)      Executive’s repeated refusal
to follow the lawful direction of the Board or, if applicable, supervising
officers.

 

(d)                            For
purposes of this Agreement, “Good Reason”
shall mean the occurrence of any one or more of the following events which
continues uncured for a period of not less thirty (30) days following written
notice given by Executive to the Company within ninety (90) days after the
later of (x) the occurrence of such event or (y) when Executive
should have reasonably become aware of such occurrence, unless Executive
specifically agrees in writing that such event shall not be Good Reason:

 

  (i)       Any material breach of this
Agreement by the Company;

 

 (ii)       Any failure to continue
Executive as an executive-level officer of the Company;

 

(iii)       A material diminution in
Executive’s duties; or assignment to him of duties that are materially
inconsistent with his duties or materially impair his ability to function as Executive
Vice President and Chief Medical Officer; it being understood
that, effective as of the Effective Time, (A) a change in or assignment of
duties attributable to the Company not being a public company, (B) Executive
not being a member 

 

7

 

of
the Board and (C) Executive reporting to Parent or an affiliate of Parent
shall not constitute Good Reason;

 

(iv)      The requirement by the
Company that Executive relocate his primary location of the performance of
his services under this Agreement outside of the metropolitan Atlanta, Georgia
area;
it being understood that overnight or
short-term business travel in connection with the performance of Executive’s
services under this Agreement shall not constitute Good Reason; or

 

 (v)      The reduction in Executive’s
Total Direct Compensation Opportunity below the amounts contemplated by Section 4 above; it being understood that (A) such a reduction as
part of a broad-based and significant reduction of compensation generally of employees
and
senior executives of Parent’s U.S. operations, as discussed and agreed upon in
good faith with Executive, and (B) a change to the terms and conditions of
the LTIP following December 31, 2012 (provided that
the overall value of the LTIP remains substantially the same) shall not
constitute Good Reason.

 

7.                             Effect of Expiration or Termination of the
Agreement.  Promptly
following the termination of the Agreement, and, except as otherwise expressly
agreed to by the Company in writing:

 

(a)                             Executive
shall immediately resign from any and all other positions or committees which
Executive holds or is a member of with the Company or any affiliate of the
Company, including, but not limited to, as an officer and director of the
Company or any affiliate of the Company.

 

(b)                            Executive
shall provide the Company with all reasonable assistance necessary to permit
the Company to continue its business operations without interruption and in a
manner consistent with reasonable business practices; provided,
however, that such transition period shall not exceed thirty (30)
days after termination nor require more than twenty (20) hours of Executive’s
time per week and Executive shall be promptly paid for such time (at an hourly
rate commensurate with a pro rata portion of his Salary) as if his employment
were not terminated and shall be reimbursed for all out-of-pocket expenses.

 

(c)                             Executive
shall deliver to the Company possession of any and all property owned or leased
by the Company which may then be in Executive’s possession or under his
control, including, but not limited to, any and all such keys, credit cards, automobiles,
equipment, supplies, books, records, files, computer equipment, computer
software and other such tangible and intangible property of any description
whatsoever.  If, following the expiration
or termination of the Term, Executive shall receive any mail addressed to the 

 

8

 

Company, then Executive shall immediately
deliver such mail, unopened and in its original envelope or package, to the
Company.

 

(d)                            Other
than as provided in this Section 7, the Company shall cease all other
benefits and/or entitlements to participate in programs or benefits, if any, as
of the effective date of termination, except medical insurance coverage that may be
continued at Executive’s own expense as provided by applicable law or written
Company policy.

 

(e)                             Upon
termination of Executive’s employment on account of Executive’s death pursuant
to Section 6(a)(i) above, the Company shall pay to Executive’s
estate a lump sum amount (the “Death Payment”)
equal to the sum of (i) one year’s Salary as then in effect; (ii) the
Annual Bonus with respect to the calendar year during which such death occurs,
at target, prorated to reflect the number of days during such calendar year
during which Executive was employed; (iii) the portion of any outstanding
LTI Award that would have otherwise vested during the performance period in
which such death occurs, at target, prorated to reflect the number of days
during such calendar year during which Executive was employed (for the
avoidance of doubt, in the case of an annual performance period, one (1) year,
and, in the case of a three (3) cumulative performance period, three (3) years);
(iv) any outstanding Retention Bonus that would have otherwise vested
during the semi-annual period in which such death occurs, prorated to reflect
the number of days during such period during which Executive was employed; (v) any
accrued but unpaid Salary through the date of such death; (vi) any accrued
but unused paid time off through the date of such death; and (vii) any
unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was earned
or vested prior to the date of such death. 
The Death Payment shall be paid to Executive not later than thirty (30)
days after such death occurs.

