Document:

EX-10.KK

 

EXHIBIT 10(kk)

SEPARATION AGREEMENT AND GENERAL RELEASE

     This Separation Agreement and General Release (“Agreement and Release”) is made by and between
Paul A. Sowyrda (“Sowyrda”) and DUSA Pharmaceuticals, Inc. (“DUSA”) as of August 31, 2006.

     WHEREAS, Sowyrda commenced employment with DUSA on March 30, 2000 and, on July 31, 2000,
assumed the responsibilities of Vice President of DUSA subject to the terms of an Employment
Agreement, a true copy of which is attached hereto as “Exhibit A”; and

     WHEREAS, Sowyrda voluntarily tendered his resignation from his employment with DUSA in order
to pursue a new opportunity and asked to be completely separated from DUSA effective August 31,
2006; and

     WHEREAS, DUSA and Sowyrda wish to confirm the exclusive terms of Sowyrda’s separation from his
employment with DUSA, and to settle, release and discharge with prejudice, any and all claims or
issues arising out of Sowyrda’s employment with DUSA and his separation from that employment.

     NOW THEREFORE, in consideration of the mutual commitments set forth in this Agreement and
Release, DUSA and Sowyrda agree as follows:

1. Separation from Employment.

     1.1 Sowyrda’s employment with DUSA is irrevocably ended, by his voluntary resignation, as of
the close of business on August 31, 2006 (hereinafter the “Separation Date”).

     1.2 Except as otherwise specifically provided in this Agreement and Release, any duties or
obligations owed by DUSA and/or all “Released Parties” (as defined below) to Sowyrda pursuant to
Sowyrda’s employment with DUSA, his separation from that employment, any verbal or written
agreement (including but not limited to the Employment Agreement), or by virtue of his
participation in any benefit plan sponsored or maintained by DUSA or any Released Party shall
hereby be completely extinguished as of the Separation Date. Likewise, all of Sowyrda’s duties and
obligations to DUSA will be extinguished as of the Separation Date, with the exception of those
obligations otherwise stated herein including but not limited to the confidentiality and
non-competition restrictions stated in Employment Agreement, which remain in full force and effect
pursuant to their terms.

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2. Payments and Other Benefits to Be Provided by DUSA.

     2.1 In exchange for and in consideration of Sowyrda’s promises and covenants as set forth in
this Agreement and Release, and contingent upon DUSA’s receipt of an unrevoked original thereof,
fully-executed by Sowyrda, DUSA agrees to provide Sowyrda with the following payments and other
consideration on behalf of all Released Parties:

          2.1(a) DUSA hereby agrees to make a gross payment to Sowyrda in the total amount of Two
Hundred Six Thousand and 00/100 Dollars ($206,000.00), less all applicable federal, state and
local employment taxes, income tax and other required withholdings (the “Severance Payment”),
representing the equivalent of one (1) year of Sowyrda’s base salary at DUSA as of his Separation
Date. The Severance Payment will be paid to Sowyrda in a lump sum tendered within sixty (60)
days of the Effective Date (defined below) of this Agreement and Release.

          2.1(b) DUSA will also make a payment to Sowyrda in the amount of Eighteen thousand five
hundred and ninety nine and 71 /100 Dollars ($18,599.71) , less all applicable federal, state and
local employment taxes, income taxes and other required withholdings, representing payment for
187.80 hours of accrued, unused vacation time at the annual salary rate of Two Hundred Six
Thousand and 00/100 Dollars ($206,000.00) (the “Vacation Payment”). This payment shall be made
as of the payroll period following Sowyrda’s Separation Date.

          2.1(c) As of the close of business on the business day prior to his Separation Date,
Sowyrda will submit all outstanding expense reports related to business conducted on behalf of
DUSA together with all appropriate receipts. DUSA will pay to Sowyrda for all appropriate
expenses due. This payment shall be made as of the payroll period following Sowyrda’s Separation
Date.

     2.2 Sowyrda acknowledges and agrees that the Severance Payment and the Vacation Payment,
individually and together, constitute good and adequate consideration to support the promises
contained herein and are substantially greater than any payments, benefits or other consideration
to which he may presently be entitled, including: (1) pursuant to any express or implied
agreement, contract or understanding with DUSA, including the Employment Agreement; or (2) under
any prior or current DUSA policies, practices or employee benefit plans, including but not
limited to compensation, vacation, car allowance, bonus, severance, or other fringe benefit
plans.

     2.3 Sowyrda understands and agrees that, in the event he should breach any term of this
Agreement and Release, including but not limited to the continuing confidentiality and
non-competition terms of his Employment Agreement, DUSA, in addition to all other legal and
equitable remedies, shall be entitled to obtain the return of any and all installments of the
Severance Payment made to him hereunder.

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3. Release and Covenant Not to Sue.

