EXHIBIT 10.2
 
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
 
This Amended and Restated Employment Agreement (this “Agreement”), effective as
of May 2, 2013 (the “Effective Date”), is between IMPRIMIS PHARMACEUTICALS, INC.
(the “Company”), a Delaware corporation, and MARK BAUM (the
“Executive”).  Unless otherwise specified, capitalized terms used in this
Agreement are defined in Section 22.  This Agreement is entered into with
respect to the following facts:
 
WHEREAS, the Company and Executive are parties to that certain Amended and
Restated Employment Agreement dated July 24, 2012 (the “Original Agreement”);
 
WHEREAS, the parties wish to amend and restate the Original Agreement in full as
set forth herein;
 
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged by the parties hereto, it is agreed as follows:
 
1. Term of Employment. The Company hereby agrees to employ Executive, and
Executive hereby agrees to be employed by the Company, upon the terms and
subject to the conditions set forth in this Agreement. The initial period of
Executive’s employment under this Agreement shall begin as of the Effective Date
and shall continue until the third anniversary of the Effective Date, unless
sooner terminated in accordance with Section 4 or extended by mutual written
agreement of the parties (the “Initial Term”). After the Initial Term, the
Agreement shall automatically be renewed for one-year terms (each a “Subsequent
Term,” and together with the Initial Term, the “Term”) unless other party
provides the other party written notice of non-renewal at least ninety (90) days
prior to the end of the then current Term. At the end of the Term, Executive’s
employment shall continue at will on a month-to-month basis, terminable by
either party for any or no reason.
 
2. Duties and Responsibilities. During the Term, Executive shall serve as the
Company’s Chief Executive Officer and shall perform the customary duties of each
position and such other duties as may be reasonably assigned to Executive by the
Board and shall exercise such supervision and powers over and with regard to the
business of the Company customarily associated with each such position.
Executive shall report directly to the Company’s Chairman of the Board. In
addition, it is contemplated that at all times during the effectiveness of this
Agreement, Executive shall be nominated for election to the Board by the
stockholders of the Company so that he may continue to serve as a director of
the Company and the Chairman of the Board in accordance with the Company’s
governing instruments. Executive’s service on the Board will be subject to any
required stockholder approval and to be without additional compensation.
Executive shall be based in the Company’s principal executive offices in San
Diego, California, although the parties understand that reasonable travel shall
be required in the performance of Executive’s duties under this Agreement.
Executive shall devote Executive’s full and exclusive business time (as opposed
to personal time), energy, and ability to the business of Company, and shall
perform Executive’s duties faithfully and in compliance with the law. Subject to
written notice to the Board, it shall not be a violation of this Agreement for
Executive to serve on the Board of Directors of, or own shares or hold options
to purchase shares in, Ideal Power Converters, Inc., one other Board of
Directors of a corporation whose shares are publicly traded on a national
exchange and one other Board of Directors of a private company, or to serve on
other corporate, civic or charitable boards or committees, deliver lectures,
fulfill speaking engagements or teach at educational institutions and manage
personal investments. Any additional service on a Board of Directors or
otherwise shall be subject to prior approval of the Board, which shall not be
unreasonably withheld, but may be reasonably reviewed from time to time and
withdrawn based on such reasonable review. If Executive’s employment with the
Company terminates for any reason, Executive shall immediately resign all
positions that Executive then holds with the Company or any of its Affiliates.
If Executive fails to so resign, the Board shall thereupon have the right to
remove Executive from all such positions without further action or notice.
 
 
1

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

 
 
3. Compensation and Benefits.
 
(a) Base Salary. During the Term, Executive’s annual base salary (“Base Salary”)
shall be $329,000, and may be increased (but not decreased) by the Committee in
its sole discretion. Notwithstanding the foregoing, Executive’s Base Salary may
be decreased in accordance with a uniform reduction in base salaries applicable
to all senior executives of the Company.
 
(a) Annual Cash Bonus. Executive shall be eligible to participate in the
Company’s management incentive plan as established and amended by the Committee
from time to time (the “MIP,” and the bonus paid thereunder, the “MIP Bonus”).
Executive’s target MIP Bonus (the “Target MIP Bonus”) shall be 45% of Base
Salary, and Executive’s maximum MIP Bonus shall be 65% of the Target MIP Bonus.
The actual MIP Bonus earned and paid depends upon the achievement of Company
and/or individual performance objectives as established and determined by the
Committee in its sole discretion. The actual MIP Bonus earned will be paid on or
before March 15 of the year following the year in which the MIP Bonus was
earned.
 
(b) Equity Compensation.
 
(i) Annual Equity Grant. Executive shall be eligible for and shall be considered
annually for equity awards under the terms of the Company’s Amended and Restated
2007 Incentive Stock Awards Plan, or any successor thereto (the “Plan”), as
determined by the Committee in its sole discretion.
 
(ii) Initial Equity Grant. Upon the Effective Date (the “Grant Date”), Executive
shall receive a one-time grant of equity awards pursuant to the Plan, consisting
of stock options for 180,000 shares, with an exercise price equal to the closing
price of Company stock on the Grant Date, subject to terms of the stock option
agreement in the form attached as Exhibit A; and (B) 200,000 restricted stock
units, subject to terms of the restricted stock unit agreement in the form
attached as Exhibit B.
 
 
2

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

 
 
(iii) Performance Stock Unit Grant. On the Grant Date, Executive shall receive a
one-time grant of 1,050,000 performance stock units, subject to terms of the
performance stock unit agreement in the form attached as Exhibit
C.  Notwithstanding the forgoing, to the extent the grant of performance stock
units exceeds the number of shares available for grant under the Plan and/or the
applicable annual per person grant limit for performance stock units, the grant
shall be subject to approval by the Company’s stockholders of sufficient shares
and a limit covering the excess. No excess shares shall be earned or issued
unless and until such approval is obtained. The Company shall use reasonable
efforts throughout the Term to obtain the necessary stockholder approval. To the
extent such approval is not obtained, this Section 3(c) shall be null and void
with respect to the excess shares and the failure to obtain such approval shall
not otherwise be deemed a breach of this Agreement or an event constituting Good
Reason.
 
(c) Benefits. During the Term, Executive shall be eligible to participate in all
of the Company’s employee benefit plans as in effect from time to time and
subject to the terms and conditions thereof, consistent with an employee of
Executive’s position. Notwithstanding the foregoing, in no event shall Executive
be entitled to reimbursement for personal use of corporate aircraft or any
gross-up payment for taxes due under Code Section 4999.
 
(d) Business Expenses. The Company shall reimburse Executive for all reasonable
travel and other business expenses incurred by Executive in the performance of
Executive’s duties to the Company under this Agreement provided that such
expenses are incurred for business reasons and accounted for in accordance with
the Company’s policy. The Company shall reimburse Executive for legal fees and
expenses up to $3,500, which Executive may incur in connection with the
negotiation and execution of this Agreement, payable within thirty (30) days
following the Company’s receipt of an invoice from Executive’s legal firm.
 
(e) Clawback Policy. Notwithstanding anything to the contrary in this Agreement,
all incentive-based compensation payable hereunder shall be subject to any
clawback policy adopted by the Company from time to time, including, without
limitation, in accordance with the Dodd-Frank Wall Street Reform and Consumer
Protection Act.
 
(f) Business Development Performance Stock Options. Upon the Board’s approval of
a merger, acquisition, financing, strategic partnership, spinoff, spin out or
equity carve out or similar transaction involving the Company and/or any newly
formed subsidiary or affiliate (collectively a “Strategic Transaction”), the
Board will in good faith consider issuing performance stock options with an
exercise price equal to the current fair market value of the Company’s common
stock to Executive to compensate Executive for raising capital, acquiring and
developing intellectual property and technology and/or successfully executing on
other strategic objectives of the Company. The Board’s current target with
respect to such awards in connection with a capital raising Strategic
Transaction would be to grant Executive performance stock options valued using
the Black Scholes valuation formula equal to 4% of the cash made available to
the Company to develop its assets other than its Impracor product or such other
reasonable metric as the Board shall determine. The actual amount of any award
would be determined at the time of the Strategic Transaction, and could be less
than or exceed the target. At Executive’s or the Board’s option, the performance
stock options may be issued in the subsidiary or affiliate involved in the
Strategic Transaction (if applicable). The Board may adopt a policy regarding
the specifics of an award in connection with a specific type of Strategic
Transaction.
 
 
3

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

 
 
(g) Lock-Up. Executive will not, without the prior written consent of the
Company, sell, contract to sell or otherwise dispose of (or enter into any
transaction or device that is designed to, or could be expected to, result in a
disposition by Executive at any time in the future of) any securities of the
Company acquired pursuant to the terms of this Agreement except (i) securities
required to be sold to pay the tax obligations of Executive arising directly out
of the grants contained in this Agreement; (ii) securities that qualify as a
bona fide gift or gifts, provided that the donee or donees thereof agree in
writing to be bound by a similar lock-up agreement; or (iii) sales of the
Company’s common stock or any trading day which do not exceed 10% of the average
trading volume of Company’s common stock during the 20 days prior to any such
disposition on the NASDAQ Capital Market or successor exchange. The foregoing
restrictions expressly preclude Executive from engaging in any hedging or other
transaction which is designed to or reasonably expected to lead to or result in
disposition of securities during the lock-up period even if such securities
would be disposed of someone other than Executive, including, without
limitation, any short sale (whether or not against the box) or any purchase,
sale or grant of any right (including, without limitation, any put or call
option) with respect to any securities or with respect to any security (other
than a broad-based market basket or index) that includes, relates to or derives
any significant part of its value from securities.
 
4. Termination of Employment. Executive’s employment may be terminated by either
party without any breach of this Agreement only under the circumstances
specified below. Any termination of Executive’s employment, other than by reason
of Executive’s death, shall be communicated by a notice of termination to the
other party. For purposes of this Agreement, a “notice of termination” shall
mean a written notice that (i) indicates the specific termination provision in
the Agreement relied upon, (ii) sets forth in reasonable detail any facts and
circumstances claimed to provide a basis for termination of Executive’s
employment under the provision indicated and (iii) specifies the effective date
of the termination.
 
(a) Death. Executive’s employment shall terminate upon Executive’s death.
 
(b) Disability. If the Company determines in good faith that Executive is
Disabled during the Term, the Company may give Executive written notice of its
intention to terminate Executive’s employment. In such event, Executive’s
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by Executive if, within the 30 days after such receipt,
Executive shall not have returned to full-time performance of Executive’s duties
with or without a reasonable accommodation.
 
(c) Cause. The Company may terminate Executive’s employment for Cause.
 
(d) Without Cause. The Company may terminate Executive’s employment at any time
without Cause upon 90 days’ prior written notice. For purposes of this
Agreement, including without limitation Section 5, a termination due to
Executive’s death or Executive being Disabled shall not be deemed a termination
by the Company without Cause.
 
 
4

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

 
 
(e) Resignation or For Good Reason. Executive may resign or terminate
Executive’s employment with the Company for Good Reason within 90 days following
the end of the Cure Period.
 
(f) Expiration of Term. Executive’s employment under this Agreement shall
terminate upon expiration of the Term, which shall not constitute a termination
without Cause or a resignation for Good Reason.
 
5. Compensation After Termination of Employment. Upon termination of Executive’s
employment under this Agreement during the Term, Executive (or such payee as
Executive designates in writing or Executive’s estate) shall be entitled to
receive the following compensation:
 
(a) Base Salary and Accrued but Unpaid Expenses and Vacation. The Company shall
pay Executive any Base Salary for services rendered to the date of termination
and any accrued but unpaid expenses required to be reimbursed under this
Agreement.
 