 

(f)                               Upon
termination of Executive’s employment pursuant to Section 6(a)(ii) above
with Cause, Section 6(b)(i) above without Good Reason or Section 2
above
on account of Executive’s non-renewal of this Agreement, the Company shall pay
Executive any accrued but unpaid Salary through the date of such termination and any
accrued but unused paid time off through the date of such termination.

 

(g)                            Upon
termination of Executive’s employment pursuant to Section 6(a)(iii) above
without Cause or Section 6(b)(ii) above for Good Reason or Section 2
above
on account of the Company’s non-renewal of this Agreement, the Company shall
provide Executive with the following payments and benefits (the “Severance”):

 

(i)             payments
made in equal consecutive installments in accordance with the Company’s regular
payroll practices during the twelve (12) months following such termination
in an aggregate amount equal to the sum of (A) two (2) times the Salary at
the highest annual rate in effect during the Term; (B) two (2) times (x) the
Annual Bonus, if any, 

 

9

 

earned by Executive for the calendar year
immediately preceding such termination or (y) if Executive was not
eligible to earn an Annual Bonus with respect to such year, the Target Annual
Bonus; plus (C) the balance of all
outstanding unvested LTI Awards, at target, and any outstanding unvested Retention
Bonus;

 

(ii)          payment of
any unpaid Annual Bonus, LTI Award or Retention Bonus, in each case that was
earned or vested prior to the date of such termination; and

 

(iii)       Company-paid COBRA coverage
for Executive and his eligible dependents which shall be substantially
equivalent to that provided by the Company prior to termination of Executive’s
employment, until the earlier of (A) twenty-four (24) months after the
date of such termination or (B) Executive’s acceptance of replacement coverage
from a third-party employer.

 

The Company’s obligation to provide the
Severance is subject to Executive’s execution and non-revocation of a release
of claims against the Company and its affiliates in substantially
the form on Exhibit B attached hereto.  In addition, upon Executive’s breach of any
of the covenants set forth in Sections 8, 9 or 10 below, the Company’s obligation to
provide the Severance shall immediately cease.

 

In
addition, the Company shall pay Executive any accrued
but unpaid Salary through the date of such termination and any accrued but
unused paid time off through the date of such termination.  These accrued payments, together with the
payment described in Section 6(g)(ii) above, shall be paid to
Executive not later than thirty (30) days after the date of such termination.

 

(h)                            For the
avoidance of doubt, Executive acknowledges that, upon the effectiveness of this
Agreement, he shall not have any right to terminate his employment for Good
Reason (for this Section 7(h) only, as defined in the Existing
Employment Agreement) and receive any payments and benefits in connection
therewith.

 

(i)                                If
the Company or the Company’s accountants determine that any payment called for
under this Agreement either alone or in conjunction with any other payments or
benefits made available to Executive by the Company will result in Executive
being subject to an excise tax (“Excise Tax”)
under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), or if an Excise Tax is assessed against Executive as
a result of such payment or other payments and benefits, the Company shall make
a Gross-Up Payment (as defined below) to or on behalf of Executive as and when
such determination(s) and assessment(s), as appropriate, are made, subject
to the conditions of this subsection (i).  A
“Gross-Up Payment” shall mean a payment
to or on behalf of Executive that shall be sufficient to pay (x) any
Excise Tax in full, (y) any federal, state and local income tax and Social
Security or other employment tax on the 

 

10

 