     3.1 Upon execution of this Agreement and Release and its Effective Date, and in
consideration of the payments and other benefits described herein, Sowyrda, on behalf of himself,
his spouse, his heirs, executors, administrators, assigns, agents and representatives, hereby
unconditionally releases and completely and forever discharges DUSA, as well as the present and
former officers, directors, employees, attorneys, and agents of each of these entities,
individually and in their official capacities, and any of their employee 401(k) or other employee
benefit plans as well as the administrators, fiduciaries, parties-in-interest, employees, agents,
attorneys and trustees of any such plans (collectively referenced throughout this Agreement and
Release as the “Released Parties”), from any and all of the following claims, prayers for relief
or alleged damages, of whatever nature, known or unknown, existing on or before the date he
executed this Agreement and Release, including but not limited to: (1) any and all claims,
issues, prayers for relief and any other causes of action arising during, from or by virtue of
Sowyrda’s employment with and/or separation from employment with any Released Party, whether real
or perceived, including, but not limited to, all claims for common law tort, negligence,
defamation, intentional or negligent infliction of emotional distress, wrongful, retaliatory or
abusive discharge, invasion of privacy, estoppel, fraud, breach of any public policy, express or
implied contract or covenant of good faith and fair dealing as well as employee benefit claims,
or claims relating to any wages or bonus entitlements, or payments of any nature including debts,
accounts, attorneys’ fees, costs, disbursements or reimbursements; and (b) any claims arising
under any federal, state or local laws, statutes, regulations, ordinances or rules prohibiting
unlawful employment discrimination, harassment, retaliation or otherwise relating to Sowyrda’s
employment with any Released Party or his separation from that employment, including but not
limited to the Equal Pay Act of 1963, 29 U.S.C. § 206(d) (“EPA”); Title VII of the Civil Rights
Act of 1964, as amended, 42 U.S.C. § 2000e, et seq. (“Title VII”); the Age Discrimination in
Employment Act of 1967, as amended, 29 U.S.C. § 621, et seq. (“ADEA”); the Vietnam Era Veterans
Readjustment Assistance Act of 1974, 38 U.S.C. § 2012, et seq. (“VEVRAA”); the Americans With
Disabilities Act, 42 U.S.C. § 12101, et seq. (“ADA”); the Occupational Safety and Health Act, 29
U.S. § 651, et seq. (“OSHA”); the Older Workers Benefit Protection Act, 29 U.S.C. § 626(f), et
seq. (“OWBPA”); the Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. § 1161, et seq.
(“COBRA”); the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101, et seq.
(“WARN”); the Federal Family and Medical Leave Act, 29 U.S.C. § 2601, et seq. (“FMLA”); the
Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1001, et seq. (“ERISA”); the
Rehabilitation Act of 1973, 29 U.S.C. § 701, et seq.; the Fair Labor Standards Act, 29 U.S.C. §
215(a)(3), et seq. (“FLSA”); the Civil Rights Act of 1991, 42 U.S.C. §§ 1981, 1983, 1985, 1986
and 1988; the Consolidated Omnibus Budget Reconciliation Act, 29 U.S.C. § 1161, et seq.
(“COBRA”); the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101, et seq.
(“WARN”); the Federal Family and Medical Leave Act, 29 U.S.C. § 2601, et seq. (“FMLA”); the
Federal Food Drug & Cosmetics Act, 21 U.S.C. § 321 et seq., the Massachusetts Fair
Employment Practices Act, Mass Gen. Laws Ann. ch. 151B, § 1, et seq. (“FEPA”); the Massachusetts
Whistleblower Statute, Mass Gen. Laws Ann. ch. 149, § 185, et seq.; the Massachusetts Privacy
Act, Mass. Gen. Laws ch. 214, § 1B, et seq.; the Massachusetts Wage and Hour Laws, Mass. Gen.
Laws ch. 151, § 1, et seq.; the Massachusetts Civil Rights Act,

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Mass. Gen. Laws ch. 12, § 11H, et seq.; the Massachusetts Right-to-Know Law, Mass. Gen. Laws
Ann. ch. 111F, et seq.; the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1, et seq.
(“NJLAD”); the New Jersey Discrimination in Wages Law, N.J.S.A. 10:5-1, et seq.; the New Jersey
Temporary Disability Law, N.J.S.A. 43:21-25, et seq.; the New Jersey Wage Payment Law, N.J.S.A.
34:11-4.1, et seq.; the New Jersey State Wage and Hour Law, N.J.S.A. 34:11-56a, et seq.; the New
Jersey Conscientious Employee Protection Act, N.J.S.A. 34:19-1, et seq. (“CEPA”); the New Jersey
Family Leave Act, N.J.S.A. 34:11B-1, et seq. (“NJFLA”); the New Jersey Civil Rights Act, N.J.S.A.
10:6-1, et seq. (“NJCRA”); and the United States, Massachusetts, and New Jersey Constitutions.
Sowyrda understands that the laws set forth above give him important remedies that relate to,
inter alia, claims that he has or may have arising out of or in connection with his employment by
any Released Party or the termination of that employment, and he freely and voluntarily gives up
those remedies and claims after being encouraged to and having had the opportunity to consult
with legal counsel.