(b) Other Compensation and Benefits. Except as otherwise provided under this
Agreement,
 
(i) any other compensation or benefits (including retirement or deferred
compensation benefits) to which Executive may be entitled at the time of
termination shall be determined and paid in accordance with the terms of such
plans, policies, and arrangements providing such compensation or benefits; and
 
(ii) except as provided under this Agreement, Executive shall have no right to
receive any other compensation, or to participate in any other plan,
arrangement, or benefit, with respect to future periods after such termination
or resignation.
 
(c) Additional Compensation Payable After Termination Without Cause or
Resignation for Good Reason. Subject to Section 20, if Executive’s employment is
terminated by the Company without Cause under Section 4(d) or by Executive for
Good Reason under Section 4(e), and the Company receives a release in the form
attached to this Agreement as Exhibit D (the “Release”), executed by Executive
on or after the date of termination of employment and delivered to the Company
within twenty-one (21) days following the date of termination, without
revocation or modification, Executive shall be entitled to the following
compensation and benefits beginning thirty (30) days following the date of
termination of employment:
 
(i) severance payments equal to the sum of (A) one time Executive’s Base Salary
for the year in which Executive’s employment terminates (without regard to any
reduction that gives rise to Good Reason) plus (B) one times Executive’s actual
MIP Bonus for the two calendar years preceding the year in which Executive’s
termination occurs (or, if the actual MIP Bonus has not yet been determined for
the calendar year preceding Executive’s termination, the average of Executive’s
actual MIP Bonus for the first calendar year in this two-year period and his
Target MIP Bonus for the calendar year immediately preceding his termination)
for the fiscal year during which Executive’s employment terminates and the
immediately preceding fiscal year, payable in substantially equal installments
over one year in accordance with normal payroll practices;
 
 
5

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

 
 
(ii) a prorated MIP Bonus for the year in which the termination occurs based on
actual results for the year and payable in a lump sum at the time MIP Bonuses
are paid to active employees; and
 
(iii) should Executive elect to continue group health plan coverage through
COBRA, the Company shall pay a portion of the cost of COBRA coverage in the same
proportion as it shared such costs with Executive during the Term for a period
of 12 months, provided, however, that such payments shall cease if Executive
becomes eligible for coverage under any other employer’s group health plan.
Executive will thereafter be responsible for the payment of COBRA premiums
(including, without limitation, all administrative expenses) for any remaining
COBRA period. Notwithstanding the foregoing, in the event that the Company
determines, in its sole discretion, that the Company may be subject to a tax or
penalty pursuant to Section 4980D of the Code as a result of providing some or
all of the payments described in this Section 5(c)(iii), the Company may reduce
or eliminate its obligations under this Section 5(c)(iii) to the extent it deems
necessary, with no offset or other consideration required.
 
(d) No Other Compensation. If Executive’s employment is terminated by the
Company for Cause, by Executive without Good Reason, or upon expiration of the
Term, then Executive shall not be entitled to any other compensation or benefits
from the Company except as described in Section 5(a) and (b).
 
6. Survival. The expiration or termination of the Term shall not impair the
rights or obligations of any party to this Agreement which shall have accrued
under this Agreement prior to such expiration.
 
7. Restrictive Covenants.
 
(a) Confidentiality. During and after the Term, Executive shall not use or
disclose to any individual or entity any Confidential Information except (A) in
the performance of Executive’s duties for the Company, (B) as authorized in
writing by the Company, or (C) as required by law, so long as prior written
notice of such required disclosure is delivered to the Company and all
reasonable efforts to preserve the confidentiality of such information shall be
made. “Confidential Information” means all secret or confidential information,
knowledge, or data relating to the Company and all of its subsidiaries,
partnerships, joint ventures, limited liability companies, and other Affiliates
(the “Company Group”) (including, without limitation, any proprietary and not
publicly available information concerning any processes, methods, trade secrets,
intellectual property, research secret data, costs, names of users or purchasers
of their respective products or services, business methods, operating or
manufacturing procedures, or programs or methods of promotion and sale) that
Executive has obtained or obtains during the Term and that is not public
knowledge (other than as a result of Executive’s violation of this
Section 7(a)).
 
 
6

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

 
 
(b) No Conflict of Interest. During the Term and for any period severance
benefits are payable under Section 5(c)(i), Executive shall not engage in any
work, paid or unpaid, that creates an actual conflict of interest with the
Company Group. Such work shall include, but is not limited to, directly or
indirectly competing with the Company Group in any way, or acting as an officer,
director, employee, consultant, stockholder, volunteer, lender, or agent of any
business enterprise of the same nature as, or which is in direct competition
with, the business in which the Company Group is now engaged or in which the
Company Group becomes engaged during the Term. If the Company reasonably
determines such a conflict exists during the Term, the Company may ask Executive
to choose to discontinue the other work or resign employment with Company
without Good Reason. If the Company reasonably determines such a conflict exists
during any period severance benefits are payable under Section 5(c)(i), the
Company may ask Executive to choose to discontinue the other work or forfeit the
remaining severance benefits as the Company’s sole remedy under this Agreement
and at law; provided, however, that if the Company does not ask Executive to
choose to discontinue the other work or forfeit the remaining severance
benefits, the Company shall be entitled to any remedy that may be provided under
this Agreement or at law. In addition, Executive agrees not to refer any client
or potential client of the Company Group to competitors of the Company Group,
without obtaining Company’s prior written consent, during the Term and any
period severance benefits are payable under Section 5(c)(i).
 
(c) Non-Solicitation. Executive understands and agrees that significant
information regarding the Company Group’s employees and customers is treated as
confidential and constitutes trade secrets. As such, during the Term and for a
period of two years thereafter, Executive agrees not to, directly or indirectly,
separately or in association with others, use any Confidential Information to
interfere with, impair, disrupt or damage the Company Group’s relationship with
any of its customers or prospective customers. During the Term and for a period
of two years thereafter, Executive further agrees not to, directly or
indirectly, separately or in association with others, damage the Company Group’s
relationships with its employees by soliciting such employees to leave the
employ of the Company Group.
 
(d) Non-Disparagement. During and after the Term, Executive shall not make any
voluntary statements, written or oral, or cause or encourage others to make any
such statements that defame, disparage or in any way criticize the personal
and/or business reputations, practices or conduct of the Company Group, as well
as Company Group’s employees, officers, directors, agents, successors and
assigns.
 
(e) Inventions. All plans, discoveries and improvements, whether patentable or
unpatentable, made or devised by Executive, whether alone or jointly with
others, from the Effective Date and continuing until the end of any period
during which Executive is employed by the Company Group, relating or pertaining
in any way to Executive’s employment with or the business of the Company Group
(each, an “Invention”), shall be promptly disclosed in writing to the Secretary
of the Company and are hereby transferred to and shall redound to the benefit of
the Company and shall become and remain its sole and exclusive property.
Executive agrees to execute any assignment to the Company or its nominee, of
Executive’s entire right, title and interest in and to any Invention and to
execute any other instruments and documents requisite or desirable in applying
for and obtaining patents, trademarks or copyrights, at the expense of the
Company, with respect thereto in the United States and in all foreign countries,
that may be required by the Company. Executive further agrees, during and after
the Term, to cooperate to the extent and in the manner required by the Company,
in the prosecution or defense of any patent or copyright claims or any
litigation, or other proceeding involving any trade secrets, processes,
discoveries or improvements covered by this covenant, but all necessary expenses
thereof shall be paid by the Company. This Section 7(e) does not apply to an
Invention which qualifies fully as a nonassignable invention under the
provisions of section 2870 of the California Labor Code. Executive acknowledges
that a condition for an Invention to qualify fully as a nonassignable invention
under the provisions of section 2870 of the California Labor Code is that the
Invention must be protected under patent laws. Executive has reviewed the
Limited Exclusion Notification attached as Exhibit E and agrees that Executive’s
signature acknowledges receipt of the notification. However, Executive agrees to
disclose promptly in writing to Company all innovations (including Inventions)
conceived, reduced to practice, created, derived, developed, or made by
Executive during the term of employment and for three months thereafter, whether
or not Executive believes such innovations are subject to this Section 7(e), to
permit a determination by Company as to whether or not the innovations should be
the property of Company. Any such information shall be received in confidence by
Company.
 
 
7

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

 
 
(f) Acknowledgment and Enforcement. Executive acknowledges and agrees that
(i) the purpose of the foregoing covenants is to protect the goodwill, trade
secrets, and Confidential Information of the Company Group; (ii) because of the
nature of the business in which the Company Group is engaged and because of the
nature of the Confidential Information to which Executive has access, the
Company Group would suffer irreparable harm and it would be impractical and
excessively difficult to determine the actual damages of the Company Group in
the event Executive breached any of the covenants of this Section 7; and
(iii) remedies at law (such as monetary damages) for any breach of Executive’s
obligations under this Section 7 would be inadequate. Executive therefore agrees
and consents that (I) if Executive commits any breach of the covenant under
Section 7(b) and the Company does not ask Executive to choose to discontinue the
other work or forfeit the remaining severance benefits as allowed under
Section 7(b), or (II) if Executive commits any breach of a covenant under this
Section 7 or threatens to commit any such breach at any time, the Company shall
have the right (in addition to, and not in lieu of, any other right or that may
be available to it) to temporary and permanent injunctive relief from a court of
competent jurisdiction, without posting any bond or other security and without
the necessity of proof of actual damage.
 
(g) Effect of Termination of Employment. Notwithstanding the provisions of
Section 4(e) of this Agreement, the period of Executive’s employment for
purposes of determining the applicability of the restrictions contained in
Section 7 of this Agreement shall include any period during which Executive is
employed by the Company’s successors or assigns. Upon termination of employment,
as defined herein and for whatever cause, Executive shall immediately deliver to
the Company or its successors or assigns, all Company property, including
without limitation all Confidential Information as defined above.
 
8. Cooperation Following Termination of Employment. Executive agrees that, for
five years following termination of employment for any reason, Executive shall
assist and cooperate with the Company with regard to any matter or project in
which Executive was involved during the Term, including but not limited to any
litigation that may be pending or arise after such termination of employment.
Further, Executive agrees to notify the Company at the earliest reasonable
opportunity of any contact that is made by any third parties concerning any such
matter or project. The Company shall not unreasonably request such cooperation
of Executive and shall cooperate with Executive in scheduling any assistance by
Executive taking into account and not unreasonably interfering with Executive’s
business and personal affairs and shall reasonably compensate Executive for any
time spent or expenses associated with such cooperation and assistance.
 
 
8

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

 
 
9. Withholding of Taxes. The Company shall withhold from any compensation and
benefits payable under this Agreement all applicable federal, state, local, or
other taxes.
 
10. Binding on Successors. This Agreement shall be binding upon and inure to the
benefit of the Company, Executive and their respective successors, assigns,
personnel and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable. The Company shall cause any
successor to all or substantially all of its assets or business to assume this
Agreement.
 
11. Governing Law. This Agreement is being made and executed in and is intended
to be performed in the State of California, and shall be governed, construed,
interpreted and enforced in accordance with the substantive laws of the State of
California without regard to its conflict or choice of law rules.
 
12. Validity. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. If any
part of this Agreement is found to be unreasonable, then it may be amended by
appropriate order of a court of competent jurisdiction to the extent deemed
reasonable.
 
13. Notices. Any notice, request, claim, demand, document and other
communication under this Agreement to any party shall be effective upon receipt
(or refusal of receipt) and shall be in writing and delivered personally or
sent, by telex, telecopy, facsimile transmission, or certified or registered
mail, postage prepaid, as follows:
 
If to the Company, addressed to:
 
Imprimis Pharmaceuticals, Inc.
437 S. Hwy. 101, Suite 209
Solana Beach, CA 92075
Attention: General Counsel
Facsimile: 858-345-1745
 
If to Executive, at the home address most recently communicated by Executive to
the Company in writing;
 
or at any other address as any party shall have specified by notice in writing
to the other parties in accordance herewith.
 
14. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same Agreement. This Agreement shall not become
enforceable until executed by the Company.
 
 
9

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

 
 
15. Entire Agreement. The terms of this Agreement and the exhibits and
attachments hereto are intended by the parties to be the final expression of
their agreement with respect to the employment of Executive by the Company, may
not be contradicted by evidence of any prior or contemporaneous agreement, and
supersedes any and all prior agreements, including, without limitation, the
Original Agreement which is hereby terminated in its entirety. The parties
further intend that this Agreement shall constitute the complete and exclusive
statement of its terms and that no extrinsic evidence whatsoever may be
introduced in any judicial, administrative, or other legal proceeding to vary
the terms of this Agreement or the exhibits and attachments hereto.
 
16. Amendments; Waivers. This Agreement may not be modified, amended, or
terminated except by an instrument in writing, signed by Executive and an
independent director of the Company or by an arbitrator or court seeking to
render enforceable through “judicial” modification an otherwise unenforceable
provision. By an instrument in writing similarly executed, Executive or the
Company may waive compliance by the other party with any provision of this
Agreement that such other party was or is obligated to comply with or perform,
so long as such waiver shall not operate as a waiver of, or estoppel with
respect to, any other or subsequent failure. No failure to exercise and no delay
in exercising any right, remedy, or power under this Agreement shall preclude
any other or further exercise of any other right, remedy, or power provided
herein or by law or in equity.
 
17. Arbitration. The Company and Executive agree to attempt to resolve any
dispute between them quickly and fairly. Any dispute related to this Agreement
which remains unresolved shall be resolved exclusively by final and binding
arbitration conducted in San Diego, California, pursuant to the then-current
rules of the American Arbitration Association with respect to employment
disputes. The Company shall bear any and all costs of the arbitration process
plus, if Executive substantially prevails on all issues raised, any attorneys’
fees incurred by Executive with regard to such arbitration.
 
18. No Inconsistent Actions; Cooperation.
 
(a) The parties shall not voluntarily undertake or fail to undertake any action
or course of action inconsistent with the provisions or essential intent of this
Agreement. Furthermore, it is the intent of the parties to act in a fair and
reasonable manner with respect to the interpretation and application of the
provisions of this Agreement.
 
(b) Each of the parties shall cooperate and take such actions, and execute such
other documents as may be reasonably requested by the other in order to carry
out the provisions and purposes of this Agreement.
 
19. No Alienation of Benefits. To the extent permitted by law the benefits
provided by this Agreement shall not be subject to garnishment, attachment or
any other legal process by the creditors of Executive, Executive’s beneficiary
or Executive’s estate.
 
20. Section 409A.
 
(a) This Agreement is intended to comply with, or otherwise be exempt from, Code
Section 409A.
 
 
10

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

 
 
(b) The Company shall undertake to administer, interpret, and construe this
Agreement in a manner that does not result in the imposition on Executive of any
additional tax, penalty, or interest under Code Section 409A.
 
(c) If the Company determines in good faith that any provision of this Agreement
would cause Executive to incur an additional tax, penalty, or interest under
Code Section 409A, the Committee and Executive shall use reasonable efforts to
reform such provision, if possible, in a mutually agreeable fashion to maintain
to the maximum extent practicable the original intent of the applicable
provision without violating the provisions of Code Section 409A or causing the
imposition of such additional tax, penalty, or interest under Code Section 409A.
 
(d) The preceding provisions, however, shall not be construed as a guarantee by
the Company of any particular tax effect to Executive under this Agreement. The
Company shall not be liable to Executive for any payment made under this
Agreement that is determined to result in an additional tax, penalty, or
interest under Code Section 409A, nor for reporting in good faith any payment
made under this Agreement as an amount includible in gross income under Code
Section 409A.
 
(e) For purposes of Code Section 409A, the right to a series of installment
payments under this Agreement shall be treated as a right to a series of
separate payments.
 
(f) With respect to any reimbursement of expenses of, or any provision of
in-kind benefits to, Executive, as specified under this Agreement, such
reimbursement of expenses or provision of in-kind benefits shall be subject to
the following conditions: (i) the expenses eligible for reimbursement or the
amount of in-kind benefits provided in one taxable year shall not affect the
expenses eligible for reimbursement or the amount of in-kind benefits provided
in any other taxable year, except for any medical reimbursement arrangement
providing for the reimbursement of expenses referred to in Code Section 105(b);
(ii) the reimbursement of an eligible expense shall be made no later than the
end of the year after the year in which such expense was incurred; and (iii) the
right to reimbursement or in-kind benefits shall not be subject to liquidation
or exchange for another benefit.
 
(g) “Termination of employment,” “resignation,” or words of similar import, as
used in this Agreement means, for purposes of any payments under this Agreement
that are payments of deferred compensation subject to Code Section 409A,
Executive’s “separation from service” as defined in Code Section 409A.
 
(h) Nothing herein shall be construed as having modified the time and form of
payment of any amounts or payments of “deferred compensation” (as defined under
Treas. Reg. § 1.409A-1(b)(1), after giving effect to the exemptions in Treas.
Reg. §§ 1.409A-1(b)(3) through (b)(12)) that were otherwise payable pursuant to
the terms of any agreement between Company and Executive in effect on or after
January 1, 2005 and prior to the date of this Agreement.
 
(i) If a payment obligation under this Agreement arises on account of
Executive’s separation from service while Executive is a “specified employee”
(as defined under Code Section 409A and determined in good faith by the
Compensation Committee), any payment of “deferred compensation” (as defined
under Treas. Reg. § 1.409A-1(b)(1), after giving effect to the exemptions in
Treas. Reg. §§ 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid
within six months after such separation from service shall accrue without
interest and shall be paid within 15 days after the end of the six-month period
beginning on the date of such separation from service or, if earlier, within 15
days after the appointment of the personal representative or executor of
Executive’s estate following Executive’s death.
 
 
11

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

 
 
(j) Notwithstanding the timing provisions set forth in Section 5(c) and subject
to Section 20(i), any payment of “deferred compensation” (as defined under
Treas. Reg. § 1.409A-1(b)(1), after giving effect to the exemptions in Treas.
Reg. §§ 1.409A-1(b)(3) through (b)(12) to the extent applicable), will be paid
or will commence on the thirtieth (30th) day following Executive’s separation
from service.
 
21. Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no succession had taken place if such assumption does not occur as
a matter of law.
 
22. Certain Definitions.
 
(a)  “Affiliate” means any entity in which the Company has a significant
ownership interest as determined by the Committee.
 
(b)  “Base Salary” is defined in Section 3(a).
 
(c)  “Board” means the Board of Directors of the Company.
 
(d) “Cause” means: (i) Executive’s conviction, or guilty or no contest plea,
regarding any non-automotive felony; (ii) act of fraud by Executive related to
or connected with Executive’s employment by the Company or otherwise likely to
cause material harm to the Company or its reputation; (iii) Executive’s material
breach of his fiduciary duty to the Company which causes material harm to the
Company or its reputation; (iv) Executive’s gross negligence or gross misconduct
in the performance of duties reasonably assigned to Executive; (v) willful and
material violation by Executive of the Company’s codes of conduct or other rules
or policies of the Company, which causes material harm to the Company or its
reputation; or (vi) entry of any court order or other ruling that prevents
Executive from performing his material duties and responsibilities hereunder;
(vii) willful and material breach of this Agreement by Executive which causes
material harm to the Company or its reputation, provided, however, that with
respect to subsection (v) and (vii) the Board or its representative shall have
delivered a written demand to Executive specifically identifying the manner in
which the Executive has violated the Company’s codes of conduct or other rules
or policies or breached this Agreement and Executive has failed to cure such
violation within thirty (30) days after receiving such notice, to the extent
that such violation is susceptible to cure.
 
(e) “Code” means the Internal Revenue Code of 1986, as amended, and the Treasury
regulations and guidance issued under the Code.
 
 
12

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

 
 
(f)  “Committee” means the Compensation Committee of the Board.
 
(g) “Company Group” is defined in Section 7(a).
 
(h) “Confidential Information” is defined in Section 7(a).
 
(i) “Disabled” has the meaning specified in the Company’s long-term disability
plan applicable to Executive at the time of Executive’s disability or, if no
such long-term disability plan exists, such term shall mean a total and
permanent disability as defined in Section 22(e)(3) of the Code.
 
(j) “Good Reason” means, without Executive’s consent: (i) material diminution in
Executive’s responsibilities, authority, or duties; (ii) material reduction in
Executive’s Base Salary (unless reduction is part of an across the board
uniformly applied reduction); (iii) material reduction in Executive’s incentive
or equity compensation; (iv) material reduction in the percentage of Executive’s
Base Salary on which his annual incentive compensation is based, other than a
reduction of not more than ten percent (10%) that is also applied to all
executive officers; (v) a material reduction in the total compensation and
benefits (including but not limited to incentive, equity and deferred
compensation) provided to Executive; or (vi) relocation of the Company, or of
Executive’s office, fifty (50) miles or more from San Diego, California, and
such relocation results in an increase in Executive’s one-way driving distance
by more than fifty (50) miles; provided, however, that before Executive may
resign for Good Reason, Executive must provide the Company with written notice
of the condition that could constitute a “Good Reason” Event within ninety (90)
days of the initial existence of such condition and such condition must not have
been remedied by the Company within thirty (30) days (the “Cure Period”) of such
written notice.
 
(k) “MIP,” “MIP Bonus,” and “Target MIP Bonus” are defined in Section 3(b).
 
(l) “Term” is defined in Section 1.
 
 
 
 
[Signatures follow.]
 
 
13

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

 
 
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
 

  IMPRIMIS PHARMACEUTICALS, INC.          
 
By:
/s/ Robert Kammer     Name: Robert Kammer     Title: Chairman of the Board      
      EXECUTIVE               /s/ Mark Baum       Mark Baum  

 
 
14

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

 
 
EXHIBIT A
 
IMPRIMIS PHARMACEUTICALS, INC.
 
NONQUALIFIED STOCK OPTION AGREEMENT
 
On ______________, (the “Grant Date”), Imprimis Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), has awarded to Mark Baum (“Optionee”), an
option (the “Option”) to purchase 180,000 shares of common stock, par value
$0.01 per share, of the Company (the “Shares”) for a price of [$X.XX] per share.
The Option has been granted under the Imprimis Pharmaceuticals, Inc. Amended and
Restated 2007 Incentive Stock and Awards Plan (the “Plan”), and will include and
be subject to all provisions of the Plan, which are incorporated herein by
reference, and will be subject to the provisions of this Nonqualified Stock
Option Agreement (this “Agreement”). Capitalized terms used in this Agreement
which are not specifically defined will have the meanings ascribed to such terms
in the Plan.
 
This Option shall vest and become exercisable in equal quarterly installments of
15,000 shares, on the first twelve quarterly anniversaries of the Effective Date
of the Optionee’s Amended and Restated Employment Agreement with the Company
dated __________ (the “Employment Agreement”) (each a “Vesting Date” with
respect to the portion of the Option scheduled to vest on such date), subject in
each case to the provisions of this Agreement, including those relating to the
Optionee’s continued employment with the Company and its Affiliates
(collectively, the “Imprimis Group”). This Option shall expire on the tenth
anniversary of the Grant Date (the “Grant Expiration Date”). If the Optionee’s
employment is terminated by the Company without cause (as defined under his
Employment Agreement), or by the Optionee for Good Reason (as defined under his
Employment Agreement), the portion of the Option scheduled to vest on the
Vesting Dates within 12 months after the date of termination of employment, had
no such termination of employment occurred, shall vest and be exercisable on the
date of termination of employment, provided that the Optionee executes and
delivers the Release contemplated by the Employment Agreement to the Company
within twenty-one (21) days following the date of termination, without
revocation or modification. If the Optionee’s employment is terminated by the
Company or its successor without Cause or by the Optionee for Good Reason (as
defined under his Employment Agreement), in each case within two (2) years after
a Change of Control, the Option shall vest in full and be fully exercisable as
discussed in Paragraph 3(b) of this Agreement, provided that the Optionee
executes and delivers the Release contemplated by the Employment Agreement to
the Company within twenty-one (21) days following the date of termination,
without revocation or modification.
 