payment made to pay such Excise Tax as well
as any additional Excise Tax on the Gross-Up Payment and (z) any interest
or penalties assessed by the Internal Revenue Service or any other applicable
taxing authority on Executive if such interest or penalties are attributable to
the Company’s failure to comply with its obligations under this subsection (i) or
applicable law.  Any
determination under this subsection (i) by the Company or the Company’s
accountants shall be made in accordance with Section 280G of the Code
(including any applicable related regulations (whether proposed, temporary or
final), any related Internal Revenue Service rulings and any related case law),
and shall assume that Executive shall pay Federal income taxes at the highest
marginal rate in effect for the year in which the Gross-Up Payment is made and
state and local income taxes at the highest marginal rate in effect in the
state of Executive’s residence for such year.  Executive
shall take such action (other than waiving Employee’s right to any payments or
benefits) as the Company reasonably requests under the circumstances to
mitigate or challenge such tax. If the Company reasonably requests that
Executive take action to mitigate or challenge any such tax or assessment and
Executive complies with such request, the Company shall provide Executive with
such information and such expert advice and assistance from the Company’s
accountants, lawyers and other advisors as Executive may reasonably request and
shall pay for all expenses incurred in effecting such compliance and any
related fines, penalties, interest and other assessments. Subject to the
provisions of this subsection (i), all determinations required to be made under
this subsection (i), including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by an independent public
accounting firm retained by the Company (the “Accounting
Firm”), which shall provide detailed supporting calculations both to
the Company and Executive within thirty (30) business days of the receipt of notice
from the Company or Executive, with a copy to the other party, that there has
been a payment that could trigger a Gross-Up Payment, or such earlier time as
is requested by the Company (collectively, the “Determination”), which
shall be binding upon the Company and Executive.  All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and the Company shall enter into any agreement reasonably requested by the
Accounting Firm in connection with the performance of the services hereunder.  The Gross-Up Payment under this
subsection (i) shall be made no later than sixty (60) days following such
payments; provided that the Gross-Up Payment shall
in all events be paid no later than the end of Executive’s taxable year next
following the Executive’s taxable year in which the Excise Tax (and any income
or other related taxes or interest or penalties thereon) on a payment
are remitted to the Internal Revenue Service or any other applicable taxing
authority.  As a result of any
uncertainty in the application of Section 4999 of the Code at the time of
the Determination, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made (“Underpayment”)
or Gross-Up Payments are made by the Company which should not have been made (“Overpayment”), consistent with the calculations required to
be made hereunder.  In the event that Executive
thereafter is required 

 

11

 

to make payment of any additional Excise Tax,
any such Underpayment (together with interest at the rate provided in Section 1274(b)(2)(B) of
the Code) shall be promptly paid by the Company to or for the benefit of
Executive.  In the
event the amount of the Gross-Up Payment exceeds the amount necessary to
reimburse Executive for his Excise Tax as herein set forth, such Overpayment
(together with interest at the rate provided in Section 1274(b)(2) of
the Code) shall be promptly paid by Executive to or for the benefit of the
Company.  Executive shall cooperate, to
the extent Executive’s expenses are reimbursed by the Company, with any
reasonable requests by the Company in connection with any contests or disputes
with the Internal Revenue Service in connection with the Excise Tax.  The Company’s obligation to provide
the Gross-Up Payment is subject to Executive’s execution and non-revocation of
a release of claims against the Company and its affiliates in substantially
the form on Exhibit B attached hereto.

 

(j)             Notwithstanding any
other provision of this Agreement, if at the time of termination of Executive’s
employment he is a “specified employee” (as defined in Section 409A of the
Code) and any payment upon such termination under this Section 7 will
result in additional tax or interest to Executive under Section 409A of
the Code (including any applicable related regulations (whether proposed,
temporary or final), any related Internal Revenue Service rulings and any
related case law), he will not be entitled to such payments until the earlier
of (i) the date that is six (6) months after such termination of
employment or (ii) any earlier date that does not result in any additional
tax or interest to Executive under Section 409A of the Code.  In addition, if any provision of this
Agreement would subject Executive to any additional tax or interest under Section 409A
of the Code, then the Company shall reform such provision; provided
that the Company shall (x) maintain, to the maximum extent practicable,
the original intent of the applicable provision without subjecting Executive to
such additional tax or interest and without substantively reducing the amount payable
under such provision and (y) not incur any additional compensation
expense as a result of such reformation.

 

8.                             Confidentiality. Executive
hereby agrees that, other than in the ordinary course of performing his duties
for the Company, he shall not, directly or indirectly, at any time (whether
during or after termination of Executive’s employment with the Company for any
reason), intentionally or negligently divulge to any person or entity other
than the Company or any affiliate, without the Company’s express written
authorization, any information known to him to constitute trade secrets or
proprietary information belonging to the Company or any of its affiliates, or
other confidential financial information, operating budgets, strategic plans,
or research methods, projects or plans of the Company or any of its affiliates,
received or created by him in the course of his employment by the Company or in
connection with his duties with the Company (“Confidential
Information”).  Anything
herein to the contrary notwithstanding, the provisions of this Section 8
shall not apply (i) when disclosure is required by law or by any court,
arbitrator, mediator or administrative or legislative body (including any
committee thereof) with apparent jurisdiction to order Executive to disclose or
make accessible any information, (ii) with respect to any other
litigation, arbitration or 

 

12

 

mediation
involving this Agreement, including, but not limited to, the enforcement of
this Agreement, or (iii) as to Confidential Information that becomes
generally known to the public or within the relevant trade or industry other
than due to Executive’s violation of this Section 8.