     3.2 Upon execution of this Agreement and Release and its Effective Date, Sowyrda, for full
consideration as recited above and below, and on behalf of himself, his spouse, his heirs,
executors, administrators, assigns, agents and representatives, hereby agrees not to file a
lawsuit or claim against any Released Party in any court of the United States, any state or local
governmental unit thereof, or with any arbitration panel concerning any claim, demand, issue or
cause of action covered by this Agreement and Release. Notwithstanding any other language in
this Agreement and Release, the parties understand that this Agreement does not prohibit Sowyrda
from filing any claim or action seeking to enforce the terms of this Agreement and Release. The
parties further understand that this Agreement and Release shall not be construed as prohibiting
Sowyrda from filing an administrative charge of alleged employment discrimination or
participating or cooperating with any administrative agency in the investigation of an
administrative charge of alleged employment discrimination under Title VII, the ADEA, the ADA,
the EPA, or FEPA. Sowyrda, however, waives his right to any individual monetary, injunctive
relief, or other recovery should any federal, state or local administrative agency pursue any
claims on his behalf arising out of or relating to his employment with and/or separation from
employment with DUSA or any of the Releases in this Separation Agreement. This means that by
signing this Agreement and Release, Sowyrda will have waived any right he had to bring a lawsuit
or obtain an individual recovery if an administrative agency pursues a claim against DUSA based
on any actions taken by any of them up to the date of his execution of this Agreement and
Release, and that Sowyrda will have released and discharged DUSA of any and all claims of any
nature arising up to the date he has executed this Agreement and Release.

4. Non-Use of DUSA’s Confidential Information.

     4.1 Sowyrda acknowledges and agrees that all confidential information and other proprietary
business information of DUSA, whether in tangible form or otherwise, including all documents and
records, whether printed, typed, handwritten, videotaped, transmitted, or transcribed on data files
or on any other type of media, and whether or not labeled or identified as confidential and
proprietary, made or compiled by Sowyrda, or made available to Sowyrda during the period of his
employment with DUSA (the “Confidential Information”), is the sole

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property of DUSA. The Confidential Information includes, but is not be limited to, any and all
customer lists, clients lists, investor lists, computer-stored data, disks, plans, reports,
financial projections, business plans, engineering studies, contracts, agreements, letters, files,
or other information that relates to the business, management or administration of DUSA or any of
the Released Parties as well as all proprietary information and trade secrets, designs, techniques,
inventions and discoveries, concepts, technical, non-technical and business data, business
development plans and strategies, product research and development, formulae, processes and
regulatory data, litigation strategies or information, pricing information, invoices, sales
history, customer contacts, correspondence and preferences, orders, contracts, computer records,
mailing, telephone and customer lists or manufacturing and vendor lists. Confidential Information
also includes tangible and intangible property of DUSA, its predecessors, licensors and customers,
including intellectual property which become known by or disclosed to Sowyrda during his employment
with DUSA or any predecessor company, and all methods of operations, know-how, systems and
information related to research, development, manufacturing, purchasing, accounting, marketing,
merchandising and selling, business plans or forecasts, and other related data, whether or not
patentable or copyrightable.

     4.2 As further material consideration in exchange for the benefits he is to receive hereunder,
Sowyrda represents and agrees that he has not, and will not, directly or indirectly, at any time,
use for his own benefit or the benefit of any third party, or disclose to any third party the
Confidential Information of DUSA.

     4.3 Sowyrda agrees that should he hereinafter be subject to any request, court or
administrative order or compulsory process seeking the disclosure of any of the information
described in Paragraph 4.1, he shall immediately notify DUSA of such request, order or process and
consent to its intervention in the matter.

     4.4 Sowyrda agrees that upon his breach of this Paragraph 4 and/or any of its subparagraphs,
any other provision of this Agreement and Release, and/or the confidentiality or non-competition
provisions of his Employment Agreement, DUSA or any other Released Party expressly authorized by
DUSA may commence an action for damages, as well as for equitable relief to prevent future breaches
or to ameliorate the impact of any prior breach.

5. Return of Confidential Information and Other DUSA Property.

     5.1 Sowyrda warrants and represents that, as of the close of business on his Separation Date,
he will deliver all originals and copies of DUSA’s Confidential Information previously in his
possession, regardless of format, to Marianne Mullin (“Ms. Mullin”) or Ms. Mullin’s express
designee. Sowyrda further expressly represents and warrants that he has not made, retained or
transferred to himself or any third party any typed, handwritten, photostatic, software, floppy
disc or other computerized or digitized copies of such documents, information or materials.

