Document:

exv10w1

Exhibit 10.1

MEDICIS PHARMACEUTICAL CORPORATION

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

Effective as of June 1, 2011

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	Page	 
	Article I. PURPOSE
	 	 	1	 
	Article II. DEFINITIONS
	 	 	1	 
	Article III. EFFECTIVE DATE
	 	 	4	 
	Article IV. ELIGIBILITY AND VESTING
	 	 	5	 
	Article V. RETIREMENT BENEFITS
	 	 	5	 
	Article VI. PAYMENT OF RETIREMENT BENEFITS
	 	 	7	 
	Article VII. FUNDING
	 	 	10	 
	Article VIII. PLAN ADMINISTRATION
	 	 	10	 
	Article IX. AMENDMENT AND TERMINATION
	 	 	10	 
	Article X. MISCELLANEOUS PROVISIONS
	 	 	11	 
	Article XI. CLAIMS PROCEDURES
	 	 	13	 
	EXHIBIT A
	 	 	A-1	 

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ARTICLE I.

PURPOSE

     1.1 The purpose of this Supplemental Executive Retirement Plan (the “Plan”) is to provide
supplemental retirement income for a select group of officers and other key employees of Medicis
Pharmaceutical Corporation (the “Employer”).

ARTICLE II.

DEFINITIONS

     2.1 “Average Earnings” means the average of the highest Earnings earned by a Participant
during any three (3) calendar years of Service; provided, however, that if the Participant has less
than three (3) calendar years of Service, “Average Earnings” shall mean the average of the highest
Earnings earned by the Participant during each calendar year(s) of Service; provided, further, that
in no event shall such calendar years of Service be measured prior to calendar year 2009 for
purposes of this Section 2.1. For purposes of this definition, a calendar year of Service shall
include the calendar year of Service that ends within the Plan Year in which the Participant’s
Separation from Service occurs, and the “Earnings” earned by a Participant during such a year shall
be based on the Participant’s annualized base salary for such calendar year and actual annual bonus
(or, if unknown, the target annual bonus) for such calendar year.

     2.2 “Accrued Retirement Benefit” means the Retirement Benefit accrued as of the date of a
Participant’s Normal Retirement Date or a Change in Control, as the case may be, provided that such
Participant has not incurred a Separation from Service as of such date.

     2.3 “Beneficiary” means the person or entity that the Participant designates as his or her
beneficiary to receive any portion of the Retirement Benefit which may become payable upon the
Participant’s death. Such designation shall be made on such forms as the Compensation Committee
shall require. If the Participant does not designate a Beneficiary, then the Participant’s
Beneficiary shall be the Participant’s Spouse, and if the Participant does not have a Spouse, then
the Participant’s estate.

     2.4 “Benefit Accrual Percentage” means, with respect to any Participant and as of any date of
reference, the percentage obtained by dividing (a) such Participant’s years of Service (determined
as of such reference date) by (b) (i) twenty years for Tier I Participants and Tier II
Participants, (ii) five (5) years for the Tier III Participant, (iii) sixteen (16) years of Service
for the Tier IV Participant, and (iv) eighteen (18) years of Service for the Tier V Participant;
provided, that the maximum “Benefit Accrual Percentage” for any Participant shall be 100%.

     2.5 “Board of Directors” means the Board of Directors of the Employer.

     2.6 “Change in Control” means the first to occur of any one of the following:

          (a) the acquisition by any individual, entity or group (a “Person”), including any “person”
within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), of beneficial ownership within the meaning of Rule 13d-3 promulgated
under the Exchange Act, of 49% or more of either (i) the then outstanding

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shares of common stock of the Employer (the “Outstanding Common Stock”) or (ii) the combined
voting power of the then outstanding securities of the Employer entitled to vote generally in the
election of directors (the “Outstanding Voting Securities”); excluding, however, the following: (A)
any acquisition directly from the Employer (excluding any acquisition resulting from the exercise
of an exercise, conversion or exchange privilege unless the security being so exercised, converted
or exchanged was acquired directly from the Employer), (B) any acquisition by the Employer, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Employer
or any corporation controlled by the Company, or (D) any acquisition by any corporation pursuant to
a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this definition
of “Change in Control”;

          (b) individuals who, as of the date hereof constitute the Board of Directors (the “Incumbent
Board”), cease for any reason to constitute at least a majority of such Board of Directors;
provided that any individual who becomes a director of the Employer subsequent to such date whose
election or nomination for election by the Employer’s stockholders was approved by the vote of at
least a majority of the directors then comprising the Incumbent Board shall be deemed a member of
the Incumbent Board; provided further, that any individual who was initially elected as a director
of the Employer as a result of a solicitation of proxies or consents by or on behalf of any Person
other than the Board of Directors shall not be deemed a member of the Incumbent Board; or

          (c) a reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Employer (a “Corporate Transaction”); excluding, however, a
Corporate Transaction pursuant to which (i) all or substantially all of the individuals or entities
who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding
Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 75% of, respectively, the outstanding shares of common stock, and the
combined voting power of the outstanding securities of such corporation entitled to vote generally
in the election of directors of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such transaction owns the
Company or all or substantially all of the Employer’s assets either directly or indirectly) in
substantially the same proportions relative to each other as their ownership, immediately prior to
such Corporate Transaction, of the Outstanding Common Stock and the Outstanding Voting Securities,
as the case may be, (ii) no Person (other than: the Employer; any employee benefit plan (or related
trust) sponsored or maintained by the Employer or any corporation controlled by the Employer; the
entity resulting from such Corporate Transaction; and any Person which beneficially owned,
immediately prior to such Corporate Transaction, directly or indirectly, 49% or more of the
Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 49% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the combined voting
power of the outstanding securities of such corporation entitled to vote generally in the election
of directors, and (iii) individuals who were members of the Incumbent Board will constitute at
least a majority of the members of the board of directors of the corporation resulting from such
Corporate Transaction;

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provided, that the transaction or event described in subsection (a), (b) or (c) constitutes a
“change in control event,” as defined in Treasury Regulation §1.409A-3(i)(5); provided, further,
that for purposes of this definition, “Employer” shall refer only to Medicis Pharmaceutical
Corporation.

     2.7 “Code” shall mean the Internal Revenue Code of 1986, as amended, and any successor statute
thereto.

     2.8 “Compensation Committee” means the Stock Option and Compensation Committee of the Board of
Directors.

     2.9 “Earnings” means, with respect to a particular calendar year, the total of (a) cash
earnings paid to a Participant in the form of base salary, (b) cash compensation under the
incentive compensation plan (annual bonus) paid in such calendar year (regardless of whether earned
for a prior year), and (c) any amount by which an Employee’s base salary and annual bonus awards
are reduced under any 401(k) plan or any flexible benefit plans under the Code Sections 125 and 129
maintained by the Employer during the respective calendar year.

     2.10 “Effective Date” means June 1, 2011.

     2.11 “Employee” means a person who is employed by the Employer on a regular, full-time basis.

     2.12 “Employer” means Medicis Pharmaceutical Corporation, a Delaware Corporation, and its
successor, and any of its subsidiaries so designated by the Board of Directors.

     2.13 “Key Executive” means an Employee who is designated by the Compensation Committee on or
after the Effective Date of the Plan and as to whom the Compensation Committee has not withdrawn
such designation.

     2.14 “Normal Retirement Date” means the first day of the month coincident with or next
following the earlier of: (i) a Participant’s 65th birthday, or (ii) the date that
Participant attains age 591/2 and has 20 years of Service.

     2.15 “Participant” means a Key Executive designated by the Compensation Committee to
participate in this Plan and who has a benefit accrued under this Plan.

     2.16 “Plan” means the Medicis Pharmaceutical Corporation Supplemental Executive Retirement
Plan.

     2.17 “Plan Year” means the consecutive twelve (12) month period commencing on June 1 and
ending on May 31.

     2.18 “Remaining Retirement Benefit” means the portion of a Retirement Benefit, if any, in
which a Participant continues to accrue and vest following a Participant’s Normal Retirement Date
or a Change in Control, as the case may be, provided that such Participant has not incurred a
Separation from Service as of such date.

     2.19 “Retirement Benefit” means the benefit accrued under Section 5.1 of the Plan.

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     2.20 “Separation from Service” shall have the meaning set forth in Treasury Regulation
§1.409A-1(h).

     2.21 “Service” means a Participant’s period of full-time employment with the Employer
commencing on his first day of employment with the Employer until the date of Participant’s
Separation from Service with the Employer. For purposes of calculating Service earned prior to the
Effective Date, such period of Service shall be rounded up or down to the nearest full year (i.e.,
consecutive twelve (12) month period) of Service through the Effective Date. For purposes of
calculating Service earned after the Effective Date, if a Participant is employed on the first day
of a Plan Year, he shall be credited with a year of Service for such Plan Year. For purposes of
this definition, “full-time” employment shall mean an average of thirty (30) hours or more of
employment per calendar week.

     2.22 “Spouse” shall mean the person to whom the Participant was lawfully married on the date
the Participant’s benefits under this Plan are to commence.

     2.23 “Tier I Participants” means the Participants identified as “Tier I Participants” on
Exhibit A hereto.

     2.24 “Tier II Participants” means the Participants identified as “Tier II Participants” on
Exhibit A hereto.