1.           Method of Exercise and Payment of Price.
 
(a)           Method of Exercise. At any time when all or a portion of the
Option is exercisable under the Plan and this Agreement, some or all of the
exercisable portion of the Option may be exercised from time to time by written
notice to the Company, or such other method of exercise as may be specified by
the Company, including without limitation, exercise by electronic means on the
web site of the Company’s third-party equity plan administrator, which will:
 
 
A-1

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

 
 
(i) state the number of whole Shares with respect to which the Option is being
exercised; and
 
(ii) if the Option is being exercised by anyone other than Optionee, if not
already provided, be accompanied by proof satisfactory to counsel for the
Company of the right of such person or persons to exercise the Option under the
Plan and all applicable laws and regulations.
 
(b)           Payment of Price. The full exercise price for the portion of the
Option being exercised shall be paid to the Company as provided below:
 
(i) in cash;
 
(ii) by check or wire transfer (denominated in U.S. Dollars);
 
(iii) subject to any conditions or limitations established by the Committee,
other Shares which (A) in the case of Shares acquired from the Company (whether
upon the exercise of an Option or otherwise), have been owned by the Participant
for more than six months on the date of surrender (unless this condition is
waived by the Committee), and (B) have a Fair Market Value on the date of
surrender equal to or greater than the aggregate exercise price of the Shares as
to which said Option shall be exercised (it being agreed that the excess of the
Fair Market Value over the aggregate exercise price shall be refunded to the
Optionee, with any fractional Share being repaid in cash);
 
(iv) consideration received by the Company under a broker-assisted sale and
remittance program acceptable to the Committee; or
 
(v) any combination of the foregoing methods of payment.
 
2.           Transferability. The Option shall be transferable (I) at Optionee’s
death, by Optionee by will or pursuant to the laws of descent and distribution,
and (II) by Optionee during Optionee’s lifetime, without payment of
consideration, to (a) the spouse, former spouse, parents, stepparents,
grandparents, parents-in-law, siblings, siblings-in-law, children, stepchildren,
children-in-law, grandchildren, nieces or nephews of Optionee, or any other
persons sharing Optionee’s household (other than tenants or employees)
(collectively, “Family Members”), (b) a trust or trusts for the primary benefit
of Optionee or such Family Members, (c) a foundation in which Optionee or such
Family Members control the management of assets, or (d) a partnership in which
Optionee or such Family Members are the majority or controlling partners;
provided, however, that subsequent transfers of the transferred Option shall be
prohibited, except (X) if the transferee is an individual, at the transferee’s
death by the transferee by will or pursuant to the laws of descent and
distribution, and (Y) without payment of consideration to the individuals or
entities listed in subparagraphs II(a), (b) or (c), above, with respect to the
original Optionee. The Committee may, in its discretion, permit transfers to
other persons and entities as permitted by the Plan. Neither a transfer under a
domestic relations order in settlement of marital property rights nor a transfer
to an entity in which more than 50% of the voting interests are owned by
Optionee or Family Members in exchange for an interest in that entity shall be
considered to be a transfer for consideration. Within 10 days of any transfer,
Optionee shall notify the Committee in writing of the transfer. Following
transfer, the Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer and, except as
otherwise provided in the Plan or this Agreement, references to the original
Optionee shall be deemed to refer to the transferee. The events of a termination
of employment of Optionee provided in Paragraph 3 hereof shall continue to be
applied with respect to the original Optionee, following which the Option shall
be exercisable by the transferee only to the extent, and for the periods,
specified in Paragraph 3. The Company shall have no obligation to notify any
transferee of Optionee’s termination of employment with the Imprimis Group for
any reason. Optionee shall remain subject to the tax withholding provisions of
Section 29 of the Plan following transfer of the Option.
 
 
A-2

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

 
 
3.           Termination of Employment; Retirement.
 
(a)           Termination of Employment by Reason of Death or Disability. If a
termination of employment of Optionee occurs by reason of death or Disability
prior to the vesting in full of the Option, but at least six (6) months from the
Grant Date, then any unvested portion of the Option shall vest upon and become
exercisable in full from and after such death or Disability. The Option may
thereafter be exercised by the Optionee, any transferee of Optionee, if
applicable, or by the legal representative of the estate or by the legatee of
Optionee under the will of Optionee from the date of such death or Disability
until the Grant Expiration Date.
 
(b)           Other Termination of Employment. If a termination of employment of
Optionee occurs by any reason other than Optionee’s death or Disability (each at
least six (6) months from Grant Date), any unexercised portion of the Option
which has not vested on such date of termination of employment will
automatically be forfeited. Optionee (or any transferee, if applicable) will
have 90 days from the date of termination of employment or until the Grant
Expiration Date, whichever period is shorter, to exercise any portion of the
Option that is vested and exercisable on the date of termination of employment;
provided, however, that if the termination of employment was a termination for
Cause, as determined by the Committee, the Option shall be immediately canceled
by the Committee (whether then held by Optionee or any transferee); provided,
further, that in the event of an Optionee’s termination of employment within one
(1) year after a Change of Control for any reason other than because of the
Optionee’s death, Disability or termination for Cause, this Option shall,
following such termination of employment, remain exercisable until the earlier
of the third anniversary of such termination of employment or the expiration of
its original term.
 
4.           Restrictions on Exercise. The Option is subject to all restrictions
in this Agreement and/or in the Plan. As a condition of any exercise of the
Option, the Company may require Optionee or his or her transferee or successor
to make any representation and warranty to comply with any applicable law or
regulation or to confirm any factual matters reasonably requested by the
Company. The Option shall not be exercisable if such exercise would involve a
violation of any applicable law.
 
 
A-3

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

 
 
5.           Triggering Conduct. As used in this Agreement, “Triggering Conduct”
shall mean Optionee’s material breach of any provision of Section 7 of the
Employment Agreement.
 
6.           Special Forfeiture/Repayment Rules. For so long as Optionee
continues as an employee with the Imprimis Group and for one year following
termination of employment regardless of the reason, Optionee agrees not to
engage in Triggering Conduct. If Optionee engages in Triggering Conduct during
the time period set forth in the preceding sentence, then Optionee shall, within
30 days following written notice from the Company, pay to the Company an amount
equal to (x) the gross option gain realized or obtained by Optionee or any
transferee resulting from the exercise of such Option, measured at the date of
exercise (i.e., the difference between the market value of the Shares underlying
the Option on the exercise date and the exercise price paid for such Shares
underlying the Option), with respect to any portion of the Option that has
already been exercised at any time within three years prior to the Triggering
Conduct (the “Look-Back Period”), (y) minus $1.00. Optionee may be released from
Optionee’s obligations under this Paragraph 5 if and only if the Committee (or
its duly appointed designee) authorizes, in writing and in its sole discretion,
such release. Nothing in this Paragraph 5 constitutes a so-called “noncompete”
covenant. This Paragraph 5 does, however, prohibit certain conduct while
Optionee is associated with the Imprimis Group and thereafter and does provide
for the forfeiture or repayment of the benefits granted by this Agreement under
certain circumstances. No provisions of this Agreement shall diminish, negate or
otherwise impact any separate agreement to which Optionee may be a party,
including, but not limited to, any certificate of compliance or similar
attestation/certification signed by Optionee; provided, however, that to the
extent that any provisions contained in any other agreement are inconsistent in
any manner with the restrictions and covenants of Optionee contained in this
Agreement, the provisions of this Agreement shall take precedence and such other
inconsistent provisions shall be null and void as to this Agreement. Optionee
acknowledges and agrees that the restrictions contained in this Agreement are
being made for the benefit of the Company in consideration of Optionee’s receipt
of the Option, in consideration of employment, in consideration of exposing
Optionee to the Company’s business operations and confidential information, and
for other good and valuable consideration, the adequacy of which consideration
is hereby expressly confirmed. Optionee further acknowledges that the receipt of
the Option and execution of this Agreement are voluntary actions on the part of
Optionee and that the Company is unwilling to provide the Option to Optionee
without including the restrictions and covenants of Optionee contained in this
Agreement. Further, the parties agree and acknowledge that the provisions
contained in Paragraphs 4 and 5 are ancillary to, or part of, an otherwise
enforceable agreement at the time the agreement is made.
 
7.           Right of Set-Off. By accepting this Option, Optionee consents to a
deduction from, and set-off against, any amounts owed to Optionee that are not
treated as “non-qualified deferred compensation” under Section 409A of the Code
by any member of the Imprimis Group from time to time (including, but not
limited to, amounts owed to Optionee as wages, severance payments or other
fringe benefits) to the extent of the amounts owed to the Imprimis Group by
Optionee under this Agreement.
 
 
A-4

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

 
 
8.           Withholding Tax.
 
(a)           Generally. Optionee is liable and responsible for all taxes owed
in connection with the exercise of the Option, regardless of any action the
Company takes with respect to any tax withholding obligations that arise in
connection with the Option. The Company does not make any representation or
undertaking regarding the tax treatment or the treatment of any tax withholding
in connection with the exercise of the Option. The Company does not commit and
is under no obligation to structure the Option or the exercise of the Option to
reduce or eliminate Optionee’s tax liability.
 
(b)           Payment of Withholding Taxes. Concurrently with the payment of the
exercise price pursuant to Paragraph 1 hereof, Optionee is required to arrange
for the satisfaction of the minimum amount of any domestic or foreign tax
withholding obligation, whether national, federal, state or local, including any
employment tax obligation (the “Tax Withholding Obligation”) in a manner
acceptable to the Company, including withholding such amounts in cash from the
Optionee’s wages or other payments due to the Optionee at any time, or, in lieu
thereof, to retain, or sell without notice, a number of Shares sufficient to
cover the Tax Withholding Obligation. The value of any Shares retained for such
purposes shall be based on the Fair Market Value, as the term is defined in the
Plan, of the Shares on the date of exercise of the Option. To the extent that
the Company or its Affiliate withholds any amounts in Shares to cover the Tax
Withholding Obligation, it will do so at the minimum statutory rate. Should the
Company or the Affiliate withhold any amounts in cash or retains any Shares in
excess of Optionee’s actual Tax Withholding Obligation, the Company and/or
Optionee’s employer will refund the excess amount to the Optionee, with any
fractional Share being repaid in cash, within a reasonable period and without
any interest. The Optionee authorizes the Company or the Affiliate, or their
agents (including, without limitations, any broker or bank) to withhold cash or
Shares as appropriate. Optionee agrees to pay the Company and/or the Affiliate
employing Optionee any amount of the Tax Withholding Obligation that is not
satisfied by the means described herein.
 
If any of the foregoing methods of collection are not allowed under applicable
law or if Optionee fails to comply with his or her obligations in connection
with the Tax Withholding Obligation as described in this Paragraph, the Company
may refuse to honor the exercise and refuse to deliver the Shares.
 
Optionee is liable and responsible for all taxes and social security owed in
connection with the Option, regardless of any action the Company takes with
respect to any Tax Withholding Obligations that arise in connection with the
Option. The Company does not make any representation or undertaking regarding
the tax and social security treatment or the treatment of any withholding in
connection with the exercise of the Option. The Company does not commit and is
under no obligation to structure the Option or the exercise of the Option to
reduce or eliminate Optionee’s tax liability.
 