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     5.2 Sowyrda warrants and represents that, as of the close of business on his Separation Date,
he will return to DUSA any and all other property owned or leased by DUSA including but not limited
to the laptop computer, computer docking station and router, computer desktop monitor, printer,
personal digital assistant (Blackberry), company credit cards (AMEX), office keys and other
equipment.

6. No Admission of Liability.

     6.1 Sowyrda acknowledges and agrees that DUSA’s entry into this Agreement and Release is not
to be construed as, and is not admission that, DUSA or any Released Party violated any duties or
obligations owed to Sowyrda, or treated Sowyrda improperly, unlawfully or unfairly in any manner
whatsoever, or are liable to him in any way. Neither shall this Agreement and Release be construed
to be, or be admissible in any proceedings as, evidence of any such admission by DUSA as to any
alleged violation of any federal, state or local law, common law, agreement, rule, regulation or
order.

7. Non-Disparagement.

     7.1 Sowyrda agrees that he shall not, now or ever in the future, publicly or privately, make,
in any way, any disparaging, derogatory, unkind, unflattering or otherwise inflammatory remarks
about DUSA or any other Released Party, the conduct, operations, financial condition or business
practices, policies or procedures of DUSA or any other Released Party, or the management personnel
of DUSA or any other Released Party to any third party, and that he will not in any way make or
solicit any comments, statements or the like to the media or to others that may be considered
derogatory or detrimental to the good name or business reputation of DUSA or any of the Released
Parties.

8. Other Provisions.

     8.1 The parties acknowledge and agree that this Agreement and Release contains the full,
final and complete agreement, understandings and representations of the parties with respect to
the topics contained herein, including but not limited to Sowyrda’s employment and the terms of
his separation from employment with any Released Party, and it supersedes and extinguishes all
prior or contemporaneous written or oral contracts, negotiations, agreements, representations,
inducements or policies between Sowyrda and DUSA or any other Released Party, except the
confidentiality and non-competition provisions of the Employment Agreement which remain in full
force and effect. The parties further acknowledge and agree that this Agreement and Release
supersedes and extinguishes all other prior or contemporaneous written or oral negotiations,
contracts, agreements, representations, inducements or policies between Sowyrda and DUSA or any
other Released Party.

     8.2 The parties agree that this Agreement and Release is to be governed by, construed and
enforced, in all respects, in accordance with the laws of the Commonwealth of

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Massachusetts, exclusive of any choice of law rules. Any dispute concerning this Agreement and
Release shall be brought in, and the parties hereby consent to the personal jurisdiction of the
courts of the Commonwealth of Massachusetts (to the extent that subject matter jurisdiction
exists only).

     8.3 This Agreement and Release may be modified, altered or terminated only by an express
written agreement between DUSA and Sowyrda, which agreement must be signed by both parties or their
duly authorized agents, and expressly reference and attach a copy of this Agreement and Release to
be effective.

     8.4 Any party’s waiver of a breach of any provision hereof shall not operate or be construed
as a waiver of any subsequent breach by any party.

     8.5 The article headings contained herein are for convenience only and shall not in any way
affect the interpretation, construction or enforceability of any provision of this Agreement and
Release.

     8.6 If any provision of this Agreement is determined to be invalid or unenforceable, either in
whole or in part, in any jurisdiction or forum, the parties hereby waive such provision to the
extent that it is found to be invalid and unenforceable. Such provision shall, to the extent
allowable by law, be modified, so that it becomes enforceable. Any such modification shall not
affect the validity or enforceability of any other provision of this Agreement, all of which shall
remain in full force and effect.

     8.7 This Agreement and Release may be executed in more than one counterpart, and each
counterpart shall be considered an original, but all of which together shall constitute one and the
same.

     8.8 This Agreement and Release shall not be assignable by Sowyrda but it shall be binding upon
his heirs, estate, executors, administrators and legal representatives. This Agreement and Release
shall be freely assignable by DUSA without restriction and without the need for any additional
consent from Sowyrda and shall be deemed automatically assigned by DUSA upon the company’s purchase
by, or merger or consolidation with, any other entity.

     8.9 Sowyrda further warrants that he has had the opportunity to review and consider this
Agreement and Release for twenty-one (21) days, and that any material or immaterial changes to
this Agreement and Release will not restart the running of the twenty-one (21) day period.
Sowyrda also acknowledges and agrees that, by this writing, he has been advised to seek the
guidance and advice of legal counsel in considering the terms and effect of this Agreement and
Release, and that he has had been provided with the opportunity to do so prior to executing this
Agreement and Release. Sowyrda also acknowledges by signing this Agreement and Release that he
has carefully read this Agreement and Release, that he understands completely its contents, that
he has had an opportunity to have an attorney explain

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those contents to him, and that he has executed this Agreement and Release of his own free will,
act and deed.