 

9.                             Nonsolicitation.  During Executive’s employment with the
Company and for a period specified below following the termination of Executive’s
employment for any reason (the “Relevant Period”),
Executive shall not, directly or indirectly:

 

(a)                                  induce
or attempt to induce any employee of the Company or any of its affiliates to be
employed or to perform services elsewhere;

 

(b)                                 hire
any employee of the Company or of any of its affiliates to be employed or to
perform services elsewhere; provided that
Executive may hire such employees if their employment is terminated by the
Company; or

 

(c)                                  solicit
or attempt to solicit the trade of any individual or entity which, at the time
of such solicitation, is a customer of the Company or any of its subsidiaries,
or which the Company or any of its subsidiaries is undertaking reasonable steps
to procure as a customer at the time of or immediately preceding termination of
employment; provided, however, that this limitation (i) shall
not
apply to any wholesalers and (ii) shall only apply to any product
or service which is in competition with a product or service of the Company or
any of its subsidiaries.

 

The Relevant Period shall be twenty-four (24)
months in the case of Sections 9(a) and 9(b) above and twelve (12)
months in the case of Section 9(c) above.

 

10.                       Nondisparagement.  Executive will not at any time (whether
during or after termination of Executive’s employment with the Company for any
reason) knowingly make any statement, written or oral, or take any other action
that disparages or otherwise harms the Company, its business or reputation or
the reputation of any of its affiliates or the officers and directors of any of
them.

 

11.                       Remedies.  The covenants of Sections 8, 9 and 10 below shall
form the basis of injunctive relief and damages including expenses of
litigation (including, but not limited to, reasonable attorney’s fees upon
trial and appeal) suffered by the Company arising out of any breach of the
aforesaid covenants by Executive.

 

12.                       Indemnification.

 

(a)                                  The
Company shall indemnify Executive and hold Executive harmless from and against
any and all liabilities, suits, claims, actions, causes of action, judgments,
settlements, debts and expenses (including actually and reasonably incurred
legal fees and costs) of any kind whatsoever arising from and in connection
with Executive’s employment with the Company and its affiliates, other
than any arising from Executive’s willful or criminal misconduct or gross
negligence (separately and collectively, the “Indemnifiable Claims”)
to the fullest 

 

13

 

extent permitted by law.  The Company shall control Executive’s
defense against any such Indemnifiable Claims, and Executive
agrees to cooperate with the Company to mitigate costs, expenses and
other damages associated with such Indemnifiable Claims and to cooperate fully in
such defense.  The Company agrees that,
for purposes of this Section 12(a), it shall interpret and/or
apply any provision of applicable law (and, as applicable, the bylaws and/or
other organizational documents of the Company and its applicable affiliates)
with respect to Executive in a manner not less favorable than how such provision is
interpreted and applied by the Company to then active directors and officers of
the Company.

 

(b)                                 The Company
shall, as of the Effective Time, cause Executive to be covered under a
prepaid directors’ and officers’ liability insurance policy on terms and
conditions no less advantageous to such individuals than the Company’s
directors’ and officers’ liability insurance policy existing as of the date hereof (the “D&O Insurance”), during the Term and for a period of
not less than six (6) years after the termination of this Agreement, but
only to the extent related to actions or omissions of such officers and
directors in their capacities as such; provided, that
in no event shall the Surviving Corporation be required, in order to maintain or procure
insurance coverage pursuant hereto, to (i) expend more than $20,000
for the
“tail” portion of such insurance or (ii) pay annual premiums for the
non-”tail” portion of such insurance that are materially greater than for
comparable coverage obtained by comparable companies on the date hereof,
subject to reasonable increase from time to time  (collectively, the “Maximum Amount”); provided, further,
that if the amount of the annual premiums necessary to maintain or procure such
insurance coverage exceeds the Maximum Amount, the Surviving Corporation shall
procure and maintain during the Term and for such six (6) year
period as much coverage as is available for the Maximum Amount.  The Company shall have the right to
cause coverage to be extended under the D&O Insurance by obtaining
a “tail” policy on terms and conditions no less advantageous to such former
directors or officers than the D&O Insurance, and such “tail” policy shall
satisfy the provisions of this Section 12(b).