     2.25 “Tier III Participant” means the Participant identified as “Tier III Participant” on
Exhibit A hereto.

     2.26 “Tier IV Participant” means the Participant identified as “Tier IV Participant” on
Exhibit A hereto.

     2.27 “Tier V Participant” means the Participant identified as “Tier V Participant” on
Exhibit A hereto.

     2.28 “Total Disability” means the Participant: (a) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical or mental impairment that can be
expected to result in death or continue for at least twelve(12) months; (b) by reason of any
medically determinable physical or mental impairment that can be expected to result in death or
continue for at least twelve (12) months, the Participant is receiving income replacement benefits
under the Employer’s disability plan for at least three (3) months; or (c) the Participant has been
determined to be totally disabled by the Social Security Administration; each of (a), (b) and (c)
as certified by a licensed physician and determined by the Compensation Committee in its sole
discretion; provided, that such “Total Disability” constitute a “disability” as defined under
Treasury Regulation § 1.409A-3(i)(4).

ARTICLE III.

EFFECTIVE DATE

     3.1 This Plan as set forth in this document is effective as of June 1, 2011.

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ARTICLE IV.

ELIGIBILITY AND VESTING

     4.1 Eligibility. Key Executives shall continue to be Participants until their Separation from
Service or they are no longer entitled to Retirement Benefits under this Plan, whichever is later.
If a Participant is no longer a Key Executive, but remains an Employee, his Service accrued as a
Participant shall not be forfeited, but he shall not accrue any additional Service for purposes of
his Benefit Accrual Percentage.

     4.2 Vesting. Upon a Separation from Service, a Participant shall be paid a Retirement
Benefit, to the extent vested, in such form and amounts, and at such times, as provided under this
Plan. A Retirement Benefit shall vest and become nonforfeitable based on the number of Plan Years
during which the Participant is a Participant in the Plan, up to a maximum of 100%. Each
Participant’s Retirement Benefit shall vest as follows:

	 	 	 	 	 
	Plan Years of Participation in Plan	 	Vested Fraction	 
	1 years but less than 2 years
	 	 	1/6	 
	2 years but less than 3 years
	 	 	2/6	 
	3 years but less than 4 years
	 	 	3/6	 
	4 years but less than 5 years
	 	 	4/6	 
	5 years but less than 6 years
	 	 	5/6	 
	6 or more years
	 	 	100	%

provided, however, that a Retirement Benefit shall also be 100% vested upon (i) a Participant’s
Normal Retirement Date, provided that the Participant has at least fifteen (15) years of Service
and has not had a Separation from Service with the Company prior to such date, (ii) a Participant’s
Separation from Service due to his discharge without “cause” or resignation for “good reason” (as
such terms are defined in such Participant’s employment agreement with the Company, as amended from
time to time, or, in the absence of such an employment agreement or such definitions, then as
defined in the Company’s Executive Retention Plan, as amended from time to time), or (iii) a Change
in Control. Additionally, in the event that no Change in Control has occurred, if the Tier III
Participant terminates his employment prior to July 1, 2017 other than by reason of death, Total
Disability, or an involuntary change in his material duties or responsibilities (as provided in
such Participant’s employment agreement with the Company, as amended from time to time), then his
vested Retirement Benefit shall be reduced by an additional 5%. Effective as of the Effective Date
and thereafter, vesting shall be credited to each Participant on the first day of each Plan Year,
in accordance with the vesting schedule set forth above.

ARTICLE V.

RETIREMENT BENEFITS

     5.1 Retirement Benefit.

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          (a) A Participant’s Retirement Benefit under this Plan, computed as an annual benefit payable
for twenty (20) years at Normal Retirement Date, shall equal the product of:

     (i) (A) with respect to any Tier I Participant, (x) 2.5% of such Participant’s
Average Earnings, multiplied by (y) such Participant’s Benefit Accrual Percentage,
multiplied by (z) the number of Participant’s years of Service at the Normal
Retirement Date up to a maximum of twenty (20) years of Service;

          (B) with respect to any Tier II Participant, (x) 1.25% of such Participant’s
Average Earnings, multiplied by (y) such Participant’s Benefit Accrual Percentage,
multiplied by (z) the number of Participant’s years of Service at the Normal
Retirement Date up to a maximum of twenty (20) years of Service;

          (C) with respect to the Tier III Participant, (x) 10% of such Participant’s
Average Earnings, multiplied by (y) such Participant’s Benefit Accrual Percentage,
multiplied by (z) the number of Participant’s years of Service at the Normal
Retirement Date up to a maximum of five (5) years of Service;

          (D) with respect to the Tier IV Participant, (x) 3.125% of such Participant’s
Average Earnings, multiplied by (y) such Participant’s Benefit Accrual Percentage,
multiplied by (z) the number of Participant’s years of Service at the Normal
Retirement Date up to a maximum of sixteen (16) years of Service;

          (E) with respect to the Tier V Participant,

          (1) (a) 3.125% of such Participant’s Average Earnings,
multiplied by (b) such Participant’s Benefit Accrual Percentage as of
May 31, 2011, multiplied by (c) the number of Participant’s years of
Service as of May 31, 2011, plus

          (2) (x) 2.5% of such Participant’s Average Earnings, multiplied
by (y) such Participant’s Benefit Accrual Percentage for the number
of years of Service occurring between June 1, 2011 through Normal
Retirement Date, multiplied by (z) the number of Participant’s years
of Service from June 1, 2011 through the Normal Retirement Date;

provided, however, that the maximum aggregate years of Service taken into account
for the Tier V Participant for purposes of calculating (1) plus (2) above shall be
eighteen (18) years of Service;

provided, further, that in no event shall the Retirement Benefit exceed (x) fifty percent (50%) of
a Participant’s Average Earnings with respect to any Tier I Participant, Tier III Participant, Tier
IV Participant and Tier V Participant, and (y) twenty-five percent (25%) of a Participant’s Average
Earnings with respect to any Tier II Participant.

          (b) A Participant shall continue to accrue and become vested in his Retirement Benefit for
Service after his Normal Retirement Date or a Change in Control, as the

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case may be, provided he has not incurred a Separation from Service with respect to such event. If
the Participant is entitled to receive a distribution of his Retirement Benefit in accordance with
Section 6.3(d) or (e) hereof, the Participant’s Accrued Retirement Benefit shall be distributed to
Participant in accordance with the Participant’s distribution election, and the Participant shall
continue to accrue and vest in any Remaining Retirement Benefit in accordance with the terms and
conditions of the Plan, provided, that the sum of the Accrued Retirement Benefit plus the Remaining
Retirement Benefit shall not exceed the maximum Retirement Benefit set forth in Section 5.1(a) with
respect to such Participant. The Remaining Retirement Benefit shall vest as set forth in Section
4.2, with the first day of vesting commencing immediately following the Normal Retirement Date or
the Change in Control, as the case may be. Any Remaining Retirement Benefit shall be paid
according to the election of the Participant with respect to his or her Retirement Benefit under
Section 6.3; provided that if such Remaining Retirement Benefit accrues after payment of the
Accrued Retirement Benefit by reason of Section 6.3(e), the Remaining Retirement Benefit shall be
paid on the Participant’s Separation from Service, or if elected by the Participant, if earlier,
upon a Change in Control.

          (c) In the event a Participant receives a distribution of his Retirement Benefit prior to such
Participant’s Normal Retirement Date, or in the event a Participant elects to receive a
distribution of his Retirement Benefit in a lump sum payment or in installment payments in any
number fewer than twenty (20), such Retirement Benefit shall be discounted to a present value
equivalent benefit using a four percent (4%) annual interest discounting rate for each year (based
on a consecutive twelve (12) month period from the Participant’s Normal Retirement Date, and
including any partial years) that the Retirement Benefit is paid prior to the Participant’s Normal
Retirement Date and less than twenty (20) years of annual installment payments. In the event a
Participant’s Retirement Benefit commences after his Normal Retirement Date, the Retirement Benefit
shall be credited with four percent (4%) annual interest for each year (based on a consecutive
twelve (12) month period from the Participant’s Normal Retirement Date, and including any partial
years) that the Retirement Benefit commences following the Participant’s Normal Retirement Date.

ARTICLE VI.

PAYMENT OF RETIREMENT BENEFITS

     6.1 Payment of Retirement Benefits. Except as set forth in Sections 6.3 and 6.4 below, all
vested Retirement Benefits hereunder shall be payable in twenty (20) equal annual installments, and
shall be payable commencing on the later of the Participant’s Normal Retirement Date or Separation
from Service as provided in Section 6.2 below; provided, that the Participant may elect a different
time and form of payment consistent with the requirements of Section 6.4 below and pursuant to the
distribution election form approved by the Compensation Committee from time to time for use with
this Plan.

     6.2 Timing of Payment. Unless a Participant elects otherwise pursuant to Section 6.4, a
Participant’s vested Retirement Benefit shall commence on the later of the Participant’s Normal
Retirement Date or the Participant’s Separation from Service. Notwithstanding any election to the
contrary, the Participant’s Retirement Benefit shall commence upon the Participant’s death or Total
Disability.

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     6.3 Timing of Commencement of Benefits.