     8.10 To the extent Sowyrda signs the Agreement and Release prior to the expiration of the
twenty-one (21) day period and delivers an executed original to DUSA, he additionally
acknowledges and warrants that he has voluntarily and knowingly waived the twenty-one (21) day
review period and that the decision to accept such a shortened period of time is not induced by
DUSA or any Released Party through fraud, misrepresentation, a threat to withdraw or alter the
offer prior to the expiration of the twenty-one (21) day time period, or by providing different
terms to workers who sign releases prior to the expiration of such time period.

     8.11 Sowyrda understands and expressly agrees that, following his execution of this
Agreement and Release and delivery of same to DUSA, he shall have a period of seven (7) days
during which time he may revoke the Agreement and Release by delivering written notification to
DUSA, no later than the close of business on the seventh (7th) calendar day after he
signs this Agreement and Release, and that this Agreement and Release shall not be effective or
enforceable prior to the expiration of that period. This Agreement and Release shall be forever
binding and enforceable once the seven (7) day period has expired. For purposes of this
Agreement and Release, the term “Effective Date” referenced throughout this Agreement and Release
shall mean the eighth (8th) calendar day after Sowyrda executes this Agreement and
Release and DUSA receives an effective, unrevoked original copy. If Sowyrda revokes this
Agreement and Release, the Agreement and Release will not be effective and enforceable and he
will not receive the benefits described in this Agreement and Release.

     8.12 All notices, requests, demands and other communications hereunder to DUSA must be in
writing and shall be deemed to have been given if delivered by hand or sent via regular and
certified mail, return receipt requested, addressed as follows:

If to DUSA:

Marianne Mullin

DUSA Pharmaceuticals, Inc.

25 Upton Drive

Wilmington, Massachusetts 01887

If to Sowyrda:

Paul A. Sowyrda

2 Tubwreck Drive

Medfield, Massachusetts 02052

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     IN WITNESS WHEREOF, intending to be forever legally bound hereby and for full consideration,
the parties have executed this Agreement and Release, being nine (9) pages in length, on the
date(s) set forth below.

	 	 	 	 	 	 	 
	 

	 	 	DUSA Pharmaceuticals, Inc.	 	 
	 
	 	 	 	 	 	 
	/s/ Paul A. Sowyrda
 

Paul A. Sowyrda

	 	 	By: 	/s/ William F. O’Dell
 

	 	 
	Date 8/29/06

	 	 	Date 8/29/06	 	 
	 
	 	 	 	 	 	 
	Witness:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Marianne Mullin
 

	 	 	 	 	 	 
	Marianne Mullin 

Date 8/29/06
	 	 	 	 	 	 

9EX-10.LL:

 

EXHIBIT 10(ll)

EMPLOYMENT AGREEMENT

     This Agreement (“Agreement”) made as of this 20th day of September, 2006, between DUSA
Pharmaceuticals, Inc., a New Jersey corporation (“DUSA”) and Michael Todisco (“Todisco”).

     WHEREAS, Todisco has been employed by DUSA since May 2, 2005 and DUSA wishes to promote
Todisco;

     NOW THEREFORE, in consideration of the mutual covenants and promises, the parties agree as
follows:

     1. Employment: DUSA hereby employs Todisco and he hereby accepts such employment as the Vice
President, Controller. Todisco agrees to work on a full-time basis and to devote his best efforts
and spend as much time and attention as is necessary to manage the financial affairs of DUSA for
which he is responsible. Todisco shall report to the Chief Financial Officer of DUSA or other
senior management officer as may be determined from time to time.

     2. Duties and Responsibilities: Notwithstanding any language contained herein to the
contrary, Todisco shall be responsible (by way of example and not by way of limitation) for:

	 	A.	 	General accounting matters including, but not limited to,
monthly corporate financial reporting to management; and
	 
	 	B.	 	Preparation and coordination of SEC reporting, federal and
state tax obligations both internally with management and externally with
auditors and counsel, accounts payable, payroll, general ledger processes and
controls, financial system report development and control, accounting policies
and procedures, and
	 
	 	C.	 	treasury functions including, but not limited to, assist
management of banking relationships, manage and report short and long-term cash
activities, insurance, stock option administration and management; and
	 
	 	D.	 	any additional employment responsibilities as deemed
appropriate by the Board of Directors and DUSA’s senior management, from time
to time.

     3. Remuneration: DUSA will pay to Todisco a base salary equal to One Hundred Fifty Thousand
Dollars ($150,000.00) per annum from time to time at intervals consistent with DUSA’s
administrative practices, and a retention bonus of Forty Thousand Dollars ($40,000.00) to be paid
in a lump sum in the payroll period immediately following execution of this Agreement. The base
salary shall be reviewed by the Board of Directors of DUSA from time to time, not less than on an
annual basis, beginning in January 2007. Any salary increases shall be determined by, and shall be
made at the sole discretion of the Board. Following the end of each fiscal year, the Board may
award a cash bonus to Todisco in an amount up to 30% of his current base salary for such year, as
determined by the Board in its sole discretion. For purposes of awarding the total amount of such
bonus, mutually agreeable performance objectives will be set at the beginning of any calendar year
during Todisco’s employment. The Board may award annual cash bonuses above 30% of then current
base salary for outstanding performance.