 

(c)                                  Nothing
in this Agreement shall operate to limit or extinguish any right to indemnification,
advancement of expenses, or contribution that Executive would otherwise have,
including, but not limited to, by agreement or under applicable law.

 

13.                       Enforcement Costs. If any legal
action or other proceeding is brought for the enforcement of this Agreement, or
because of an alleged dispute, breach, default or misrepresentation in
connection with any provisions of this Agreement, the successful or prevailing
party shall be entitled to recover reasonable attorney’s fees, court costs and
all expenses, even if not taxable as court costs (including, but not limited
to, all such fees, costs and expenses incident to appeal and other
post-judgment proceedings), incurred in that action or proceeding, in addition
to any other relief to which such party may be entitled. Attorneys’ fees shall
include, without limitation, paralegal fees, investigative 

 

14

 

fees,
administrative costs, sales and use taxes and all other charges billed by the
attorney to the prevailing party.

 

14.                       Notices. Any and all notices
necessary or desirable to be served hereunder shall be in writing and shall be:

 

(a)                                  Personally delivered,
or

 

(b)                                 Sent by certified
mail, postage prepaid, return receipt requested, or guaranteed overnight
delivery by a nationally recognized express delivery company, in each case
addressed to the intended recipient at the address set forth below.

 

For notices sent to the Company:

 

Sciele Pharma, Inc.

Five Concourse Parkway, Suite 1800

Atlanta, Georgia 30328

Attn: General Counsel

Facsimile: (678) 992-1043

 

For notices sent to Executive:

 

Larry
Dillaha

803
Marsh Trail Circle

Atlanta,
GA 30328

 

Either party
may amend the addresses for notices to such party hereunder by delivery of a
written notice thereof served upon the other party as provided herein. Any
notice sent by certified mail as provided above shall be deemed delivered on
the third (3rd) business day next following the postmark date which it bears.

 

15.                       Entire Agreement. This Agreement
sets forth the entire agreement of the parties hereto with respect to the
subject matter hereof, and specifically supersedes any other agreement or
understanding among the parties hereto related to the subject matter hereof,
including, but not limited to, as of the Effective Date, the Existing
Employment Agreement and any other agreement covering the subject
matter hereof (including, but not limited to, indemnification and directors’ and officer’s
insurance).  This Agreement may not be
modified or revised except pursuant to a written instrument signed by the party
against whom enforcement is sought.

 

16.                       Severability. In the event that any
provision or portion of this Agreement shall be determined to be invalid or
unenforceable for any reason, the remaining provisions or portions of this
Agreement shall be unaffected thereby and shall remain in full force and effect
to the fullest extent permitted by law.

 

15

 

17.      Waiver. Failure to insist upon
strict compliance with any of the terms or conditions hereof shall not be
deemed a waiver of such term or condition, and the waiver or relinquishment of
any right or remedy hereunder at any one or more times shall not be deemed a
waiver or relinquishment of such right or remedy at any other time or times.

 

18.      Arbitration. Any claims, disputes or
controversies arising out of or relating to this Agreement between the parties
shall be submitted to arbitration by the parties. The arbitration shall be
conducted in Atlanta, Georgia in accordance with the rules of the American
Arbitration Association then in existence and the following provisions: Either
party may serve upon the other party by guaranteed overnight delivery by a nationally
recognized express delivery service, written demand that the dispute,
specifying in detail its nature, be submitted to arbitration. Within seven (7) business
days after the service of such demand, each of the parties shall appoint an
arbitrator and serve written notice by guaranteed overnight delivery by a
nationally recognized express delivery service, of such appointment upon the
other party. The two arbitrators appointed shall appoint a third arbitrator.
The decision of two arbitrators in writing under oath shall be final and
binding upon the parties. The arbitrators shall decide who is to pay the
expenses of the arbitration. If the two arbitrators appointed fail to agree
upon a third arbitrator within ten (10) days after their appointment, then
an application may be made by either party, upon notice to the other party, to
any court of competent jurisdiction for the appointment of a third arbitrator,
and any such appointment shall be binding upon both parties.

 

19.      Governing Law.  This Agreement and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with the
law of the State of Georgia, without regard to its conflicts of laws
provisions. Subject to Section 18 above, each party hereto hereby (a) agrees
that the state and federal courts of the Northern District of Georgia shall
have exclusive jurisdiction and venue of any litigation which may be initiated
with respect to this Agreement or to enforce rights granted hereunder and (b) consents
to the personal jurisdiction and venue of such courts for such purposes.