9.           Governing Law/Venue for Dispute Resolution/Costs and Legal Fees.
This Agreement shall be governed by the laws of the State of Delaware, without
regard to principles of conflicts of law, except to the extent superseded by the
laws of the United States of America. The parties agree and acknowledge that the
laws of the State of Delaware bear a substantial relationship to the parties
and/or this Agreement and that the Option and benefits granted herein would not
be granted without the governance of this Agreement by the laws of the State of
Delaware. In addition, all disputes relating to this Agreement shall be resolved
exclusively pursuant to the terms of Section 17 of the Employment Agreement.
 
 
A-5

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

 
 
10.          Action by the Committee. The parties agree that the interpretation
of this Agreement shall rest exclusively and completely within the sole
discretion of the Committee. The parties agree to be bound by the decisions of
the Committee with regard to the interpretation of this Agreement and with
regard to any and all matters set forth in this Agreement. The Committee may
delegate its functions under this Agreement to an officer of the Imprimis Group
designated by the Committee (hereinafter the “designee”). In fulfilling its
responsibilities hereunder, the Committee or its designee may rely upon
documents, written statements of the parties or such other material as the
Committee or its designee deems appropriate. The parties agree that there is no
right to be heard or to appear before the Committee or its designee and that any
decision of the Committee or its designee relating to this Agreement, including
without limitation whether particular conduct constitutes Triggering Conduct,
shall be final and binding unless such decision is arbitrary and capricious.
 
11.          Prompt Acceptance of Agreement. The Option grant evidenced by this
Agreement shall, at the discretion of the Committee, be forfeited if this
Agreement is not manually executed and returned to the Company, or
electronically executed by Optionee by indicating Optionee’s acceptance of this
Agreement in accordance with the acceptance procedures set forth on the
Company’s third-party equity plan administrator’s web site, within 90 days of
the Grant Date.
 
12.          Electronic Delivery and Consent to Electronic Participation. The
Company may, in its sole discretion, decide to deliver any documents related to
the Option grant under and participation in the Plan or future options that may
be granted under the Plan by electronic means. Optionee hereby consents to
receive such documents by electronic delivery and to participate in the Plan
through an on-line or electronic system established and maintained by the
Company or another third party designated by the Company, including the
acceptance of option grants and the execution of option Agreements through
electronic signature.
 
13.          Notices. All notices, requests, consents and other communications
required or provided under this Agreement to be delivered by Optionee to the
Company will be in writing and will be deemed sufficient if delivered by hand,
facsimile, nationally recognized overnight courier, or certified or registered
mail, return receipt requested, postage prepaid, and will be effective upon
delivery to the Company at the address set forth below:
 
Imprimis Pharmaceuticals, Inc.
437 S. Hwy. 101, Suite 209
Solana Beach, CA 92075
Attention: General Counsel
Facsimile: 858-345-1745

All notices, requests, consents and other communications required or provided
under this Agreement to be delivered by the Company to Optionee may be delivered
by e-mail or in writing and will be deemed sufficient if delivered by e-mail,
hand, facsimile, nationally recognized overnight courier, or certified or
registered mail, return receipt requested, postage prepaid, and will be
effective upon delivery to the Optionee.
 
 
A-6

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

 
 
14.          Employment Agreement, Offer Letter or Other Arrangement. To the
extent a written employment Agreement, offer letter or other arrangement
(“Employment Arrangement”) that was approved by the Compensation Committee or
the Board of Directors or that was approved in writing by an officer of the
Company pursuant to delegated authority of the Compensation Committee provides
for greater benefits to Optionee with respect to (i) vesting of the Option on
termination of employment by reason of specified events or (ii) exercisability
of the Option following termination of employment, than provided in this
Agreement or in the Plan, then the terms of such Employment Arrangement with
respect to vesting of the Option on termination of employment by reason of such
specified events or exercisability of the Option following termination of
employment shall supersede the terms hereof to the extent permitted by the terms
of the Plan.
 
 

IMPRIMIS PHARMACEUTICALS, INC.       By:         Its.:    

 
 
A-7

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

 
 
ACCEPTANCE OF AGREEMENT
 
Optionee hereby: (a) acknowledges receiving a copy of the Plan, which has either
been previously delivered or is provided with this Agreement, and represents
that he or she is familiar with and understands all provisions of the Plan and
this Agreement and (b) voluntarily and knowingly accepts this Agreement and the
Option granted to him or her under this Agreement subject to all provisions of
the Plan and this Agreement, including the provisions in the Agreement regarding
“Triggering Conduct” and “Special Forfeiture/Repayment Rules” set forth in
Paragraphs 5 and 6 above. Optionee further acknowledges receiving a copy of the
Company’s most recent annual report to stockholders and other communications
routinely distributed to the Company’s stockholders and a copy of the Plan
Prospectus pertaining to the Plan.
 
_______________________
Optionee’s Signature
 
_______________________
Date
 
 
A-8

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

 
 
EXHIBIT B
 
IMPRIMIS PHARMACEUTICALS, INC.
 
RESTRICTED STOCK UNITS AGREEMENT
 
On _____________, ____ (the “Grant Date”), Imprimis Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), has awarded to Mark Baum (“Grantee”)
200,000 Restricted Stock Units (the “Restricted Stock Units” or “Award”),
representing an unfunded unsecured promise of the Company to deliver shares of
common stock, par value $0.01 per share, of the Company (the “Shares”) to
Grantee as set forth herein. The Restricted Stock Units have been granted
pursuant to the Imprimis Pharmaceuticals, Inc. Amended and Restated 2007
Incentive Stock and Awards Plan (the “Plan”), and shall be subject to all
provisions of the Plan, which are incorporated herein by reference, and shall be
subject to the provisions of this Restricted Stock Units Agreement (this
“Agreement”). Capitalized terms used in this Agreement which are not
specifically defined will have the meanings ascribed to such terms in the Plan.
 
1.           Vesting. The Restricted Stock Units shall vest on the third
anniversary of the Effective Date of the Grantee’s Amended and Restated
Employment Agreement with the Company dated _______________ (the “Employment
Agreement”) (the “Vesting Date” with respect to the Restricted Stock Units
scheduled to vest on such date), subject in each case to the provisions of this
Agreement, including those relating to the Grantee’s continued employment with
the Company and its Affiliates (collectively, the “Imprimis Group”). If the
Grantee’s employment is terminated by the Company without Cause (as defined
under his Employment Agreement), or by the Grantee for Good Reason (as defined
under his Employment Agreement), the portion of the Restricted Stock Units equal
to 200,000 multiplied by a fraction the numerator of which shall be the sum of
the number of days between the Grant Date and the termination of employment plus
365 days and the denominator of which shall be 1095, shall vest on the date of
termination of employment, provided that the Grantee executes and delivers the
Release contemplated by the Employment Agreement to the Company within
twenty-one (21) days following the date of termination, without revocation or
modification; provided, further, that under no circumstances will the Grantee
vest in more than 100% of the Restricted Stock Units subject to his award. If
the Grantee’s employment is terminated by the Company or its successor without
Cause or by the Grantee for Good Reason (as defined under his Employment
Agreement), in each case within one (1) year after a Change of Control, the
Restricted Stock Units shall vest in full., provided that the Grantee executes
and delivers the Release contemplated by the Employment Agreement to the Company
within twenty-one (21) days following the date of termination, without
revocation or modification.
 
2.           Transferability. The Restricted Stock Units shall not be
transferable.
 
3.           Termination of Employment.
 
(a)           General. Except as set forth below or in Section 1 above, if a
termination of employment of Grantee occurs prior to the vesting in full of the
Restricted Stock Units, any unvested portion of such Restricted Stock Units
shall be forfeited by Grantee.
 
 
B-1

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

 
 
(b)           Termination of Employment by Reason of Death or Disability. If a
termination of employment of Grantee occurs by reason of death or Disability
prior to the vesting in full of the Restricted Stock Units, but at least six
(6) months from the Grant Date, then any unvested Restricted Stock Units shall
immediately vest in full and shall not be forfeited.
 
4.           Triggering Conduct. As used in this Agreement, “Triggering Conduct”
shall mean Grantee’s material breach of any provision of Section 7 of the
Employment Agreement.
 
5.           Special Forfeiture/Repayment Rules. For so long as Grantee
continues as an employee with the Imprimis Group and for one year following
termination of employment regardless of the reason, Grantee agrees not to engage
in Triggering Conduct. If Grantee engages in Triggering Conduct during the time
period set forth in the preceding sentence, then Grantee shall, within 30 days
following written notice from the Company, pay to the Company an amount equal to
(x) the aggregate gross gain realized or obtained by Grantee resulting from the
settlement of all Restricted Stock Units pursuant to Paragraph 6 hereof
(measured as of the settlement date (i.e., the market value of the Restricted
Stock Units on such settlement date)) that have already been settled and that
had vested at any time within three years prior to the Triggering Conduct (the
“Look-Back Period”), minus (y) $1.00. Grantee may be released from Grantee’s
obligations under this Paragraph 5 if and only if the Committee (or its duly
appointed designee) authorizes, in writing and in its sole discretion, such
release. Nothing in this Paragraph 5 constitutes a so-called “noncompete”
covenant. This Paragraph 5 does, however, prohibit certain conduct while Grantee
is associated with the Imprimis Group and thereafter and does provide for the
forfeiture or repayment of the benefits granted by this Agreement under certain
circumstances. No provisions of this Agreement shall diminish, negate or
otherwise impact any separate agreement to which Grantee may be a party,
including, but not limited to, any certificate of compliance or similar
attestation/certification signed by Grantee; provided, however, that to the
extent that any provisions contained in any other agreement are inconsistent in
any manner with the restrictions and covenants of Grantee contained in this
Agreement, the provisions of this Agreement shall take precedence and such other
inconsistent provisions shall be null and void as to this Agreement. Grantee
acknowledges and agrees that the restrictions contained in this Agreement are
being made for the benefit of the Company in consideration of Grantee’s receipt
of the Restricted Stock Units, in consideration of employment, in consideration
of exposing Grantee to the Company’s business operations and confidential
information, and for other good and valuable consideration, the adequacy of
which consideration is hereby expressly confirmed. Grantee further acknowledges
that the receipt of the Restricted Stock Units and execution of this Agreement
are voluntary actions on the part of Grantee and that the Company is unwilling
to provide the Restricted Stock Units to Grantee without including the
restrictions and covenants of Grantee contained in this Agreement. Further, the
parties agree and acknowledge that the provisions contained in Paragraphs 4 and
5 are ancillary to, or part of, an otherwise enforceable agreement at the time
the agreement is made.
 
6.           Payment.
 
(a)           Subject to the provisions of Paragraphs 4 and 5 of this Agreement
and Paragraphs (b), (c) and (d) below, and unless Grantee makes an effective
election to defer receipt of the Shares represented by the Restricted Stock
Units, on the date of vesting of any Restricted Stock Unit, Grantee shall be
entitled to receive from the Company (without any payment on behalf of Grantee
other than as described in Paragraph 10) the Shares represented by such
Restricted Stock Unit; provided, however, that where the vesting of any
Restricted Stock Unit occurs in connection with Grantee’s termination without
Cause or resignation for Good Reason, Section 409A of the Code applies to the
distribution in connection with such acceleration and Grantee is a “specified
employee” (determined in accordance with Section 409A of the Code), Grantee
shall be entitled to receive the corresponding Shares from the Company on the
date that is the first day of the seventh month after Grantee’s “separation from
service” with the Company (determined in accordance with Section 409A of the
Code). Elections to defer receipt of the Shares beyond the date of settlement
provided herein may be permitted in the discretion of the Committee pursuant to
procedures established by the Committee in compliance with the requirements of
Section 409A of the Code.
 
 
B-2

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

 
 
(b)           Death. Notwithstanding anything herein to the contrary, in the
event that such Restricted Stock Units vest prior to the Vesting Date(s) set
forth in Paragraph 1 as a result of a termination of employment due to Grantee’s
death, Grantee’s estate shall be entitled to receive the corresponding Shares
from the Company on the date of such vesting.
 