 

 

     All salary and other payments and allowances outlined in this Agreement shall be subject to
such withholding taxes and deductions as may be required by law.

     4. Place of Employment: As Vice President, Controller, Todisco will operate primarily from
the principal offices of DUSA, currently located in Wilmington, Massachusetts. Todisco
acknowledges, however, that there may be domestic and international travel required on a periodic
basis. Such travel is understood to be necessary in order to promote the business of DUSA.

     5. Benefits: Todisco will be entitled to participate in the medical, dental, life, disability
and other insurance benefit plans or pension, profit sharing, deferred compensation, or 401K plans
which may be made available to the officers and employees of DUSA from time to time, subject to
applicable eligibility rules thereof.

     6. Stock Options: As additional consideration the Company’s Board of Directors has approved a
grant of Fifteen Thousand (15,000) non-qualified stock options for shares of common stock of DUSA
to Todisco, under the terms of the 2006 Equity Plan, subject to the entry of this Agreement. The
options will be granted on and have an exercise price equal to the closing price of DUSA’s common
stock as listed on the NASDAQ Stock Market on the second business day following the release of
earnings by DUSA for the period ended September 30, 2006 and shall vest at the rate of 25% per year
over four (4) years, commencing on the first anniversary of the grant date. Todisco shall also be
entitled to participate in any subsequent stock purchase and bonus or incentive plans that DUSA
shall from time to time make available to its officers and employees, subject to applicable
eligibility rules thereof.

     7. Vacation: Todisco shall be entitled to four (4) weeks of vacation during each year of
employment, to be taken at a time or times acceptable to DUSA, having regard to its operations.
Todisco shall be entitled to carry over up to 80 hours of any unused vacation from one (1) calendar
year into the following calendar year, so long as such a vacation policy is consistent for all
employees.

     8. Expenses: All reasonable travel and other expenses incident to the rendering of services
by Todisco on behalf of and in promoting the interests of DUSA shall be paid by DUSA, including but
not limited to an automobile allowance in the amount of $6,000 per year and cell phone
reimbursement. If such expenses are paid in the first instance by Todisco, DUSA agrees that it
will reimburse him therefore upon presentation of appropriate statements, vouchers, bills and
invoices as and when required by DUSA to support the reimbursement request.

     9. Confidential Information:

     A. Todisco understands that in the performance of his services hereunder he may obtain
knowledge of “confidential information”, as hereinafter defined, relating to the business of
DUSA. As used herein, “confidential information” means any information (whether clinical,
financial, administrative or otherwise), written or oral, (including without limitation, any
formula, pattern, device, plan, process, or compilation of information) which (i) is, or is
designed to be, used in the business of DUSA or results from its research and/or development
activities, or (ii) is private or confidential in that it is not generally known or
available to the public, or (iii) gives DUSA an opportunity to obtain an advantage over
competitors who do not know or use it. Todisco shall not, without the written consent of
the Board, either during the term of his employment or thereafter, (a) use or disclose any
such confidential information outside of DUSA (except to consultants or other agents or
representatives of DUSA who are similarly bound to DUSA by confidentiality obligations), (b)
publish any article with respect thereto, (c) except in the performance of his services
hereunder, remove or aid in the removal from

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the premises of DUSA any such confidential information or any property or material
which relates thereto.

     B. Upon the termination of his employment with DUSA, all documents, records, notebooks
and similar repositories of or continuing information concerning DUSA, or its products,
services or customers, including any copies thereof, then in Todisco’s possession or under
his control, whether prepared by Todisco or others, will be left with or immediately
returned to DUSA by Todisco.

     C. (i) Todisco shall promptly disclose to DUSA any and all prescription drug products,
devices, machines, methods, inventions, discoveries, improvements, processes, works or the
like (all of which are referred to herein as “inventions”) which he may invent, conceive,
produce, or reduce to practice, either solely or jointly with others, at any time (whether
or not during work hours) during his employment hereunder.

          (ii) All such inventions which in any way relate to the products manufactured, sold or
used by DUSA or to any methods, processes or apparatus used in connection with the
manufacture of such products or treatment of disease or conditions, or in either case which
are or may be or may become capable of use in the business of DUSA, shall at all times and
for all purposes be regarded as acquired and held by Todisco in a fiduciary capacity for,
solely for the benefit of, DUSA.