 

20.      Benefit and Assignability.  This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The rights and
obligations of Executive hereunder are personal to him, and are not subject to
voluntary or involuntary alienation, transfer, delegation or assignment.

 

[Signatures
on Next Page]

 

16

 

IN
WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Employment Agreement as of the day and year first above written.

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ Larry M. Dillaha

  
	
   

  	
  Name:  Larry M. Dillaha

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPANY:

  SCIELE PHARMA, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Patrick P.
  Fourteau

  
	
   

  	
  Name: Patrick P. Fourteau

  
				

 

17

 

Exhibit A

Benefits

 

	
  Executive Supplemental
  Life Insurance

  	
   

  	
  $500,000 policy; builds
  projected cash value to cover premiums on a $250,000 policy at age 55 or in four (4) years if over
  55.

  
	
   

  	
   

  	
   

  
	
  Executive Supplemental
  Disability Coverage

  	
   

  	
  Individual, portable
  disability policy targeted to provide approximately 66 2/3% of pay combined
  with Group LTD policy. Policy amounts are reviewed every two (2) years.

  
	
   

  	
   

  	
   

  
	
  Annual Executive Physical

  	
   

  	
  Provided through Emory
  University’s Executive Healthcare System.

  
	
   

  	
   

  	
   

  
	
  Financial Planning

  	
   

  	
  Financial planning and tax
  preparation assistance provided through a local Atlanta firm.

  
	
   

  	
   

  	
   

  
	
  Company Executive Deferred
  Compensation Plan

  	
   

  	
  Allows deferral of up to
  75% of salary and up to 100% of annual and long-term incentive
  awards.

  

 

18

 

Exhibit B

 

WAIVER
AND RELEASE AGREEMENT

 

This Waiver and Release
Agreement (this “Agreement”) is made and entered
into as of the          day of                     ,
20    , by and between Sciele Pharma, Inc., a Delaware
corporation (the “Company”), and                         
(“Executive”).

 

1.             Release: 
Executive, for himself/herself, his/her heirs, agents, executors and
administrators, hereby releases and discharges the Company and its current and
former subsidiaries, parents, affiliates, joint ventures, officers, directors,
employees, partners, owners, attorneys and agents (collectively, the “Company Releasees”) from all debts, obligations, promises,
covenants, collective bargaining obligations, agreements, contracts,
endorsements, bonds, controversies, suits or causes of actions known or
unknown, suspected or unsuspected, of every kind and nature whatsoever, which
may heretofore have existed or which may now exist, including, but not limited,
to those arising under the Age Discrimination in Employment Act, as modified by
the Older Workers Benefit Protection Act, Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C. Section 2000e et seq.,
the Worker Adjustment Retraining and Notification Act, 29 U.S.C. Section 2101,
et seq., the Employee Retirement Income
Security Act of 1974, as amended, 29 U.S.C. Section 1001 et seq., the Americans with Disabilities Act, as amended,
42 U.S.C. Section 12101 et seq., the
Reconstruction Era Civil Rights Act, as amended, 42 U.S.C. Section 1981
et seq., the Rehabilitation Act of 1973,
as amended, 29 U.S.C. Section 701 et seq., the
Family and Medical Leave Act of 1992, 29 U.S.C. Section 2601 et seq., and any and all state or local laws regarding
employment discrimination and/or federal, state or local laws of any type or
description regarding employment, as well as any claim for breach of contract,
wrongful discharge, breach of any express or implied promise, misrepresentation,
fraud, retaliation, violation of public policy, infliction of emotional
distress, defamation, promissory estoppel, invasion of privacy or any other
theory or claim, whether legal or equitable, including, but not limited to, any
claims arising from or derivative of Executive’s employment with the Company
and Executive’s termination of employment with the Company or otherwise.  This release is for any and all relief,
without regard to its form or characterization. 
Executive acknowledges that he/she has not been discriminated against on
the basis of age, sex, handicap, race, ethnicity, religion or any other
protected class status.

 

THIS MEANS THAT BY
SIGNING THIS AGREEMENT, EXECUTIVE WILL HAVE WAIVED ANY RIGHT HE/SHE MAY HAVE
TO BRING A LAWSUIT OR MAKE ANY CLAIM OF ANY KIND WHATSOEVER AGAINST ANY OF THE
COMPANY RELEASEES BASED ON ANY ACTIONS OR OMISSIONS

 

B-1

 

OF ANY OF THE COMPANY
RELEASEES ON OR PRIOR TO THE DATE OF SIGNING THIS AGREEMENT.