(c)           Disability. Notwithstanding anything herein to the contrary, in
the event that such Restricted Stock Units vest prior to the Vesting Date(s) set
forth in Paragraph 1 as a result of a termination of employment by reason of
Disability, Grantee shall be entitled to receive the corresponding Shares from
the Company on the date of such vesting; provided, however, that where
Section 409A of the Code applies to such distribution and Grantee is a
“specified employee” (determined in accordance with Section 409A of the Code),
Grantee shall be entitled to receive the corresponding Shares from the Company
on the date that is the first day of the seventh month after Grantee’s
“separation from service” with the Company (determined in accordance with
Section 409A of the Code).
 
(d)           Change of Control. Notwithstanding anything herein to the
contrary, in the event that such Restricted Stock Units vest prior to the
Vesting Date(s) set forth in Paragraph 1 as a result of the occurrence of a
Change of Control, Grantee shall be entitled to receive the corresponding Shares
from the Company on the date of such vesting; provided, however, that if the
Change of Control occurs under circumstances that would not qualify as a
permissible date of distribution under Section 409A(a)(2)(A) of the Code and the
regulations thereunder, then Grantee shall be entitled to receive the
corresponding Shares from the Company on the Vesting Date(s) that would have
otherwise applied pursuant to Paragraph 1.
 
7.           Dividend Equivalents. Grantee shall not be entitled to receive any
cash dividends on the Restricted Stock Units. However, to the extent the Company
determines to pay a cash dividend to holders of the Common Stock, a Grantee
shall, with respect to each Restricted Stock Unit, be entitled to receive a cash
payment from the Company on each cash dividend payment date with respect to the
Shares with a record date between the Grant Date and the settlement of such unit
pursuant to Paragraph 6 hereof, such cash payment to be in an amount equal to
the dividend that would have been paid on the Common Stock represented by such
unit. Cash payments on each cash dividend payment date with respect to the
Shares with a record date prior to a Vesting Date shall be accrued until the
Vesting Date and paid thereon (subject to the same vesting requirements as the
underlying Restricted Stock Units award). Elections to defer receipt of the cash
payments in lieu of cash dividends beyond the date of settlement provided herein
may be permitted in the discretion of the Committee pursuant to procedures
established by the Company in compliance with the requirements of Section 409A
of the Code.
 
 
B-3

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

 
 
8.           Right of Set-Off. By accepting these Restricted Stock Units,
Grantee consents to a deduction from, and set-off against, any amounts owed to
Grantee that are not treated as “non-qualified deferred compensation” under
Section 409A of the Code by any member of the Imprimis Group from time to time
(including, but not limited to, amounts owed to Grantee as wages, severance
payments or other fringe benefits) to the extent of the amounts owed to the
Imprimis Group by Grantee under this Agreement.
 
9.           No Stockholder Rights. Grantee shall have no rights of a
stockholder with respect to the Restricted Stock Units, including, without
limitation, any right to vote the Shares represented by the Restricted Stock
Units.
 
10.         Withholding Tax.
 
(a)           Generally. Grantee is liable and responsible for all taxes owed in
connection with the Restricted Stock Units (including taxes owed with respect to
any cash payments described in Paragraph 7 hereof), regardless of any action the
Company takes with respect to any tax withholding obligations that arise in
connection with the Restricted Stock Units. The Company does not make any
representation or undertaking regarding the tax treatment or the treatment of
any tax withholding in connection with the grant or vesting of the Restricted
Stock Units or the subsequent sale of Shares issuable upon settlement of the
Restricted Stock Units. The Company does not commit and is under no obligation
to structure the Restricted Stock Units to reduce or eliminate Grantee’s tax
liability.
 
(b)           Payment of Withholding Taxes. Prior to any event in connection
with the Restricted Stock Units (e.g., vesting or settlement) that the Company
determines may result in any domestic or foreign tax withholding obligation,
whether national, federal, state or local, including any employment tax
obligation (the “Tax Withholding Obligation”), Grantee is required to arrange
for the satisfaction of the minimum amount of such Tax Withholding Obligation in
a manner acceptable to the Company. Unless Grantee elects to satisfy the Tax
Withholding Obligation by an alternative means that is then permitted by the
Company, Grantee’s acceptance of this Agreement constitutes Grantee’s
instruction and authorization to the Company to retain on Grantee’s behalf the
number of Shares from those Shares issuable to Grantee under this Award as the
Company determines to be sufficient to satisfy the Tax Withholding Obligation as
owed when any such obligation comes due. The value of any Shares retained for
such purposes shall be based on the Fair Market Value, as the term is defined in
the Plan, of the Shares on the date of vesting of the Restricted Stock Units. To
the extent that the Company retains any Shares to cover the Tax Withholding
Obligation, it will do so at the minimum statutory rate, but in no event shall
such amount exceed the minimum required by applicable law and regulations. The
Company shall have the right to deduct from all cash payments paid pursuant to
Paragraph 7 hereof the amount of any taxes which the Company is required to
withhold with respect to such payments.
 
 
B-4

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

 
 
11.          Governing Law/Venue for Dispute Resolution/Costs and Legal Fees.
This Agreement shall be governed by the laws of the State of Delaware, without
regard to principles of conflicts of law, except to the extent superceded by the
laws of the United States of America. The parties agree and acknowledge that the
laws of the State of Delaware bear a substantial relationship to the parties
and/or this Agreement and that the Restricted Stock Units and benefits granted
herein would not be granted without the governance of this Agreement by the laws
of the State of Delaware. In addition, all disputes relating to this Agreement
shall be resolved exclusively pursuant to the terms of Section 17 of the
Employment Agreement.
 
12.          Action by the Committee. The parties agree that the interpretation
of this Agreement shall rest exclusively and completely within the sole
discretion of the Committee. The parties agree to be bound by the decisions of
the Committee with regard to the interpretation of this Agreement and with
regard to any and all matters set forth in this Agreement. The Committee may
delegate its functions under this Agreement to an officer of the Imprimis Group
designated by the Committee (hereinafter the “designee”). In fulfilling its
responsibilities hereunder, the Committee or its designee may rely upon
documents, written statements of the parties or such other material as the
Committee or its designee deems appropriate. The parties agree that there is no
right to be heard or to appear before the Committee or its designee and that any
decision of the Committee or its designee relating to this Agreement, including,
without limitation, whether particular conduct constitutes Triggering Conduct,
shall be final and binding unless such decision is arbitrary and capricious.
 
13.          Prompt Acceptance of Agreement. The Restricted Stock Unit grant
evidenced by this Agreement shall, at the discretion of the Committee, be
forfeited if this Agreement is not manually executed and returned to the
Company.
 
14.           Electronic Delivery and Consent to Electronic Participation. The
Company may, in its sole discretion, decide to deliver any documents related to
the Restricted Stock Unit grant under and participation in the Plan or future
Restricted Stock Units that may be granted under the Plan by electronic means.
Grantee hereby consents to receive such documents by electronic delivery and to
participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company,
including the acceptance of Restricted Stock Unit grants and the execution of
Restricted Stock Unit agreements through electronic signature.
 
15.          Notices. All notices, requests, consents and other communications
required or provided under this Agreement to be delivered by Grantee to the
Company will be in writing and will be deemed sufficient if delivered by hand,
facsimile, nationally recognized overnight courier, or certified or registered
mail, return receipt requested, postage prepaid, and will be effective upon
delivery to the Company at the address set forth below:
 
Imprimis Pharmaceuticals, Inc.
437 S. Hwy. 101, Suite 209
Solana Beach, CA 92075
Attention: General Counsel
Facsimile: 858-345-1745
 
All notices, requests, consents and other communications required or provided
under this Agreement to be delivered by the Company to Grantee may be delivered
by e-mail or in writing and will be deemed sufficient if delivered by e-mail,
hand, facsimile, nationally recognized overnight courier, or certified or
registered mail, return receipt requested, postage prepaid, and will be
effective upon delivery to the Grantee.
 
 
B-5

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

 
 
16.          Employment Agreement, Offer Letter or Other Arrangement. To the
extent a written employment agreement, offer letter or other arrangement
(“Employment Arrangement”) that was approved by the Compensation Committee or
the Board of Directors or that was approved in writing by an officer of the
Company pursuant to delegated authority of the Compensation Committee provides
for greater benefits to Grantee with respect to vesting of the Award on
termination of employment than provided in this agreement or in the Plan, then
the terms of such Employment Arrangement with respect to vesting of the Award on
termination of employment by reason of such specified events shall supersede the
terms hereof to the extent permitted by the terms of the Plan.
 
 

IMPRIMIS PHARMACEUTICALS, INC.       By:         Its.:    

 
 
B-6

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

 
 
ACCEPTANCE OF AGREEMENT
 
Grantee hereby: (a) acknowledges receiving a copy of the Plan, which has either
been previously delivered or is provided with this agreement, and represents
that he or she is familiar with and understands all provisions of the Plan and
this agreement and (b) voluntarily and knowingly accepts this Agreement and the
Restricted Stock Units granted to him or her under this Agreement subject to all
provisions of the Plan and this Agreement, including the provisions in the
Agreement regarding “Triggering Conduct” and “Special Forfeiture/Repayment
Rules” set forth in Paragraphs 4 and 5 above. Grantee further acknowledges
receiving a copy of the Company’s most recent annual report to stockholders and
other communications routinely distributed to the Company’s stockholders and a
copy of the Plan Prospectus pertaining to the Plan.
 
___________________________
Grantee’s Signature
 
___________________________
Date
 
 
B-7

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

 
 
EXHIBIT C
 
IMPRIMIS PHARMACEUTICALS, INC.
 
PERFORMANCE STOCK UNITS AGREEMENT
 
On _____________, ____ (the “Grant Date”), Imprimis Pharmaceuticals, Inc., a
Delaware corporation (the “Company”), has awarded to Mark Baum (“Grantee”) a
targeted number of 1,050,000 (the “Target Number”) Performance Stock Units (the
“Performance Stock Units” or “Award”) to be calculated and determined as
discussed below. Each Performance Stock Unit will represent an unfunded and
unsecured promise of the Company to deliver shares of common stock, par value
$0.01 per share, of the Company (the “Shares”) to Grantee as set forth herein.
Each Performance Stock Unit will be subject to forfeiture until the date such
Performance Stock Unit vests pursuant to Paragraph 1 of this Agreement. The
Performance Stock Units have been granted pursuant to the Imprimis
Pharmaceuticals, Inc. Amended and Restated 2007 Incentive Stock and Awards Plan
(the “Plan”), and shall be subject to all provisions of the Plan, which are
incorporated herein by reference, and shall be subject to the provisions of this
Agreement. Capitalized terms used in this Agreement that are not specifically
defined will have the meanings ascribed to such terms in the Plan.
 
1.           Vesting. The Performance Stock Units consist of the following five
tranches (each, a “Tranche”) that vest upon the attainment of the target share
price (the “Target Share Price”) as specified below:
 
Tranche
 
No. of Shares
 
Target Share Price
Tranche 1
 
19.05% of Target Number
 
$10.00 or greater
Tranche 2
 
19.05% of Target Number
 
$15.00 or greater
Tranche 3
 
19.05% of Target Number
 
$20.00 or greater
Tranche 4
 
19.05% of Target Number
 
$25.00 or greater
Tranche 5
 
23.08% of Target Number
 
$30.00 or greater

 
Each Tranche may only vest once. Except as otherwise specified below, for each
respective Tranche to vest, all three of the following conditions must be met:
 
(a)           a Trigger Date may occur any time after the Grant Date. A “Trigger
Date” means any trading day on which the official closing price per Share (the
“Closing Price”) is at or above the Target Share Price for the respective
Tranche. Notwithstanding the foregoing, the Committee will, in such manner as
the Committee determines is appropriate in its discretion, include the value of
stock dividends distributed to the stockholders of the Company in connection
with spin-offs or similar transactions for purposes of determining whether the
Target Share Price has been achieved;
 
 
C-8

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

 
 
(b)           during the period that includes the Trigger Date and the
immediately following 19 trading days (each, a “Measurement Period”), the
arithmetic mean of the 20 Closing Prices during the Measurement Period must be
at or above the Target Share Price for such Tranche (the “20 Closing Price
Condition”); and
 
(c)           the Grantee must be in continuous service with the Company and its
Affiliates through the third anniversary of the Grant Date (the “Service
Condition”).
 