          (iii) With respect to all such inventions, Todisco shall:

     (a) treat all information with respect thereto as confidential
information within the meaning of, and subject to this paragraph 9;

     (b) keep complete and accurate records thereof, which records shall be
the property of DUSA;

     (c) execute any application for letters patent of the United States and
of any and all other countries covering such inventions, and give to DUSA,
its attorneys and solicitors all reasonable and requested assistance in
preparing such application;

     (d) from time to time, upon the request and at the expense of DUSA, but
without charge for services beyond the salary paid to him by DUSA, execute
all assignment or other instruments required to transfer and assign to DUSA
(or as it may direct) all inventions, and all patents and applications for
patents, copyrights or applications for registration of copyrights, covering
such inventions or otherwise required to protect the rights and interests of
DUSA;

     (e) testify in any proceedings or litigation as to all such inventions;
and

     (f) in case DUSA shall desire to keep secret any such invention, or
shall for any reason decide not to have letters patent applied for thereon,
refrain from applying for letters patent thereon.

     D. Notwithstanding any of the foregoing in this section, information, whether
confidential or proprietary or not, shall be exempt from the above confidentiality
provisions if said information:

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	 	(i)	 	is known to Todisco prior to his employment
with DUSA;
	 
	 	(ii)	 	is in the public domain on the date of
employment;
	 
	 	(iii)	 	becomes public at any time through no fault of
Todisco; or
	 
	 	(iv)	 	is or becomes readily available from third
parties who have no confidentiality obligations to DUSA.

     E. If Todisco’s employment is terminated by Todisco, Todisco shall not, without the
express prior written consent of DUSA, directly, or indirectly, during the term of this
Agreement or for a period of one (1) year after its termination, render services, or engage
in activity including but not limited to, the activities enumerated in Section 2 hereof or
any similar activity, for any company which relates to the development or sale of
photodynamic therapy (“PDT”) or photodetection (“PD”) products directly competitive (i.e.,
medically or therapeutically) with DUSA’s products or compounds or mixtures thereof, whether
alone or as a partner, officer, director, employee or shareholder of any other corporation,
or as a trustee, fiduciary, consultant or other representative of any other activity. This
restriction shall not apply if Todisco has disclosed to DUSA, in writing, all the known
facts relating to such work or activity and has received a release, in writing from DUSA, to
engage in such work or activity. The making of passive and personal investments and the
conduct of private business affairs shall not be prohibited hereunder. Ownership by Todisco
of five percent (5%) or less of the outstanding shares of stock of any corporation either
(i) listed on a national securities exchange or (ii) having at least 100 stockholders shall
not make Todisco a “stockholder” within the meaning of that term as used in this paragraph,
so long as Todisco has no participation in the management of such corporation.

     10. Termination of Employment:

     A. DUSA may terminate this Agreement at any time, with or without cause on sixty (60)
days prior written notice. For purposes of this Agreement, cause shall mean (i) Todisco’s
physical or mental disability or other inability to perform the duties of his job for any
reason for a period in excess of six (6) consecutive months, (ii) Todisco’s conviction in a
court of law of a crime or offense, which conviction would prevent Todisco from effective
management of DUSA or materially adversely affect the reputation of DUSA, as determined by
the Board in its sole discretion, exercising its reasonable judgment, or (iii) Todisco’s
malfeasance or misconduct such as fraud, embezzlement, dishonesty, acts of moral turpitude,
or a felony conviction, or for other good cause materially detrimental to DUSA. In the
event of a termination for cause, Todisco shall be paid his base salary and unused, accrued
vacation pay, prorated to the date of termination. Nothing contained herein shall be
interpreted to impair or otherwise affect the right of DUSA to terminate Todisco’s
employment, at will, with or without good cause.

     B. If Todisco’s employment is terminated by DUSA without cause, DUSA shall:

     (i) pay to Todisco a severance allowance equivalent to twelve (12) months’ then
current base salary, payable as a lump sum, within sixty (60) days following the
date of such termination;

     (ii) pay to Todisco within two (2) weeks of the date of termination all
outstanding vacation pay and any earned but unpaid salary or bonuses to the date

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of such termination and reimburse Todisco for any business expense incurred by
him up to and including the date of such termination following provision by Todisco
of all applicable and necessary receipts.

     C. Termination upon Death: Todisco’s employment with DUSA will cease and this
Agreement will terminate without further compensation if Todisco dies. Upon his death, his
estate will be entitled to any Corporation paid death benefit in force at the time of such
death. In addition, Todisco’s estate shall be paid any cash bonus to which he would have
been entitled under Paragraph 3 above. Likewise, Todisco’s beneficiaries as designated by
him to DUSA shall be entitled to receive the benefits, if any, described in Paragraphs 5 and
6 above, and will be entitled to exercise any vested but unexercised stock options that were
held by him at the time of his death, subject to the terms and conditions of such options.

     D. Resignation: Todisco will provide DUSA with two (2) months’ advance notice, in
writing, of his resignation from DUSA. If Todisco resigns at any time and for any reason
prior to December 31, 2007, Todsico shall refund the entire retention bonus paid to Todisco
pursuant to Section 3 of this Agreement.