          (a) Separation from Service. In the event a Participant is entitled to distribution of his
vested Retirement Benefit upon Separation from Service other than by reason of death or such
Participant’s Total Disability, and prior to his Normal Retirement Date, such Retirement Benefit
shall commence distribution on the one year anniversary of the date of such Participant’s
Separation from Service.

          (b) Total Disability. In the event a Participant is entitled to distribution of his
Retirement Benefit upon Total Disability, the Participant’s vested Retirement Benefit shall
commence distribution on the sixtieth (60th) day following the date that the
Compensation Committee determines such Total Disability has occurred.

          (c) Death. In the event a Participant is entitled to distribution of his vested Retirement
Benefit upon his death, such Retirement Benefit shall commence distribution on the sixtieth
(60th) day following the date of such Participant’s death.

          (d) Change in Control. In the event a Participant is entitled to receive a Retirement Benefit
upon a Change in Control, such Retirement Benefit shall commence distribution on the thirtieth
(30th) day after the Change in Control, regardless of whether a Participant has had a
Separation from Service or reached his Normal Retirement Date.

          (e) Normal Retirement. In the event a Participant is entitled to a distribution of his vested
Retirement Benefit upon such Participant’s Normal Retirement Date, the Retirement Benefit shall
commence distribution on the sixtieth (60th) day following the Normal Retirement Date;
provided, however, that if the Participant has a Separation from Service upon his Normal Retirement
Date, the Retirement Benefit shall be commence distribution on the six month anniversary of the
Normal Retirement Date.

     6.4 Timing of Elections. Prior to becoming eligible to participate in the Plan, each
Participant may elect to receive his or her Retirement Benefit upon the earlier of Separation from
Service (if such Separation from Service is prior to his Normal Retirement Date) or Normal
Retirement Date (regardless of Separation from Service), or also upon a Change in Control, as set
forth in the election form approved by the Committee. Additionally, each Participant may in such
election elect to receive his or her Retirement Benefit in the form of a lump sum or installments,
not to exceed twenty (20) years, and may elect a different form of payment for each distribution
event. Once made, such election shall be irrevocable on the date of the Participant’s commencement
of participation in the Plan. If no such election is made, then such Participant’s Retirement
Benefits shall be paid in annual installments over twenty (20) years commencing on the later of the
Participant’s (i) Normal Retirement Date or (ii) Separation from Service.

     6.5 Changes in Payments. A Participant may change his election after it has become
irrevocable by submitting a modified distribution election to the Compensation Committee, and in
accordance with the following criteria:

          (a) The election of the new form of payment shall have no effect until at least 12 months
after the date on which the modified distribution election is made;

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          (b) The date on which the Participant’s distribution is to begin under the modified
distribution election must be no sooner than five (5) years after the date the Participant’s
Retirement Benefit would have commenced absent such modified distribution election; and

          (c) The modified distribution election must be made at least 12 months prior to the date the
Participant’s Retirement Benefit previously would have commenced absent the modified distribution
election.

     A Participant’s modified distribution election shall not be considered to be made until the
date on which the election becomes irrevocable. Such an election shall become irrevocable no later
than the date that is twelve (12) months prior to the date the Participant’s Retirement Benefit
would otherwise have commenced absent the modified distribution election. For purposes of this
Section 6.5 and Code Section 409A, installment payments shall be treated as being made in the form
of a single payment commencing on the first date that such installment payment would otherwise
commence. .

     6.6 Payments Rounded to Next Full Dollar. Each annual payment which is computed in accordance
with this Plan will, if not in whole dollars, be increased or decreased to the nearest whole
dollar. Such rounding shall be made after applying any applicable reduction factors.

     6.7 Permissible Acceleration. Notwithstanding Article VI, a Participant’s Retirement Benefit
may be paid in the discretion of the Employer as follows upon the following events, in accordance
with the requirements of Treasury Regulation § 1.409A-3(j)(4):

          (a) As necessary to comply with a domestic relations order (as defined in Code Section
414(p)(1)(B)).

          (b) If the Internal Revenue Service, makes a determination that a Participant is required to
include in gross income the value of his Retirement Benefit, as soon as practicable following such
determination, the Employer shall pay to the Participant, the amount required to be included in the
Participant’s gross income.

          (c) If a Participant’s Retirement Benefit, or any remaining installments thereof is less than
an amount applicable under Code Section 402(g) for the year in question, then the balance of such
Retirement Benefit may be distributed in a lump sum.

          (d) Upon the termination and liquidation of the Plan, the Retirement Benefit shall be
distributed in a lump sum twelve months following such termination and liquidation; provided that
such termination or liquidation is not in connection with a downturn in the financial health of the
Employer and shall conform to the requirements of Treasury Regulation §1.409A-3(j)(4)(ix).

     6.8 Payments upon Death. In the event of Participant’s death prior to a Participant’s
Retirement Benefit being paid in full, then any remaining Retirement Benefit shall be made to the
Participant’s Beneficiary in accordance with this Article VI.

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ARTICLE VII.

FUNDING

     7.1 The Employer may enter into a trust agreement creating an irrevocable grantor trust for
the holding of cash and/or annuity contracts for pension benefits accrued by the Participants under
the Plan. Any assets of such trust shall be subject to the claims of creditors of the Employer to
the extent set forth in the trust and Participants’ interests in benefits under this Plan shall
only be those of unsecured creditors of the Employer. In the event of a Change in Control, the
Employer shall enter into a trust agreement creating an irrevocable grantor trust for the holding
of cash and/or annuity contracts in respect of the Retirement Benefits accrued by the Participants
(whether current or former); provided, further, that upon the occurrence of a Change in Control,
the Employer shall transfer to the trustee of the foregoing trust the maximum amount of assets
estimated to be necessary to satisfy the Employer’s obligations hereunder, as in effect immediately
prior to the Change in Control, and to the extent permitted under Code Section 409A.

ARTICLE VIII.

PLAN ADMINISTRATION

     8.1 The general administration of this Plan and the responsibility for carrying out the
provisions hereof shall be vested in the Compensation Committee. The Compensation Committee may
adopt, subject to the approval of the Board of Directors, such rules and regulations as it may deem
necessary for the proper administration of this Plan, and its decision in all matters shall be
final, conclusive, and binding.

     8.2 The Compensation Committee may adopt, subject to the approval of the Board of Directors,
such rules and regulations as it may deem necessary for the proper administration of this Plan, and
its decision in all matters shall be final, conclusive, and binding. The Compensation Committee
shall also have the discretion and authority to (a) make, amend, interpret, and enforce all
appropriate rules and regulations for the administration of this Plan, and (b) decide or resolve
any and all questions, including benefit entitlement determinations and interpretations of this
Plan, as may arise in connection with the Plan.

     8.3 To the extent applicable, this Plan shall be interpreted in accordance with Code Section
409A and Department of Treasury regulations and other interpretive guidance issued thereunder. If
the Company determines that any benefits payable under this Plan do not comply with Code Section
409A and related Department of Treasury guidance, the Company may amend this Plan or adopt other
policies or procedures (including amendments, policies and procedures with retroactive effect), or
take such other actions as the Company deems necessary or appropriate to comply with the
requirements of Code Section 409A and related Department of Treasury guidance; provided that no
such amendment shall be effective without the Participant’s consent unless it preserves the
Participant’s economic benefit prior to such amendment.

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ARTICLE IX.

AMENDMENT AND TERMINATION

     9.1 The Board of Directors of the Employer reserves in its sole and exclusive discretion the
right at any time and from time to time to amend this Plan in any respect or terminate this Plan
without restriction and without the consent of any Participant or Spouse, provided, however, that
no amendment or termination of this Plan shall, without the Participant’s prior written consent,
adversely affect the right of any Participant or Spouse with respect to any Retirement Benefit
under this Plan, whether earned, vested or unvested, accrued or to be accrued, except as required
by law or in order to satisfy Code Section 409A.

     9.2 Notwithstanding any other provisions of the Plan to the contrary and in addition to the
restrictions under Section 9.1, following a Change in Control, or following any public announcement
concerning an anticipated Change in Control (or until such time as the anticipated Change in
Control is abandoned if not consummated, as determined by the Committee in its sole discretion),
without the prior written consent of a Participant:

          (a) any Service accrued by the Participant as of the date of a Change in Control cannot be
reduced;

          (b) no amendment or action of the Compensation Committee which adversely affects the
Participant (including, without limitation, any amendment restricted by Section 9.1) is valid and
enforceable; and

          (c) no termination of the Plan shall have the effect of reducing any benefits accrued by the
Participant under the Plan prior to such termination.

ARTICLE X.

MISCELLANEOUS PROVISIONS

     10.1 No Guarantee of Employment. Nothing contained herein shall be deemed to give any
individual the right to be retained in the service of the Employer or to interfere with the rights
of the Employer to discharge any individual at any time, with or without cause.

     10.2 Non-Alienation of Benefits. No Retirement Benefit payable hereunder may be assigned,
pledged, mortgaged or hypothecated and, to the extent permitted by law, no such Retirement Benefit
shall be subject to legal process or attachment for the payment of any claims against any person
entitled to receive the same. Notwithstanding any provision herein to the contrary, the Employer
may, as the Compensation Committee in its sole and absolute discretion shall determine, offset any
amount to be paid to a Participant, Spouse or Beneficiary hereunder in order to recoup amounts that
have been misappropriated by such Participant against any amounts which such Participant may owe to
the Employer or a subsidiary of the Employer.