 

2.             Covenant Not to Sue: 
Executive understands and agrees that, to the fullest extent permitted
by law, Executive is precluded from filing or pursuing any legal claim of any
kind against any of the Company Releasees at any time in the future, in any
federal, state or municipal court, administrative agency or other tribunal,
arising out of any of the claims that Executive has released and waived by
virtue of executing this Agreement. 
Executive agrees not to file or pursue any such legal claims.  Excluded from this release and covenant not
to sue is any right or claim that cannot be waived by law, including, but not limited to,
(a) any rights or claims of the Executive that arise after this
Agreement becomes effective; (b) any vested rights under any tax-qualified
and/or retirement plan(s) maintained by the Company or its affiliates; (c) any
rights under any indemnification agreement(s) between the Executive and
the Company, any rights to and claims for indemnification or as an insured
under any directors’ and officers’ liability insurance policy in connection
with the Executive’s service as a director, officer, employee or agent of the
Company or any of its subsidiaries or affiliates, under their respective
certificates of incorporation and bylaws, or otherwise as provided by law; (d) Executive’s
right to participate in an investigation conducted by any government agency; (e)
the independent right and responsibility of the Equal Employment Opportunity
Commission (the “EEOC”) to enforce the law; (f) Executive’s
right to seek a determination of the validity of whether his/her waiver of
his/her rights under the ADEA was voluntary and knowing; (g) Executive’s
right to enforce this Agreement and (h) Executive’s right to receive
payments and benefits under Sections 7(g), 7(i), 12 and 13 of his/her Amended
and Restated Employment Agreement dated as of August     , 2008.  Executive understands, however, that, while
this Agreement does not affect his/her right to file a charge or participate in
an investigation or proceeding conducted by the EEOC or any other federal,
state or local court or agency, it does bar any claim he/she might have to
receive monetary damages should any agency pursue any claims on Executive’s
behalf.

 

3.             Knowledge and Understanding:   Executive acknowledges
that:

 

(a)                    he/she has been
advised in writing (by this Agreement) to consult with an attorney prior to
executing this Agreement;

 

(b)                   he/she has been
given a period of twenty-one (21) days to consider this Agreement and, if
he/she elects to sign it before that time, acknowledges that he/she has done so
voluntarily; and

 

(d)      he/she is fully aware of his/her rights
and has carefully read and has fully come to understand all provisions of this
Agreement before signing.

 

B-2

 

4.             Effective Date: 
Executive will have seven (7) days after signing this Agreement to
revoke it.  Any revocation will be in
writing and addressed to [Name and Address].  This Agreement will not become effective
until the earliest date after (a) both parties have executed this
Agreement and (b) Executive’s seven (7) day revocation period has
passed without revocation.

 

5.             Reasonable Cooperation:  Executive agrees to make himself/herself
reasonably available and to cooperate with the Company and its affiliates and
their respective counsel in connection with any investigation, administrative
proceeding or litigation relating to any matter in which he/she was involved or
of which he/she has knowledge as a result of his/her employment with the
Company.  The Company shall reimburse the
Executive for reasonable expenses (including, but not limited to, lost wages,
transportation costs, and postage or telephone charges) that the Executive
incurs in assisting the Company or any affiliate pursuant to this Section 5
within fifteen (15) days after the Company receives Executive’s request for
reimbursement, along with satisfactory written substantiation of the claimed
expenses.

 

6.             Successors: 
This Agreement will apply to Executive, as well as his/her heirs,
agents, executors and administrators. 
The Agreement also will apply to, and inure to the benefit of, the
predecessors, successors and assigns of the Company and its respective current
and former subsidiaries, parents, affiliates, joint ventures, officers,
directors, employees, partners, owners, attorneys and agents.

 

7.             Severability: 
The parties explicitly acknowledge and agree that the provisions of this
Agreement are both reasonable and enforceable. 
However, the provisions of this Agreement are severable, and the
invalidity of any one or more provisions will not affect or limit the
enforceability of the remaining provisions. 
If any provision of this Agreement is held unenforceable for any reason,
then such provision will be enforced to the maximum extent permitted by law.

 

8.             No Admission:  Executive
acknowledges that neither the Company’s execution of this Agreement nor the
Company’s performance of its terms shall constitute an admission by the Company
of any wrongdoing by it or any of the other Company Releasees with respect to
Executive in connection with any matter.