     11. Change of Control: If Todisco’s employment is terminated by DUSA without cause upon the
consummation of a “change in control” as defined herein, Todisco shall receive, within five (5)
days after such termination from DUSA or its successor, a lump sum payment equal to three (3) times
his base salary during the last fiscal year in which Todisco is associated with DUSA (including any
amounts due as severance under Paragraph 10B.(i) of this Agreement). For the purposes hereof,
“change in control” shall mean a change in control of a nature that would be required to be
reported in response to Item 5 of Schedule 14D promulgated pursuant to section 14 of the Securities
Exchange Act of 1934, as amended (the 1934 Act”), whether or not DUSA is then subject to such
reporting requirements; provided that, without limitations, such a change in control shall be
deemed to have occurred if (i) any person other than a trustee or other fiduciary holding
securities under an employee benefit plan of DUSA is or becomes the beneficial owner, directly or
indirectly, of securities of DUSA representing twenty percent (20%) or more of the combined voting
power of DUSA’s then outstanding securities and thereafter the Board adopts a resolution to the
effect that, for the purposes of this Agreement, a change in control of DUSA has occurred; such
ownership shall be defined pursuant to Rule 13d-3 of the 1934 Act and includes mergers or
acquisitions whereby an outside party has in excess of twenty percent (20%) of the combined voting
power; (ii) when DUSA merges or consolidates with any other person or, entity other than a
subsidiary and, upon consummation of such transaction own less than fifty percent (50%) of the
equity securities of the surviving or consolidated entity; or (iii) a substantial portion of the
assets of DUSA are sold or transferred to another person or entity.

     12. Indemnification: DUSA will, to the extent permitted by the laws of the State of New
Jersey, indemnify Todisco against any actual or threatened action, suit or proceeding, whether
civil, criminal, administrative or investigative, that arises as a consequence of his duties as an
employer and officer of DUSA. Such indemnification will include such expenses as attorneys fees,
judgments, fines and amounts awarded or agreed to in settlement, provided that Todisco acted
legally and in good faith, or reasonably believed that his actions were legal and performed in good
faith. The termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre shall not, of itself, create a presumption that his
actions were illegal or not performed in good faith.

     13. Representation Concerning Prior Employment: Todisco represents and warrants to DUSA that
none of the duties or obligations for which he is responsible under this

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Employment Agreement breaches, or will cause him to breach in the future, any restrictive
covenant or confidentiality obligation under any former employment agreement.

     14. Provisions Operating Following Termination: Notwithstanding any termination of Todisco’s
employment with or without cause, any provision of this Agreement necessary to give it efficacy
shall continue in full force and effect following such termination.

     15. Notices: Any notice to be given in connection with this Agreement shall be given in
writing and may be given by personal delivery, by certified mail, postage prepaid, or by facsimile
transmission, so long as receipt of such transmission is available, addressed to the recipient as
follows:

			
	     To:	 	Michael Todisco, Vice President, Controller

DUSA Pharmaceuticals, Inc.

25 Upton Drive

Wilmington, Massachusetts 01887

			
	     To:	 	D. Geoffrey Shulman, MD, FRCPC, President and CEO

DUSA Pharmaceuticals, Inc.

25 Upton Drive

Wilmington, Massachusetts 01887

or to such other address or individual as may be designated by notice by either party to the other.
Any notice given by personal delivery shall be deemed to have been given on the day of actual
delivery and, if made or given by certified mail, on the third day, other than a Saturday or Sunday
following the deposit thereof with the U.S. Postal Service.

     16. Governing Law: This Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey.

     17. Benefit of Agreement: This Agreement shall inure to the benefit of and be binding upon
the heirs, executives, administrators and legal personal representatives of Todisco and to and upon
the successors and assigns of DUSA, respectively.

     18. Entire Agreement: This Agreement constitutes the entire agreement between the parties
hereto with respect to the terms and conditions of employment of Todisco and cancels and supersedes
any prior understandings and agreements between the parties to this Agreement. There are no
representations, warranties, forms, conditions, undertakings or collateral agreements expressed,
implied or statutory between the parties hereto other than as expressly set forth in this
Agreement.

     19. Severability: Whenever possible, each provision of this Agreement will be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law
or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any
other provision of any other jurisdiction but this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been
contained herein.

     20. Amendments and Waivers: Any provision of this Agreement may be amended or waived only
with prior written consent of DUSA and Todisco.

*****

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     IN WITNESS WHEREOF, the parties have duly executed this Agreement.

	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	DUSA PHARMACEUTICALS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Marianne Mullin
 

	 	 	 	By:
	 	/s/ Robert F. Doman
 

Robert F. Doman,
President and Chief Operating Officer
	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Dated: 9/20/06	 	 
	 
	 	 	 	 	 	 	 	 
	WITNESS:	 	 	 	EMPLOYEE:	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Richard C. Christopher	 	 	 	/s/ Michael Todisco	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Michael Todisco	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Dated: 9/20/06	 	 

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