     10.3 Payment to Incompetents. If a Participant entitled to receive any Retirement Benefit
payments hereunder is deemed by the Compensation Committee or is adjudged by a court of competent
jurisdiction to be legally incapable of giving valid receipt and discharge for such Retirement
Benefit, such payments shall be paid to such person or persons as the Compensation Committee shall
designate or to the duly appointed guardian. Such payments shall, to the extent made, be deemed a
complete discharge for such payments under this Plan.

11

 

     10.4 Withholding. Payments made by the Employer under this Plan to any Participant or Spouse
shall be subject to withholding as shall, at the time for such payment, be required under any
income tax or other laws, whether of the United States or any other jurisdiction.

     10.5 Expenses. All expenses and costs in connection with the operation of this Plan shall be
borne by the Employer.

     10.6 Governing Law. The provisions of this Plan will be construed according to the laws of
the State of Delaware, excluding the provisions of any such laws that would require the application
of the laws of another jurisdiction.

     10.7 Gender and Number. The masculine pronoun wherever used herein shall include the feminine
gender and the feminine the masculine and the singular number as used herein shall include the
plural and the plural the singular unless the context clearly indicates a different meaning.

     10.8 Titles and Heading. The titles to articles and headings of sections of this Plan are for
convenience of reference only and in case of any conflict, the text of the Plan, rather than such
titles and headings, shall control.

     10.9 Non-Qualified Plan. The Plan is intended to be a plan that is not qualified within the
meaning of Code Section 401(a) and that “is unfunded and is maintained by an employer primarily for
the purpose of providing deferred compensation for a select group of management or highly
compensated employees” within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1).

     10.10 Unsecured Creditors. Participants and their Beneficiaries, heirs, successors and assigns
shall have no legal or equitable rights, interests or claims in any property or assets of the
Employer. For purposes of the payment of benefits under this Plan, any and all of the Employer’s
assets shall be, and remain, the general, unpledged unrestricted assets of the Employer. The
Employer’s obligation under the Plan shall be merely that of an unfunded and unsecured promise to
pay money in the future.

     10.11 Attorneys Fees and Expenses. In addition to all other amounts payable under this Plan,
the Employer shall pay all legal fees and expenses incurred by a Participant in connection with any
dispute arising after a Change in Control out of or relating to this Plan or the interpretation
thereof (including, without limitation, all such fees and expenses, if any, incurred in seeking to
obtain or enforce any right or benefit provided by this Plan), regardless of the outcome of such
proceeding; provided, however, that a Participant shall not be entitled to recover such fees and
costs if the court determines that the Participant’s claim was brought in bad faith or was
frivolous. Any attorney’s fees incurred by a Participant with respect to such a dispute arising
after a Change in Control shall be paid by the Employer in advance of the final disposition of such
action or challenge, as such fees and expenses are incurred, if the Participant agrees to repay
such amounts if it is ultimately determined by the court that the Participant’s claim was brought
in bad faith or was frivolous.

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ARTICLE XI.

CLAIMS PROCEDURES

     11.1 Presentation of Claim. Any Participant or Beneficiary of a deceased Participant (such
Participant or Beneficiary being referred to below as a “Claimant”) may deliver to the Compensation
Committee (or such committee designated by the Compensation Committee) a written claim for a
determination with respect to the amounts distributable to such Claimant from the Plan. If such a
claim relates to the contents of a notice received by the Claimant, the claim must be made within
60 days after such notice was received by the Claimant. All other claims must be made within 180
days of the date on which the event that caused the claim to arise occurred. The claim must state
with particularity the determination desired by the Claimant. For purposes of this Article XI, all
references to the “Compensation Committee” shall include any committee designated by the
Compensation Committee to determine claims under this Article XI.

     11.2 Notification of Decision. The Compensation Committee shall consider a Claimant’s claim
within a reasonable time, but no later than 90 days after receiving the claim. If the Compensation
Committee determines that special circumstances require an extension of time for processing the
claim, written notice of the extension shall be furnished to the Claimant prior to the termination
of the initial 90 day period. In no event shall such extension exceed a period of 90 days from the
end of the initial period. The extension notice shall indicate the special circumstances requiring
an extension of time and the date by which the Compensation Committee expects to render the benefit
determination. The Compensation Committee shall notify the Claimant in writing:

          (a) that the Claimant’s requested determination has been made, and that the claim has been
allowed in full; or

          (b) that the Compensation Committee has reached a conclusion contrary, in whole or in part, to
the Claimant’s requested determination, and such notice must set forth in a manner calculated to be
understood by the Claimant:

     (i) the specific reason(s) for the denial of the claim, or any part of it;

     (ii) specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;

     (iii) a description of any additional material or information necessary for the
Claimant to perfect the claim, and an explanation of why such material or
information is necessary;

     (iv) an explanation of the claim review procedure set forth in Section 11.3
below; and

     (v) a statement of the Claimant’s right to bring a civil action under ERISA
Section 502(a) following an adverse benefit determination on review.

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     11.3 Review of a Denied Claim. On or before 60 days after receiving a notice from the
Compensation Committee that a claim has been denied, in whole or in part, a Claimant (or the
Claimant’s duly authorized representative) may file with the Compensation Committee a written
request for a review of the denial of the claim. The Claimant (or the Claimant’s duly authorized
representative):

          (a) may, upon request and free of charge, have reasonable access to, and copies of, all
documents, records and other information relevant (as defined in applicable ERISA regulations) to
the claim for benefits;

          (b) may submit written comments or other documents; and/or

          (c) may request a hearing, which the Compensation Committee, in its sole discretion, may
grant.

     11.4 The Compensation Committee shall render its decision on review promptly, and no later
than 60 days after the Compensation Committee receives the Claimant’s written request for a review
of the denial of the claim. If the Compensation Committee determines that special circumstances
require an extension of time for processing the claim, written notice of the extension shall be
furnished to the Claimant prior to the termination of the initial 60 day period. In no event shall
such extension exceed a period of 60 days from the end of the initial period. The extension notice
shall indicate the special circumstances requiring an extension of time and the date by which the
Compensation Committee expects to render the benefit determination. In rendering its decision, the
Compensation Committee shall take into account all comments, documents, records and other
information submitted by the Claimant relating to the claim, without regard to whether such
information was submitted or considered in the initial benefit determination. The decision must be
written in a manner calculated to be understood by the Claimant, and it must contain:

          (a) specific reasons for the decision;

          (b) specific reference(s) to the pertinent Plan provisions upon which the decision was based;

          (c) a statement that the Claimant is entitled to receive, upon request and free of charge,
reasonable access to and copies of, all documents, records and other information relevant (as
defined in applicable ERISA regulations) to the Claimant’s claim for benefits; and

          (d) a statement of the Claimant’s right to bring a civil action under ERISA Section 502(a).

     11.5 A Claimant’s compliance with the foregoing provisions of this Article XI is a mandatory
prerequisite to a Claimant’s right to commence any legal action with respect to any claim for
benefits under this Plan.

14exv10w2

Exhibit 10.2

EXECUTION COPY

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made as of this 24th day of June, 2011 between
MEDICIS PHARMACEUTICAL CORPORATION, a corporation organized under the laws of the State of Delaware
(the “Company”) with offices located at 7720 North Dobson Road, Scottsdale, Arizona and Jonah
Shacknai (the “Executive”) with an address of 7720 North Dobson Road, Scottsdale, Arizona:

WITNESSETH:

     WHEREAS, the Company and the Executive desire to enter into the Agreement whereby the
Executive will continue to provide personal services to the Company as Chairman and Chief Executive
officer; and

     WHEREAS, in its business, the Company has developed and uses valuable technical and
nontechnical information including information relating to development, use, manufacture and
marketing of certain biologically-active compounds, and it is necessary for the Company to protect
certain of the information either by patents, copyrights, or by holding it secret or confidential;
and

     WHEREAS, the aforesaid information is vital to the success of the Company’s business, and the
Executive through his activities may become acquainted therewith, and may contribute thereto,
either through research, inventions, discoveries or otherwise; and

     WHEREAS, in the course of his employment, the Executive has gained and will gain knowledge of
the business affairs, finances, management, marketing programs and philosophy, customers and
methods of operation of the Company; and

     WHEREAS, the Company would suffer irreparable harm if the Executive were to use such
knowledge, information and business acumen in competition with the Company,

     NOW, THEREFORE, in consideration of the continued employment of Executive by the Company as
Chairman and Chief Executive Officer, the above premises and the mutual agreements hereinafter set
forth, the receipt, adequacy and sufficiency of which is hereby acknowledged, the parties agree as
follows:

     1. Definitions.

     (a) “Business of the Company” shall mean and include the business of developing,
manufacturing, marketing, selling and using certain chemical compounds for use in the dermatologic
industry or such other businesses as the Company derived substantial revenues from, which revenues
exceed twenty (20%) percent of the Company’s gross annual revenues in the Company’s most recent
fiscal year.

     (b) “Competing Business” shall mean any business which is the same or essentially the same as
the Business of the Company.