To the extent all three of the above conditions are met, the third anniversary
of the Grant Date shall be the “Vesting Date.” If the Grantee’s employment is
terminated as a result of death or Disability, in each case before the third
anniversary of the Grant Date, then all Tranches for which a Trigger Date has
occurred and the 20 Closing Price Condition has been satisfied on or before the
date of termination but which are not vested solely because the date of
termination occurs before the third anniversary of the Grant Date shall vest,
and the date of termination shall be the Vesting Date. If the Grantee’s
employment is terminated by the Company other than a termination for Cause (as
defined in his Employment Agreement), or by the Grantee for Good Reason (as
defined in his Employment Agreement), in each case before the third anniversary
of the Grant Date, then (i) then all Tranches for which a Trigger Date has
occurred and the 20 Closing Price Condition has been satisfied on or before the
date of termination but which are not vested solely because the Service
Condition has not been satisfied shall vest, and the date of termination shall
be the Vesting Date; and (ii) all Tranches for which a Trigger Date occurs and
the 20 Closing Price Condition has been satisfied on or after the date of
termination but on or before the first anniversary of the date of termination
and with respect to which the Grantee would have vested had he satisfied the
Service Condition shall vest on the date on which both the Trigger Date occurs
and the 20 Closing Price Condition has been satisfied and such date shall be the
Vesting Date; provided that the Grantee executes and delivers the Release
contemplated by the Employment Agreement to the Company within twenty-one (21)
days following the date of termination, without revocation or modification;
provided, further, that if a Change of Control has occurred prior to such
termination, the subsequent sentence shall govern, and in no event shall the
Vesting Date or a Trigger Date extend beyond the third anniversary of the Grant
Date. If, after the first anniversary but before the third anniversary of the
Grant Date, the Grantee’s employment is terminated by the Company or its
successor without Cause or by the Grantee for Good Reason (as defined under his
Employment Agreement), in either case within one (1) year after a Change of
Control, then the following Tranches shall vest, and the date of termination
shall be the Vesting Date: (i) all Tranches for which a Trigger Date has
occurred and the 20 Closing Price Condition has been satisfied on or immediately
before the Change of Control but which are not vested solely because the Grantee
has not satisfied the Service Condition; and (ii) all other Tranches with a
Target Share Price at or below the per-Share transaction consideration received
by stockholders of the Company upon the Change of Control (as determined in
accordance with the terms and conditions of the applicable definitive agreement
that results in the Change of Control), provided that the Grantee executes and
delivers the Release contemplated by the Employment Agreement to the Company
within twenty-one (21) days following the date of termination, without
revocation or modification. Any Tranche that has not vested by the third
anniversary of the Grant Date shall expire.
 
 
C-9

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

 
 
2.           Transferability. The Performance Stock Units shall not be
transferable.
 
3.           Termination of Employment. Except as set forth in Paragraph 1, if a
termination of employment of Grantee occurs prior to the vesting in full of the
Performance Stock Units, any unvested portion of such Performance Stock Units
shall be forfeited by Grantee.
 
4.           Triggering Conduct. As used in this Agreement, “Triggering Conduct”
shall mean Grantee’s material breach of any provision of Section 7 of the
Employment Agreement.
 
5.           Special Forfeiture/Repayment Rules. For so long as Grantee
continues as an employee with the Imprimis Group and for one year following
termination of employment regardless of the reason, Grantee agrees not to engage
in Triggering Conduct. If Grantee engages in Triggering Conduct during the time
period set forth in the preceding sentence, then Grantee shall, within 30 days
following written notice from the Company, pay to the Company an amount equal to
(x) the aggregate gross gain realized or obtained by Grantee resulting from the
settlement of all Performance Stock Units pursuant to Paragraph 6 hereof
(measured as of the settlement date (i.e., the market value of the Performance
Stock Units on such settlement date)) that have already been settled and that
had vested at any time within three years prior to the Triggering Conduct (the
“Look-Back Period”), minus (y) $1.00. Grantee may be released from Grantee’s
obligations under this Paragraph 5 if and only if the Committee (or its duly
appointed designee) authorizes, in writing and in its sole discretion, such
release. Nothing in this Paragraph 5 constitutes a so-called “noncompete”
covenant. This Paragraph 5 does, however, prohibit certain conduct while Grantee
is associated with the Imprimis Group and thereafter and does provide for the
forfeiture or repayment of the benefits granted by this Agreement under certain
circumstances. No provisions of this Agreement shall diminish, negate or
otherwise impact any separate agreement to which Grantee may be a party,
including, but not limited to, any certificate of compliance or similar
attestation/certification signed by Grantee; provided, however, that to the
extent that any provisions contained in any other agreement are inconsistent in
any manner with the restrictions and covenants of Grantee contained in this
Agreement, the provisions of this Agreement shall take precedence and such other
inconsistent provisions shall be null and void as to this Agreement. Grantee
acknowledges and agrees that the restrictions contained in this Agreement are
being made for the benefit of the Company in consideration of Grantee’s receipt
of the Performance Stock Units, in consideration of employment, in consideration
of exposing Grantee to the Company’s business operations and confidential
information, and for other good and valuable consideration, the adequacy of
which consideration is hereby expressly confirmed. Grantee further acknowledges
that the receipt of the Performance Stock Units and execution of this Agreement
are voluntary actions on the part of Grantee and that the Company is unwilling
to provide the Performance Stock Units to Grantee without including the
restrictions and covenants of Grantee contained in this Agreement. Further, the
parties agree and acknowledge that the provisions contained in Paragraphs 4 and
5 are ancillary to, or part of, an otherwise enforceable agreement at the time
the agreement is made.
 
 
C-10

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

 
 
6.           Payment. Subject to the provisions of Paragraphs 4 and 5 of this
Agreement, and unless Grantee makes an effective election to defer receipt of
the Shares represented by the Performance Stock Units, on the Vesting Date,
Grantee shall be entitled to receive from the Company (without any payment on
behalf of Grantee other than as described in Paragraph 10) the Shares
represented by such Performance Stock Unit; provided, however, that where the
vesting of any Restricted Stock Unit occurs in connection with Grantee’s
termination without Cause, resignation for Good Reason or termination due to
Disability, Section 409A of the Code applies to the distribution in connection
with such acceleration and Grantee is a “specified employee” (determined in
accordance with Section 409A of the Code), Grantee shall be entitled to receive
the corresponding Shares from the Company on the date that is the first day of
the seventh month after Grantee’s “separation from service” with the Company
(determined in accordance with Section 409A of the Code). Elections to defer
receipt of the Shares beyond the date of settlement provided herein may be
permitted in the discretion of the Committee pursuant to procedures established
by the Committee in compliance with the requirements of Section 409A of the
Code.
 
7.           Dividend Equivalents. Grantee shall not be entitled to receive any
cash dividends on the Performance Stock Units. However, to the extent the
Company determines to pay a cash dividend to holders of the Common Stock, a
Grantee shall, with respect to each Performance Stock Unit, be entitled to
receive a cash payment from the Company on each cash dividend payment date with
respect to the Shares with a record date between the Grant Date and the
settlement of such unit pursuant to Paragraph 6 hereof, such cash payment to be
in an amount equal to the dividend that would have been paid on the Common Stock
represented by such unit. Cash payments on each cash dividend payment date with
respect to the Shares with a record date prior to a Vesting Date shall be
accrued until the Vesting Date and paid thereon (subject to the same vesting
requirements as the underlying Performance Stock Units award). Elections to
defer receipt of the cash payments in lieu of cash dividends beyond the date of
settlement provided herein may be permitted in the discretion of the Committee
pursuant to procedures established by the Company in compliance with the
requirements of Section 409A of the Code.
 
8.           Right of Set-Off. By accepting these Performance Stock Units,
Grantee consents to a deduction from, and set-off against, any amounts owed to
Grantee that are not treated as “non-qualified deferred compensation” under
Section 409A of the Code by any member of the Imprimis Group from time to time
(including, but not limited to, amounts owed to Grantee as wages, severance
payments or other fringe benefits) to the extent of the amounts owed to the
Imprimis Group by Grantee under this Agreement.
 
9.           No Stockholder Rights. Grantee shall have no rights of a
stockholder with respect to the Performance Stock Units, including, without
limitation, any right to vote the Shares represented by the Performance Stock
Units.
 
10.         Withholding Tax.
 
(a)           Generally. Grantee is liable and responsible for all taxes owed in
connection with the Performance Stock Units (including taxes owed with respect
to any cash payments described in Paragraph 7 hereof), regardless of any action
the Company takes with respect to any tax withholding obligations that arise in
connection with the Performance Stock Units. The Company does not make any
representation or undertaking regarding the tax treatment or the treatment of
any tax withholding in connection with the grant or vesting of the Performance
Stock Units or the subsequent sale of Shares issuable upon settlement of the
Performance Stock Units. The Company does not commit and is under no obligation
to structure the Performance Stock Units to reduce or eliminate Grantee’s tax
liability.
 
 
C-11

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

 
 
(b)           Payment of Withholding Taxes. Prior to any event in connection
with the Performance Stock Units (e.g., vesting or settlement) that the Company
determines may result in any domestic or foreign tax withholding obligation,
whether national, federal, state or local, including any employment tax
obligation (the “Tax Withholding Obligation”), Grantee is required to arrange
for the satisfaction of the minimum amount of such Tax Withholding Obligation in
a manner acceptable to the Company. Unless Grantee elects to satisfy the Tax
Withholding Obligation by an alternative means that is then permitted by the
Company, Grantee’s acceptance of this Agreement constitutes Grantee’s
instruction and authorization to the Company to retain on Grantee’s behalf the
number of Shares from those Shares issuable to Grantee under the Award as the
Company determines to be sufficient to satisfy the Tax Withholding Obligation as
owed when any such obligation becomes due. The value of any Shares retained for
such purposes shall be based on the Fair Market Value, as the term is defined in
the Plan, of the Shares on the date of vesting of the Performance Stock Units.
To the extent that the Company retains any Shares to cover the Tax Withholding
Obligation, it will do so at the minimum statutory rate, but in no event shall
such amount exceed the minimum required by applicable law and regulations. The
Company shall have the right to deduct from all cash payments paid pursuant to
Paragraph 7 hereof the amount of any taxes which the Company is required to
withhold with respect to such payments.
 
11.          Governing Law/Venue for Dispute Resolution/Costs and Legal Fees.
This Agreement shall be governed by the laws of the State of Delaware, without
regard to principles of conflicts of law, except to the extent superceded by the
laws of the United States of America. The parties agree and acknowledge that the
laws of the State of Delaware bear a substantial relationship to the parties
and/or this Agreement and that the Performance Stock Units and benefits granted
herein would not be granted without the governance of this Agreement by the laws
of the State of Delaware. In addition, all disputes relating to this Agreement
shall be resolved exclusively pursuant to the terms of Section 17 of the
Employment Agreement between Grantee and the Company dated ___________________.
 
12.          Action by the Committee. The parties agree that the interpretation
of this Agreement shall rest exclusively and completely within the sole
discretion of the Committee. The parties agree to be bound by the decisions of
the Committee with regard to the interpretation of this Agreement and with
regard to any and all matters set forth in this Agreement. The Committee may
delegate its functions under this Agreement to an officer of the Imprimis Group
designated by the Committee (hereinafter the “designee”). In fulfilling its
responsibilities hereunder, the Committee or its designee may rely upon
documents, written statements of the parties or such other material as the
Committee or its designee deems appropriate. The parties agree that there is no
right to be heard or to appear before the Committee or its designee and that any
decision of the Committee or its designee relating to this Agreement, including,
without limitation, whether particular conduct constitutes Triggering Conduct,
shall be final and binding unless such decision is arbitrary and capricious.
 