 

9.             Applicable Law: 
This Agreement will be interpreted, enforced and governed under the laws
of the State of Georgia.

 

10.           Jurisdiction: 
Any action brought by or on behalf of Executive, his/her agents, heirs,
administrators, or executors against any of the Company Releasees relating to
or arising from this Agreement or Executive’s employment with or separation
from the Company will be maintained in a court in Atlanta, Georgia.

 

B-3

 

11.           Complete Agreement: 
Executive represents and acknowledges that in executing this Agreement
he/she does not rely upon and has not relied upon any representations or
statements not set forth herein made by the Company or any of the other Company
Releasees with regard to the subject matter, basis or effect of this Agreement
or otherwise.  It is mutually understood
and agreed that this Agreement constitutes the entire understanding between the
Company and Executive relating to the subject matter hereof.

 

The parties have each executed this Agreement
on the dates indicated below.

 

PLEASE
READ CAREFULLY.  THIS AGREEMENT IS A
LEGAL DOCUMENT AND INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS,
INCLUDING, BUT NOT LIMITED, TO ALL CLAIMS AS REFERENCED ABOVE, TO THE FULLEST
EXTENT PERMITTED BY LAW.

 

BY
SIGNING THIS AGREEMENT, EXECUTIVE ACKNOWLEDGES AND AFFIRMS THAT HE/SHE IS
COMPETENT, THAT HE/SHE HAS BEEN AFFORDED TWENTY-ONE (21) DAYS TO REVIEW AND
CONSIDER THIS AGREEMENT WITH AN ATTORNEY OF HIS/HER CHOICE AND HAS SEVEN (7) DAYS
TO REVOKE HIS/HER SIGNATURE, THAT HE/SHE HAS READ AND UNDERSTANDS AND ACCEPTS
THIS DOCUMENT AS FULLY AND FINALLY WAIVING AND RELEASING ANY AND ALL CLAIMS,
DEMANDS, DISPUTES AND ANY DIFFERENCES OF ANY KIND WHATSOEVER WHICH HE/SHE MAY HAVE
HAD, NOW HAS OR IN THE FUTURE MAY HAVE AGAINST THE COMPANY OR ANY OF THE
OTHER COMPANY RELEASEES ARISING OUT OF OR RELATING TO HIS/HER EMPLOYMENT WITH
THE COMPANY, HIS/HER COMPENSATION AND BENEFITS WITH THE COMPANY AND/OR HIS/HER
TERMINATION OF EMPLOYMENT WITH THE COMPANY UP TO AND INCLUDING THE DATE OF THIS
AGREEMENT, EXCLUDING CLAIMS THAT THE LAW DOES NOT PERMIT EXECUTIVE TO WAIVE BY
SIGNING THIS AGREEMENT, AND HE/SHE 
FURTHER ACKNOWLEDGES AND AFFIRMS THAT NO REPRESENTATIONS, PROMISES OR
INDUCEMENTS HAVE BEEN MADE TO HIM/HER EXCEPT AS SET FORTH IN THIS AGREEMENT,
THAT HE/SHE  HAS SIGNED THIS AGREEMENT
FREELY AND VOLUNTARILY INTENDING TO BE LEGALLY BOUND

 

B-4

 

BY ITS
TERMS, AND THAT HE/SHE HAS DONE SO WITH FULL UNDERSTANDING OF ITS BINDING LEGAL
CONSEQUENCES.

 

B-5

 

IN
WITNESS WHEREOF, the parties hereto have executed this Waiver and Release
Agreement as of the day and year first above written.

 

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

B-6

 

WAIVER OF TWENTY-ONE (21) DAY REVIEW
PERIOD

 

I acknowledge that in connection with the
foregoing Waiver and Release Agreement (the “Agreement”)
between Sciele Pharma, Inc. (“Company”) and
me, [Name of Executive], the Company has advised me that pursuant to the Older
Workers Benefit Protection Act, I have twenty-one (21) days to review the
Agreement before I execute it and return it to the Company.

 

I hereby waive my right to this twenty-one (21) day review
period and wish to execute the Agreement prior to the conclusion of this twenty-one (21) day
period.  However, I understand that I
have seven (7) days to revoke this waiver should I change my mind.  I further understand that the Agreement shall
not be binding on the Company or me until seven (7) days after I sign the
Agreement.

 

 

	
  BY:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  [Name
  of Executive]                         

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED THIS
         DAY OF
                                ,
  20    .

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SCIELE PHARMA, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
   

  
								

 

B-7

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