 

 

     (c) “Confidential Information” shall mean all non public customer lists, sales and marketing
information, customer account records, training and operations material and memoranda, trade
secrets, strategic planning materials and information product development plans, scientific and
technical information, personnel records, pricing information, and financial information concerning
or relating to the business, accounts, customers, employees and affairs of the Company, obtained by
or furnished, disclosed or disseminated to the Executive, or obtained, assembled or compiled by the
Executive or under his supervision during the course of his employment by the Company, and all
physical embodiments of the foregoing, all of which are hereby agreed to be the property of and
confidential to the Company, but Confidential Information shall not include any of the foregoing to
the extent the same is or becomes publicly known through no fault or breach of this Agreement by
the Executive.

     2. Terms of Employment; Duties.

     (a) The Company employs the Executive as Chairman of the Board of Directors of the Company,
and Chief Executive Officer of the Company, and the Executive accepts such employment with the
Company in that capacity subject to the terms and conditions hereof. The Executive shall in such
office have the responsibilities which include presiding over and participating in deliberations of
the Board as its Chairman and as a member of the Board; serving on the Executive Committee of the
Board; exercising ultimate responsibility on a reporting basis for sales, marketing, research and
development, operations, regulatory compliance, finance, personnel, corporate development, public
and shareholder relations and governmental relations activities of the Company; exercising ultimate
responsibility for strategic planning and evaluation, and serving as Company’s official spokesman
and representative in all matters.

     (b) Throughout his employment hereunder, the Executive shall continue to work on average a
minimum of four (4) days per week, including but not limited to, conventions, meetings and off-site
activities, to the fulfillment of the duties of his employment, with full recognition of his other
obligations as designated hereinafter which may occur outside the Company’s headquarters in the
Phoenix Metropolitan area. The Executive shall conduct such business activities at the Company’s
headquarters at 7720 North Dobson Road, Scottsdale, Arizona, or from such other headquarters
located in the greater Phoenix area as the Company may determine. Alternatively, the Executive
shall be available during the business week to meet with Company personnel, attend telephonic
meetings, and participate in other corporate matters from his home during the normal business week
and/or at such other times as the Executive may be available, provided that the Executive’s
children are not in his care at such time. It is expressly understood and agreed that the Executive
may not be available for corporate matters during such times that he is providing care for his
children. Further, the Company acknowledges and agrees that the participation by the Executive in
philanthropic, community education and/or charitable activities during the normal business week
shall be considered to be in furtherance of the Executive’s duties of his employment with the
Company.

     3. Compensation and Related Matters.

     (a) For his services hereunder, the Company shall pay to the Executive the compensation and
provide the benefits set forth in Exhibit A attached hereto and incorporated herein as part
of this Agreement and such benefits as are otherwise provided for herein.

2

 

     (b) The Executive shall be eligible to fully participate in all present or future pension,
retirement, medical, dental, disability, life insurance or any other employee benefit plans of the
Company (including, without limitation, any supplemental executive retirement plan adopted by the
Company), and in addition, the Executive shall be eligible to fully participate in all present or
future incentive compensation, bonus, profit sharing, stock option or stock purchase plans of the
Company as and to the extent granted or approved and determined by the Board of Directors of the
Company, subject to the provisions of Exhibit A hereof.

     (c) Provided that the Executive maintains a satisfactory or better level of performance, he
shall remain fully eligible for an annual cash bonus at the discretion of the Company’s executive
compensation committee of its board of directors.

     (d) The Company shall provide the Executive with eight (8) weeks of paid vacation time per
year. The Executive shall endeavor to schedule such vacation time in a manner that will not
material detract from the Executive’s performance of his duties. In the event the Executive’s
employment terminates for any reason, whether voluntary or involuntary, the Company shall, no later
than thirty (30) days after the Date of Termination, make a payment to the Executive for the value
of all unused vacation.

     4. Term and Termination of This Agreement.

     (a) The Executive’s employment under this Agreement shall be for the period commencing on June
24, 2011 and expiring on June 30, 2016 (the “Term”), subject however to the earlier termination
thereof pursuant to the provisions of this Agreement.

     (b) The term of the Executive’s employment hereunder may be terminated prior to the expiration
of the Term (or any extension thereof) in the following events:

          (i) termination by mutual agreement of the parties;

          (ii) termination by the Company without Cause upon sixty (60) days’ written notice to
the Executive, as provided for in Section 5(a)(iii);

          (iii) termination upon the Executive’s death or Disability as defined in and as
provided for in Section 5(a)(v);

          (iv)
termination of the Executive for Cause, as provided for in Sections 5(a)(ii) and 7;

          (v) resignation by the Executive for Good Reason, as provided for in Sections
5(a)(iii) and 8;

          (vi) termination of the Executive arising as a result of Change in Ownership or
Control, as provided for in Sections 5(a)(iii) and 9; or

          (vii) voluntary resignation by the Executive for reasons other than those falling
within paragraph (i), (v) or (vi) herein.

3

 

     5. Payments Upon Termination or Expiration of Term.

     (a) In the event that the Executive’s employment hereunder is terminated pursuant to Section
4(b) above, the Company shall pay to Executive the following amounts within thirty (30) days of
such termination or as otherwise set forth below:

          (i) If the Executive’s employment is terminated pursuant to subsection 4(b)(i), the
Company shall pay to the Executive all amounts owing to the Executive as Annual
Compensation through the Date of Termination (as defined herein), consisting of Base Salary
through the end of the calendar month from the Date of Termination and a pro rata bonus
based upon the Executive’s prior year’s bonus.

          (ii) If the Executive’s employment is terminated by the Company for Cause (as defined
in Section 7 herein) pursuant to subsection 4(b)(iv), or if the Executive voluntarily
resigns his employment pursuant to Section 4(b)(vii), the Company shall pay to the
Executive all amounts owing to the Executive as Base Salary through the end of the calendar
month of the Date of Termination.

          (iii) (a) If the Executive’s employment is terminated by the Company without Cause
(Section 4(b)(ii)), or in the event of the termination of this Employment Agreement
pursuant to Section 4(b)(v) and Section 8 herein (Resignation by Executive For Good
Reason), or in the event the Company shall terminate this Employment Agreement for any
reason other than pursuant to Section 4(b)(iv) (Cause) or Section 4(b)(iii) (death or
Disability), or Section 4(b)(vi) and Section 9 (Termination of Employment as a Result of
Change in Ownership or Control):

	 	•	 	the Company shall pay the Executive his then current annual
compensation, and a pro rata bonus based on the Executive’s
prior year’s bonus, through the Date of Termination.
	 
	 	•	 	in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall
pay as severance to the Executive within thirty (30) days
following the Date of Termination (on such date as is determined
by the Company), a lump sum payment equal to the number of
months remaining from the Date of Termination until the
expiration date of this Employment Agreement, divided by twelve
(12), times the sum of (a) the Executive’s annual Base Salary at
the highest rate in effect during the twelve (12) months
immediately preceding the Date of Termination and (b) the
average of the annual bonus payments, if any, paid to the
Executive in the preceding three (3) years, provided, however,
that in no event shall the amount of such payment exceed three
(3) times the sum of (A) the Executive’s annual Base Salary at
the highest rate in effect during the twelve (12) months
immediately preceding the Date of Termination and (B) the
average of the Annual bonus

4

 

	 	 	 	payments, if any, paid to the Executive in the preceding three
(3) years.
	 
	 	•	 	the Company shall pay all other damages to which the
executive may be entitled as a result of the Company’s
termination of his employment under this Agreement, except for
Cause, including damages for any and all loss of benefits to the
Executive under the employee benefit plans which he would have
received had this Agreement not been terminated for reasons set
forth in subsections 4(b)(ii), 4(b)(v) and 4(b)(vi) herein, and
had the Executive’s employment continued for the full Term, or
for the full period of any extension of the term, and including
all legal fees and expenses incurred by the Executive in
contesting or disputing any such termination or in seeking to
obtain or enforce any right or benefit provided by this
Employment Agreement.

          (iii) (b) In the event of the termination of this Employment Agreement pursuant to
Section 4(b)(vi) and Section 9 herein (Termination of Employment as a Result of Change in
Ownership or Control):

	 	•	 	the Company shall pay the Executive his then current annual
compensation, and a pro rata bonus based on the Executive’s
prior year’s bonus, through the Date of Termination.
	 
	 	•	 	in lieu of any further salary payments to the Executive for
periods subsequent to the Date of Termination, the Company shall
pay as severance to the Executive within thirty (30) days
following the Date of Termination (on such date as is determined
by the Company), a lump sum payment equal to three (3) times the
sum of (a) the Executive’s annual Base Salary at the highest
rate in effect during the twelve (12) months immediately
preceding the Date of Termination and (b) the average of the
annual bonus payments, if any, paid to the Executive in the
preceding three (3) years.
	 
	 	•	 	the Company shall pay all other damages to which the
Executive may be entitled as a result of the Company’s
termination of his employment under this Agreement, except for
Cause, including damages for any and all loss of benefits to the
Executive under the employee benefit plans which he would have
received had this Agreement not been terminated for reasons set
forth in subsections 4(b)(ii) 4(b)(v) and 4(b)(vi), herein, and
had the Executive’s employment continued for the full Initial
Term, or for the full period of any extension or automatic
renewal, and including all legal fees and expenses incurred by
the Executive in contesting or disputing any such

5

 

	 	 	 	termination or in seeking to obtain or enforce any right or
benefit provided by this Employment Agreement.