13.          Prompt Acceptance of Agreement. The Performance Stock Unit grant
evidenced by this Agreement shall, at the discretion of the Committee, be
forfeited if this Agreement is not manually executed and returned to the
Company, or electronically executed by Grantee by indicating Grantee’s
acceptance of this Agreement in accordance with the acceptance procedures set
forth on the Company’s third-party equity plan administrator’s web site, within
90 days of the Grant Date.
 
 
C-12

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

 
 
14.          Electronic Delivery and Consent to Electronic Participation. The
Company may, in its sole discretion, decide to deliver any documents related to
the Performance Stock Unit grant under and participation in the Plan or future
Performance Stock Units that may be granted under the Plan by electronic means.
Grantee hereby consents to receive such documents by electronic delivery and to
participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company,
including the acceptance of Performance Stock Unit grants and the execution of
Performance Stock Unit agreements through electronic signature.
 
15.          Notices. All notices, requests, consents and other communications
required or provided under this Agreement to be delivered by Grantee to the
Company will be in writing and will be deemed sufficient if delivered by hand,
facsimile, nationally recognized overnight courier, or certified or registered
mail, return receipt requested, postage prepaid, and will be effective upon
delivery to the Company at the address set forth below:
 
Imprimis Pharmaceuticals, Inc.
437 S. Hwy. 101, Suite 209
Solana Beach, CA 92075
Attention: General Counsel
Facsimile: 858-345-1745
 
All notices, requests, consents and other communications required or provided
under this Agreement to be delivered by the Company to Grantee may be delivered
by e-mail or in writing and will be deemed sufficient if delivered by e-mail,
hand, facsimile, nationally recognized overnight courier, or certified or
registered mail, return receipt requested, postage prepaid, and will be
effective upon delivery to the Grantee.
 
 

IMPRIMIS PHARMACEUTICALS, INC.       By:         Its.:    

 
C-13

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

 
 
ACCEPTANCE OF AGREEMENT
 
Grantee hereby: (a) acknowledges receiving a copy of the Plan, which has either
been previously delivered or is provided with this agreement, and represents
that he or she is familiar with and understands all provisions of the Plan and
this agreement; and (b) voluntarily and knowingly accepts this Agreement and the
Performance Stock Units granted to him or her under this Agreement subject to
all provisions of the Plan and this Agreement, including the provisions in the
Agreement regarding “Triggering Conduct” and “Special Forfeiture/Repayment
Rules” set forth in Paragraphs 4 and 5 above. Grantee further acknowledges
receiving a copy of the Company’s most recent annual report to stockholders and
other communications routinely distributed to the Company’s stockholders and a
copy of the Plan Prospectus pertaining to the Plan.
 
____________________________
Grantee’s Signature
 
____________________________
Date
 
 
C-14

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

 
 
EXHIBIT D
 
RELEASE AGREEMENT
 
This RELEASE AGREEMENT by and between Imprimis Pharmaceuticals, Inc. (the
“Company”) and __________ (the “Executive”) is dated as of the ____ day of
________ , 2013 (the “Release”).
 
Release
 
Executive hereby releases the Company and any of its predecessors, successors or
assigns to all or any part of its businesses (“Imprimis”) by execution of this
Release from any and all claims and causes of action related in any way to the
transactions or occurrences between them to date, to the fullest extent
permitted by law, including, but not limited to, Executive’s employment with
Imprimis, the termination of Executive’s employment, and all other losses,
liabilities, claims, charges, demands and causes of action, whether known or
unknown, as of the date of Executive’s execution of this Release with the
exception of any unemployment compensation claim Executive may have and any
other claims that cannot be waived by law. Executive agrees that this Release
applies to all officers, directors, employees and other representatives of
Imprimis and its affiliates and any of its predecessors, successors or assigns
to all or any part of its businesses including the Company, both individually
and in their respective capacities (collectively with Imprimis, the
“Releasees”). This Release is intended to have the broadest possible application
permitted by law and includes, but is not limited to any tort, contract, common
law, constitutional or other statutory claims, including, but not limited to,
alleged violations of Imprimis’ policies or practices; Title VII of the Civil
Rights Act of 1964, the Americans with Disabilities Act, other federal and state
fair employment practices or discrimination laws; laws pertaining to breach of
employment contract or wrongful termination; age discrimination claims under the
Age Discrimination and Employment Act, 29 U.S.C. Section 621 et seq., the
Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C.
Section 4301 et seq.; the Worker Adjustment and Retraining Notification Act, 29
U.S.C. Section 2101 et seq. and any applicable state laws of similar intent.
 
In addition, Executive agrees that Executive will not initiate, bring, or
prosecute any suit, action or grievance against any of the Releasees for any
released claim in any federal, state, county or municipal court, or any arbitral
forum, except as specifically stated below. Executive further agree that if
Executive does so, Executive will be liable for the payment of all damages and
costs, including attorneys’ fees, incurred by any of the Releasees in connection
with Executive’s suit, action, or grievance. Executive also waives any right to
any relief sought in connection with such claims, including any right to
damages, attorneys’ fees, costs, and all other legal or equitable relief.
 
This Release and agreement not to sue does not prohibit Executive from pursuing
a lawsuit, claim, or charge to challenge the validity or enforceability of this
Release under the Age Discrimination in Employment Act (“ADEA”) or the Older
Workers Benefit Protection Act (“OWBPA”), nor does it render Executive liable
for damages or costs, including attorneys’ fees, incurred by the Releasees in
connection with a lawsuit, claim, or charge to challenge the validity or
enforceability of this Release under the ADEA or the OWBPA. This Release and
agreement not to sue also does not prohibit Executive from filing charges with
government agencies or participating in any investigation resulting from such
charges. However, under this Release, Executive agrees not to accept any
monetary or personal relief or remedy, including but not limited to back pay,
front pay, or reinstatement, or damages of any nature that may be awarded to
Executive in connection with such charges. In addition, this general release is
not intended to bar any claims that may not be waived by law, such as claims for
workers’ compensation benefits, unemployment benefits or statutory indemnity, if
applicable.
 
 
D-1

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

 
 
Notwithstanding anything to the contrary in this Release, this Release does not
apply to any claims arising after Executive’s execution of this Release,
enforcement of Executive’s rights to payments or benefits due or rights
enforceable after the execution of this Release under the Employment Agreement
dated __________, ____ between Executive and the Company (the “Employment
Agreement”), claims under any of the Company’s employee benefit plans or any
rights Executive may have for indemnification under Imprimis’ By-Laws,
Certificate of Incorporation, applicable law, or any indemnification agreement,
or any rights as an insured under Imprimis’ D&O insurance policies, as in effect
from time to time.
 
Complete Release
 
Executive also expressly agrees that Executive has read, understands, and
intends to waive any and all rights or benefits described in Section 1542 of the
California Civil Code, which provides as follows:
 
“A general release does not extend to claims which the creditor does not know or
suspect to exist in his or her favor at the time of executing the release, which
if known by him or her must have materially affected his or her settlement with
the debtor.”
 
Thus, notwithstanding the provisions of Section 1542, and for the express
purpose of implementing a full and complete release and discharge of Imprimis
and the Releasees , Executive expressly acknowledges that this Release is
intended to include within its effect, without limitation, all claims Executive
does not know or suspect to exist in Executive’s favor at the time of execution
of this Release, and this Release contemplates the extinguishment of any such
claim(s).
 
Review of Release
 
Executive agrees and represents that Executive has been advised of and fully
understands the right to discuss all aspects of this Release with an attorney of
Executive’s choice. Executive’s execution of this Release establishes that, if
Executive wishes the advice of an attorney, Executive has sought such advice by
the date Executive signed this Release, and that Executive was given at least 21
days to consider whether or not to sign. Executive may sign this Release before
the end of the 21-day period and Executive agrees that if Executive decides to
shorten this time period for signing, Executive’s decision was knowing and
voluntary. Executive agrees that a change to the Release, whether material or
immaterial, does not restart the running of said period.
 
 
D-2

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

 
 
Executive will have seven days from the date that Executive signs this Release
to revoke the Release and to change Executive’s mind, in which case this Release
shall be ineffective and of no legal force. If Executive so revokes this
Release, there will be no obligation on the part of Imprimis to provide
Executive with any of the severance benefits described in the Employment
Agreement and Executive agrees to repay to Imprimis any such severance benefits
previously paid or provided to Executive. Executive’s revocation must be in
writing and received by Imprimis’ Executive Vice President, Human Resources on
the seventh day in order to be effective. If Executive does not revoke
acceptance within the seven (7) day period, Executive’s acceptance of this
Release shall become binding and enforceable on the eighth day (“Effective
Date”).
 
General Provisions
 
Executive and the Company agree to comply with their respective continuing
obligations set forth in the surviving provisions of the Employment Agreement
signed by Executive.
 
By entering into this Release, the Company makes no admission that it has
engaged, or is now engaging, in any unlawful conduct. The parties understand and
acknowledge that this Release is not an admission of liability and shall not be
used or construed as such in any legal or administrative proceeding.
 
In the event any provision of this Release shall be found unenforceable, the
unenforceable provision shall be deemed deleted and the validity and
enforceability of the remaining provisions shall not be affected thereby.
 
This Release may be pled as a full and complete defense to, and may be used as a
basis for an injunction against, any action, suit or other proceeding that may
be prosecuted, instituted or attempted by Executive in breach hereof.
 
The validity, interpretation and performance of this Release shall be construed
and interpreted according to the laws of the United States of America and the
state in which Executive is employed.
 
This Release, including the surviving provisions of Executive’s Employment
Agreement, is intended to be the entire agreement between the parties and
supersedes and cancels any and all other and prior agreements, written or oral,
between the parties regarding this subject matter. This Release may be amended
only by a written instrument executed by all parties hereto.
 
[Signatures follow.]
 
 
D-3

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

 
 
IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand and the Company
has caused this Release to be executed in its name on its behalf, all as of the
day and year first above written.
 
 

    Executive             Date         IMPRIMIS PHARMACEUTICALS, INC.        
By:            Name:            Title:           Date:    

 
 
D-4

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

 
 
EXHIBIT E
 
LIMITED EXCLUSION NOTIFICATION
 
THIS IS TO NOTIFY you in accordance with Section 2872 of the California Labor
Code that the foregoing Agreement between you and Imprimis Pharmaceuticals,
Inc., a Delaware corporation (the “Company”) does not require you to assign or
offer to assign to the Company any invention that you developed entirely on your
own time without using the Company’s equipment, supplies, facilities or trade
secret information except for those inventions that either:
 
(1)           Relate at the time of conception or reduction to practice of the
invention to the Company’s business, or actual or demonstrably anticipated
research or development of the Company; or
 
(2)           Result from any work performed by you for the Company.
 
To the extent a provision in the Employment Agreement, dated _____________,
between you and the Company purports to require you to assign an invention
otherwise excluded from the preceding paragraph, the provision is against the
public policy of this state and is unenforceable.
 
This limited exclusion does not apply to any patent or invention covered by a
contract between the Company and the United States or any of its agencies
requiring full title to such patent or invention to be in the United States.
 
I ACKNOWLEDGE RECEIPT of a copy of this notification.
 
By:
 
_________________________________________
 
_________________________________________
Print Employee’s Name
 
_________________________________________
Date
 
 
Witnessed by:
 
_________________________________________
Company Representative’s Name and Position
 
Dated:
 
_________________________________________
 
 
 
 
Exhibit E-1

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