          (iv) If Executive’s employment is terminated pursuant to subsection 4(b)(iii) by
reason of Executive’s death, the Company agrees to pay to the legal representative of his
estate, for a period of twenty-four (24) months (commencing with the Date of Termination),
an amount equal to and payable at the same rate at his then current Base Salary.

          (v) During any period that the Executive fails to perform his duties hereunder as a
result of incapacity due to his physical or mental or emotional illness, the Executive
shall continue to receive his full Base Salary along with any bonus payments awarded by the
Board of Directors until the Executive returns to his duties or until his employment is
terminated for reason of Disability pursuant to Section 4(b)(iii).

          “Disability” shall mean the inability of the Executive to perform the duties of
Chairman and Chief Exchange Officer of the Company due to physical, mental or emotional
incapacity or illness, where such inability is expected to result in death or to be of
long-continued and indefinite duration, but in no event shall such duration be less than One
Hundred Eighty (180) consecutive days. The determination of “Disability” shall be made by
the Board of Directors of the Company (“the Board”) and the Executive, as determined by an
independent physician selected by both the Board and the Executive. In the event of such
Disability, the Company may, at its election and by providing written notice thereof to the
Executive within sixty (60) days after such determination, terminate the Executive’s
employment hereunder effective on the date set forth in such notice. If the Board or the
Company does not timely give notice to the Executive of its election to terminate the
Executive for such Disability, then the Company shall be deemed to have waived its right to
terminate the Executive based upon such Disability.

          After such termination because of the Executive’s Disability, the Executive shall be
paid, in substantially equal monthly installments, one hundred percent (100%) of his Base
Salary (at the rate in effect at the time Notice of Termination is given) for twenty-four
(24) months, and thereafter an annual amount equal to fifty percent (50%) of such Base
Salary for the balance of the Term, but in no event for less than a twelve (12) month
period.

     (b) Should any payment or provision of benefit provided for in Section 5 constitute an “excess
parachute payment” as defined in Section 280G of the Internal Revenue Code of 1986 and the
regulations and interpretations of the Internal Revenue Service promulgated thereunder, the
successor to the Company shall make all payments and provide all benefits to the Executive as set
forth in this Section 5, subject to the provisions of Exhibit B hereof.

     (c) Unless the Executive is terminated for Cause pursuant to Section 4(b)(iii) or voluntarily
resigns his employment pursuant to Section 4(b)(vii), the Company shall maintain in full force and
effect, for the continued benefit of the Executive, for a period of three (3) years following the
Date of Termination all employee benefit plans and programs in which Executive was entitled to
participate immediately prior to the Date of Termination, provided that the

6

 

Executive’s continued participation in such employee benefit plans is possible under the
general terms and provisions of such plans and programs. In the event that the Executive’s
participation in any such plan or program is barred at any time during this three (3) year period,
the Company shall arrange to provide the Executive with benefits substantially similar to those
which the Executive would otherwise have been entitled to receive under such plans and programs
from which his continued participation is barred, or alternatively, to provide to the Executive the
economic after-tax equivalent of the participation in all of said employee benefit plans in which
the Executive’s participation is barred. At the end of the period of coverage, the Executive shall
have the option to have assigned to him at no cost and with no apportionment of prepaid premiums
any assignable insurance policy owned by the Company which relate specifically to the Executive.

(d) (i) In addition to the foregoing, if the Executive’s employment is terminated by the
Company without Cause pursuant to Section 4(b)(ii), upon the Executive’s death or Disability
pursuant to Section 4(b)(iii), upon the Executive’s resignation for Good Reason pursuant to
Section 4(b)(v), as a result of a Change in Ownership or Control pursuant to Section
4(b)(vi), or upon the expiration of the Term, all stock options, restricted stock,
restricted stock units or stock appreciation rights, if any, awarded to the Executive on or
before the Date of Termination under the Company’s equity incentive plans (the “Equity
Incentives”), shall immediately vest to the Executive’s benefit or the benefit of the
Executive’s estate, in the event of his death. Further, the Executive shall retain the
right to exercise all options or stock appreciation rights that are Equity Incentives (the
“Options”) for the full term(s) thereof, and the Company shall take all actions as are
necessary to transfer the Options from the Company’s qualified stock option plan(s) to the
Company’s nonqualified stock option plan(s) or such other plans as may be applicable. The
intent of this provision is to ensure that in the event of termination of the Executive’s
employment for reasons referenced in this subsection, or upon expiration of the Term, the
Executive shall be fully vested in the Equity Incentives and shall have the full term of
each such Option or Options to exercise the same.

          (ii) In the event the Executive’s employment is terminated in accordance with Section
4(b)(vi) and, as a consequence of such Change in Ownership or Control, the Executive’s right
to exercise the Options is terminated prior to the expiration of such rights as provided
under Section 5(d)(i) above without the receipt of cash compensation therefore, then the
Executive shall have the right to a payment for such Options in an amount equal to the
amount calculated under Section 9(b)(ii)(A).

     (e) The Executive shall not be required to mitigate the amount of any payment provided for in
this Section 5 by seeking other employment or otherwise, and no compensation earned by the
Executive after his termination of employment with the Company shall be applied to offset any
payment provided for in this Agreement.

     (f) Any termination of the Executive’s employment by the Company or by the Executive (other
than termination by reason of the Executive’s death) shall be communicated by written Notice of
Termination to the other party hereto in accordance with provisions set forth in this Agreement.

7

 

     (g) “Date of Termination” shall mean:

          (i) if the Executive’s employment is terminated by his death, the date of his death,

          (ii) if the Executive’s employment is terminated by reason of the Executive’s
Disability, sixty (60) days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his duties on a reasonable full-time
basis during such sixty (60) day period),

          (iii) if the Executive’s employment is terminated for any other reason, the date
specified in the Notice of Termination; provided that if within sixty (60) days after the
Notice of Termination is given the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date of Termination shall
be the date on which said dispute is finally determined, either by mutual written agreement
of the parties, or by a final arbitration award as provided for in Section 18 (the time for
appeal therefrom having expired and no appeal having been perfected), and

          (iv) if the Term expires, the expiration date.

     (h) Except in the event the Agreement is terminated for Cause as defined in and pursuant to
the terms of Section 7, the Company shall provide the Executive, at a cost to the Executive
identical to the Executive’s health insurance premium, with coverage under the Company’s
Health/Medical and Dental plans for the Executive and for all eligible dependents of the Executive.
Such coverage shall be provided for the remainder of the life of the Executive. Pursuant to this
subsection (h), the Company shall provide the Executive and the Executive’s eligible dependents
with coverage identical to that provided by the Company to its senior officers at the time of this
Agreement. Whether the Executive’s dependents are “eligible” dependents in a given calendar year
shall be determined under the terms and conditions of the Health/Medical and dental plans, assuming
that the Executive and the Executive’s dependents would have participated in such plans.

     (i) If the Executive’s employment is terminated by the Company without Cause (Section
4(b)(ii)), or in the event of a termination of the Executive’s employment arising as a result of a
Change in Ownership or Control as provided for in Sections 5(a)(iii) and 9, the Company will
provide the Executive with a STIPEND of Seventy Five Thousand ($75,000) annually for administrative
support and services. Said STIPEND shall be made to the Executive for a period of three (3) years
following the Date of Termination, or for the balance of the term of this amended Agreement,
whichever is greater, and shall be provided semi-annually commencing on the first day of the month
following the Date of Termination.

     (j) Notwithstanding anything to the contrary contained in the Agreement, in the event the
Agreement is extended beyond June 30, 2016, the terms of the Agreement setting forth the payments
by the Company to the Executive, and the other entitlements of the Executive, to be provided upon
the termination by the Company of the Executive’s employment, including but not limited to a
termination of employment as a result of Change in Ownership or Control of the

8

 

Company as provided in Section 9 of the Agreement, or to be provided upon the resignation by
the Executive of his employment for Good Reason as provided in Section 8 of the Agreement, shall
remain in full force and effect for the duration of such extension term.

     (k) Effect of Section 409A of the Code. Notwithstanding anything to the contrary in this
Agreement, if, upon the advice of its counsel, the Company determines that any payments or benefits
to be provided to Executive pursuant to this Agreement is or may become subject to the additional
tax under Section 409A(a)(1)(B) of the Code or any other taxes or penalties imposed under Section
409A (“409A Taxes”) if provided at the time otherwise required under this Agreement, then:

	 	(A)	 	(i) Such payments shall be delayed until the
date that is six months after the date of Executive’s “separation from
service” (as such term is defined under Section 409A) with the Company,
or such shorter period that, in the opinion of such counsel, is
sufficient to avoid the imposition of 409A Taxes (the “Payments Delay
Period”), and (ii) such payments shall be increased by an amount equal
to interest on such payments for the Payments Delay Period at a rate
equal to the rate of earnings then credited on accounts in the
Company’s Deferred Compensation Plan, or any successor plan.
	 
	 	(B)	 	(i) With respect to the provision of such
benefits, for a period of six months following the date of Executive’s
“separation from service” (as such term is defined under Section 409A)
with the Company, or such shorter period, that, in the opinion of such
counsel, is sufficient to avoid the imposition of 409A Taxes (the
“Benefits Delay Period”), Executive shall be responsible for the full
cost of providing such benefits, and (ii) on the first day following
the Benefits Delay Period, the Company shall reimburse Executive for
the costs of providing such benefits imposed on Executive during the
Benefits Delay Period, plus interest accrued at a rate equal to the
rate of earnings then credited on accounts in the Company’s Deferred
Compensation Plan, or any successor plan.
	 
	 	(C)	 	The Company shall fund any payments to
Executive that are to be delayed as a result of the imposition of a
Payment Delay Period (including the interest to be paid with respect to
such delayed payments) and/or any payments that are expected to be paid
to Executive as a result of the imposition of a Benefits Delay Period
(including any interest to be paid with respect thereto) (collectively,
the “Delayed Payments”) by establishing and irrevocably funding a trust
for the benefit of Executive. Such trust shall be a grantor trust
described in Section 671 of the Code. The trust shall provide for
distribution of amounts to Executive in order to pay taxes, if any,
that become due prior to payment of the

9

 

	 	 	 	Delayed Payments pursuant to the trust. The amount of such fund shall
equal a good faith estimate of the Delayed Payments determined by the
Company in consultation with Executive. The establishment and funding
of such trust shall not affect the obligation of the Company to pay
the Delayed Payments pursuant to this Section 5(k).

	 	(D)	 	Executive will be considered to have terminated
employment with the Company only when Executive incurs a “separation
from service” with the Company within the meaning of Treasury
Regulation Section 1.409A-1(h).
	 
	 	(E)	 	The severance and benefit payments payable
under Sections 5(a)(i), 5(a)(ii), 5(a)(iii)(a), 5(a)(iii)(b), 5(c), and
5(h) and the stipend payable under Section 5(i), shall be construed to
be compliant payments that are payable in connection with Executive’s
“separation from service.” The lump sum severance payments payable
under Sections 5(a)(i), 5(a)(ii), 5(a)(iii) and 5(c) shall be paid
within thirty (30) days following the Date of Termination (on such date
as is determined by the Company). The severance payments payable under
Section 5(a)(iv) shall be construed to be compliant payments that are
payable in connection with Executive’s death.
	 
	 	(F)	 	The provision of continued benefits pursuant to
Sections 5(c), 5(h) and 6(b) shall be provided in a manner that is
exempt from Section 409A of the Code in accordance with Treasury
Regulation Section 1.409A-1(a)(5), and, to the extent such continued
benefits are not exempt from Section 409A, in a manner that complies
with Section 409A in accordance with Treasury Regulation Section
1.409A-3(i)(1)(iv). For the avoidance of doubt, the Executive shall
not be entitled to payments under Section 5(c)(i) and 5(h) for the same
benefit at the same time.
	 
	 	(G)	 	The payment of damages under the third
paragraph of Section 5(a)(iii)(a) and the third paragraph of Section
5(a)(iii)(b) shall be construed to be exempt payments of settlements or
awards resolving bona fide legal claims in accordance with Treasury
Regulation Section 1.409A-1(b)(11) and paid in a manner consistent with
such intent; provided, however, that if the payment of such damages
cannot be provided in a manner that is exempt from Section 409A, such
payment shall be made in a cash lump sum payment within five (5) days
from the date such obligation arises.
	 
	 	(H)	 	The tax gross-up payments payable under
Sections 5(b), 9(b)(A) and 9(c) shall be paid in a manner that complies
with Section 409A

10

 

	 	 	 	in accordance with Treasury Regulation Section 1.409A-3(i)(1)(v),
including, without limitation, that each such gross-up payment shall
be made by the end of the Executive’s taxable year next following the
Executive’s taxable year in which the Executive remits the related
taxes.
	 
	 	(I)	 	The reimbursement of expenses and/or provision
of in-kind benefits under Sections 9(c), 15, 16 and 17 shall be
provided in a manner that complies with Section 409A in accordance with
Treasury Regulation Section 1.409A-3(i)(1)(iv), including, without
limitation, that the reimbursement of expenses or provision of in-kind
benefits in Executive’s taxable year may not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided, in any
other taxable year.

     6. Reserved.

     7. Termination for Cause.

     (a) If the Company reasonably shall determine that there are grounds for discharging the
Executive for Cause (as hereinafter defined), the Company may, through the Board, at its election
within thirty (30) days thereafter, give the Executive notice of its intention to terminate the
Executive for Cause, stating the grounds for termination and specifying a date, within thirty (30)
days of such notice, on which the Executive shall be given an opportunity to discuss such grounds
for termination at a meeting of the Board.

     (b) If the grounds for termination are those specified in clause (ii), (iii) or (iv) of
paragraph (d) hereof, at such Board meeting the Board and the Executive shall discuss in good faith
and shall determine and set forth in writing what actions the Executive might take, and by what
date, to cure the material adverse impact or default, as the case may be, to the reasonable
satisfaction of the Board, but in no event earlier than sixty (60) days after said meeting. When
the Board and the Executive have agreed in writing upon a cure and the date by which it shall be
provided, the Board shall take no further action regarding termination for Cause on such grounds
until such date, and on such date it shall provide written notice to the Executive that either (i)
the cure has been satisfactorily provided, and the Board shall continue to employ the Executive
under this Agreement pursuant to the terms hereof, or (ii) the cure has not been satisfactorily
provided and the Board is terminating the Executive’s employment for Cause effective immediately.

     (c) If the grounds for termination are those specified in clause (i) of paragraph (d) hereof,
it is understood and agreed that no satisfactory cure is available. If following discussion with
the Executive of the grounds for his termination (as specified in clause (i) of paragraph (d)
hereof, at the Board meeting the Board shall continue intent on discharging the Executive for Cause
on such grounds, the Company shall provide written notice of termination to the Executive within
thirty (30) days of the date of such meeting, and such termination shall be effective upon the date
set forth in such notice.

11

 

     (d) For purposes of this Agreement the term “Cause” shall mean:

          (i) the conviction of the Executive for a felony involving fraud or moral turpitude;

          (ii) The Executive’s engaging in activities prohibited by Section 10 hereof;

          (iii) the Executive’s frequent willful gross neglect (other than as a result of
physical, mental or emotional illness) of his duties and responsibilities under this
Agreement that has a material adverse impact on the business or reputation of the Company;
or

          (iv) the Executive’s willful gross misconduct that has a material adverse impact on the
business or reputation of the Company.

     (e) For each act or occurrence giving rise to a basis for termination for Cause, failure by
the Company to timely give all written notices as set forth in this Section, from the date the
Board or any of its members were either (i) aware of such act or occurrence giving rise to a basis
for termination for Cause, or (ii) with reasonable due diligence should have known of such act or
occurrence giving rise to a basis for termination for Cause, shall constitute a waiver of the
Company’s right to terminate based upon such Cause, but such waiver shall not prejudice the
Company’s right to terminate pursuant to this Section based upon another act or occurrence giving
rise to a basis for termination for Cause, whether of the same or a different type.

     8. Resignation by Executive for “Good Reason”. In the event that the Company shall
during the term of this contract (i) fail to continue the appointment of the Executive as Chairman
and Chief Executive Officer, (ii) reduce the Executive’s annual salary below the minimum amount
specified in Appendix A, (iii) materially diminish the duties or responsibilities of the Executive
as Chairman and Chief Executive Officer, as the same are set forth hereinabove, (iv) assign to the
Executive such duties and responsibilities inconsistent with his position as Chairman and Chief
Executive Officer, or (v) materially change the geographic location of the Executive’s principal
office to a location that is more than thirty (30) miles away (each of the foregoing hereinafter
referred to as a “Triggering Event”), then the Executive may give notice to the Company of his
election to terminate this Agreement pursuant to this Section, effective sixty (60) days from the
date of such notice, unless the Company shall have cured the default giving rise to his Notice of
Termination. Such notice from the Executive shall state the Triggering Event that provides the
grounds for his termination, and such notice must be given, if at all, within one hundred and
twenty (120) days of the occurrence of the Triggering Event referred to as providing such grounds
for termination. Within the sixty (60) day period specified in the Executive’s notice to the
Company, the Executive and the Board shall discuss in good faith what actions the Board might take,
and by what date, to cure the default involved in the Triggering Event specified by the Executive.
If within that sixty (60) day period the Board and the Executive are unable to agree in writing
upon a cure or the date by which such cure shall be provided, the Executive’s termination shall be
effective on the date specified in his original notice to the Company. If within such sixty (60)
day period the Board and the Executive shall agree in writing upon a cure and the date by which it
shall be provided, then on such date the

12

 

Executive shall notify the Board either (i) that the cure has been satisfactorily provided,
and the Executive is willing to continue his employment under this Agreement pursuant to the terms
hereof (except as such terms may have been altered by the agreed-upon cure), or (ii) that the cure
has not been satisfactorily provided and the Executive is terminating his employment hereunder
effective immediately.

	 	9.	 	Termination of Employment as a Result of Change in Ownership or Control of the Company.

     (a) In the event that the Company shall merge with, or sell or otherwise dispose of all or
substantially all of its assets or stock to, or is acquired by another corporation or other entity
(hereinafter, a “Change in Ownership or Control”), and the parties to such agreement (i) do not
appoint the Executive as Chairman and Chief Executive Officer (or to such other position of
authority and responsibility as may be acceptable to the Executive in his sole discretion) of the
newly created or merged entity or purchaser, or (ii) in connection with or following such a Change
in Ownership or Control, cause a material change in the geographic location of the Executive’s
principal office to a location that is more than thirty (30) miles away from its location
immediately prior to the Change in Ownership or Control, then the Board shall notify the Executive
in writing, specifying such other senior executive position with the new entity purchaser, or
controlling entity, in which the Executive is to serve, the duties to be assigned to such position,
and any other amendments to the terms and provisions of this Agreement that the above-mentioned
parties propose. In no event, however, shall the remuneration, benefit coverage, stock option
entitlements or severance payments be less than that provided for in this Agreement. At any time
during the period following such notice and ending six (6) months from the effective date of the
Change in Ownership or Control, the Executive may elect to give notice to the Company, to the
purchaser, to the new entity, or to the controlling entity as the case may be, that he is
terminating this Agreement pursuant to this Section, effective on the date specified in such
notice. If the Agreement is terminated pursuant to this Section the Company shall provide the
Executive all benefits and obligations as provided in Section 5 hereof; provided, however, that
prior to the effective date of the Change in Ownership or Control, the Company shall make
arrangements satisfactory to the Executive by providing adequate security that the new entity,
purchaser or controlling entity following the Change in Ownership or Control will have the
financial resources to make the payments and provide for the payments and benefits (or the economic
equivalent thereof) to the Executive on a timely basis in accordance with the terms of this
Agreement.

     (b) In the event the Change in Ownership or Control results in the dissolution, elimination or
modification of the Company’s equity incentive plans, and the Executive becomes employed by the
successor entity in accordance with Section 9(a) above, the Executive may, at his sole discretion,
elect to (i) accept participation in and the award of equity incentives in such plans of the
successor or controlling entity, as offered to him by such successor or controlling entity, or (ii)
have all Equity Incentives not previously vested, become vested and to receive a payment in cash
for and in lieu of such Equity Incentives as calculated in accordance with the following formula:

	 	(A)	 	The cash equivalent of the Options shall be the
average of the then present value of all options and stock appreciation
rights granted to

13

 

	 	 	 	the Executive over the prior three (3) years, and shall be determined
pursuant to the “Black-Scholes” options pricing model. The cash
equivalent of any restricted stock , restricted stock units or other
stock payments which are vested by reasons of this Section 9(b)(ii)
will equal the same amount as if such restricted stock, restricted
stock units or stock payments were unrestricted stock at the time of
the Change in Ownership or Control.
	 
	 	 	 	The Executive will be provided with a lump-sum payment, within 30
days of the dissolution, elimination or modification of the Company’s
equity incentive plans, equal to the calculated cash equivalent of
the Equity Incentives, plus an additional cash amount (grossed up) to
cover all taxes required to be paid by the Executive on this cash
equivalent, provided, that Executive remains employed with the
successor entity through the date of such dissolution, elimination or
modification of the Company’s equity incentive plans.
	 
	 	(B)	 	In addition, the Executive will be credited,
for the purpose of this Section 9(b), with additional equity incentives
equal to 0.5 percent (0.5%) of the fully diluted capitalization of the
Company calculated as of the day before the Change in Ownership or
Control, multiplied by the number of years (including fraction thereof)
from that date to the end of the Term of this Agreement as set forth in
Section 4(a) (the “Cash Equivalency Obligation of Successor”).
	 
	 	 	 	On the first anniversary date of this Agreement following the Change
in Ownership or Control, the successor entity shall provide the
Executive with a cash payment to be calculated as follows: the Cash
Equivalency Obligation of Successor multiplied by a fraction the
numerator of which is the number of months or fraction thereof from
the effective date of the Change in Ownership or Control to the
anniversary date and the denominator of which is the total number of
months or fraction thereof from the effective date of the Change in
Ownership or Control and the end of the Term of this Agreement;
provided, that Executive remains employed with the successor entity
through the date of the first anniversary following a Change in
Ownership or Control, and such cash payment is paid in a lump sum
within thirty (30) days following such date. On each succeeding
anniversary date through the end of the Term of this Agreement, the
successor entity shall provide the Executive with a cash payment to
be calculated as follows: the Cash Equivalency Obligation of
Successor multiplied by a fraction, the numerator of which is 12 and
the denominator of which is the total number of months between the
effective date of the Change in Ownership or Control and the end of
the Term of this Agreement;

14

 

	 	 	 	provided, however, that Executive will be eligible to receive each
such cash payment due upon each successive anniversary following a
Change in Ownership or Control only if: (i) Executive remains
employed with the successor entity through the date of such
successive anniversary and the cash payment payable upon such
anniversary is paid in a lump sum within thirty (30) days following
such anniversary date, or (ii) if Executive is terminated by the
Company without Cause (under Section 4(b)(ii)) or has an “involuntary
separation from service” within the meaning of Treasury Regulation
Section 1.409A-1(n)(2)(i), the cash payment payable during the period
in which the Date of Termination occurs is paid in a lump sum within
thirty (30) days following the Date of Termination.

     (c) In the event the Change in Ownership or Control results in the Executive’s participation
in a medical insurance plan which provides a lesser amount of benefits or coverage than the
Company’s medical plan for the Executive and/or members of his immediate family, the successor or
controlling entity shall provide the Executive with a cash payment sufficient to reimburse the
Executive for all medical expenses incurred by the Executive for himself and for members of his
immediate family, and the successor or controlling entity shall provide the Executive with an
additional cash amount (gross up) to cover all taxes required to be paid by the Executive on such
medical expense reimbursement.

     10. Agreement Not to Compete. The Executive agrees that during his employment by the
Company, and for a period of one (1) year following the termination of such employment, except if
the Executive’s termination arises as a result of a Change in Ownership or Control as provided for
in Section 5(a)(iii) and 9 herein, in which case the Executive shall not be bound by any
post-termination agreement not to compete, he will not, without the prior written consent of the
Company, either directly or indirectly, on his own behalf or in the service or on behalf of others
as a shareholder (other than ownership of less than five percent (5%) of the outstanding voting
securities of an entity whose voting securities are traded on a national securities exchange),
officer, trustee, consultant, or executive or managerial employee, engage in, consult with or be
employed by any Competing Business.

     11. Agreement Not to Solicit Customers. The Executive agrees that during his employment
by the Company and for a period of one (1) year following the termination of such employment,
except if the Executive’s termination is for Cause under Section 7 or voluntary resignation under
Section 4(b)(vii), or if the Executive’s termination arises as a result of a Change in Ownership or
Control as provided for in Section 5(a)(iii) and 9 herein, in which case the Executive shall not be
bound by any post-termination agreement not to solicit customers, he will not without the prior
written consent of the Company, either directly or indirectly, on his own behalf or in the service
or on behalf of others, solicit, divert or appropriate, or attempt to solicit, divert or
appropriate, to any Competing Business, any person or entity whose account with the Company was
sold or serviced by or under the supervision of the Executive during the two (2) years preceding
the termination of such employment. For the purposes hereof, such persons or entities shall not
include wholesale pharmaceutical distributors, major drug chains or other distribution
intermediaries.

15

 

     12. Agreement Not to Solicit Employees. The Executive agrees that during his employment
by the Company and for a period of one (1) year following the termination of such employment,
except if the Executive’s termination is for Cause under Section 7, or voluntary resignation under
Section 4(b)(vii), or if the Executive’s termination arises as a result of a Change in Ownership or
Control as provided for in Section 5(a)(iii) and 9 herein, in which case the Executive shall not be
bound by any post-termination agreement not to solicit employees, he will not, either directly or
indirectly, on his own behalf or in the service or on behalf of others, solicit, divert or hire
away, or attempt to solicit, divert or hire away, to any Competing Business any person employed by
the Company, whether or not such employee is a full-time employee or a temporary employee of the
Company, whether or not such employment is pursuant to written agreement and whether or not such
employment is for a determined period or is at will.

     13. Ownership, Non-Disclosure and Non-Use of Confidential Information.

     (a) The Executive acknowledges and agrees that all Confidential Information as defined in
Section 1(c), hereof, and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of the Company. Upon request by the Company, and in any
event upon termination of his employment with the Company for any reason, the Executive shall
promptly deliver to the Company all property belonging to the Company, including without
limitation, all Confidential Information (and all embodiments thereof), then in his custody,
control or possession.

     (b) The Executive agrees that he will not, either during the term of his employment by the
Company, or for a period of five (5) years after the termination of his employment, without the
prior written consent of the Company, disclose or make available any Confidential Information, as
defined in Section 1(c) hereof, to any person or entity, nor shall he make or cause to be made, or
permit or allow, either on his own behalf or on behalf of others, any use of such Confidential
Information other than in the proper performance of his duties hereunder.

     14. Ownership of Inventions.

     (a) The Executive shall promptly disclose to the Company all discoveries, inventions, and
improvements, patentable or unpatentable, conceived or made by the Executive, individually or
jointly with any other person or persons, during the period of his employment by the Company
(whether or not during working hours) relating in any manner to the business or activities of the
Company, whether such discovery, invention or improvement be a machine, apparatus, process,
composition, article, or other subject. All such discoveries, inventions and improvements shall be
the sole and exclusive property of the Company in respect to any and all countries, their
territories and possessions. The Executive shall, during his employment within the Company and
thereafter, perform at the request and expense of the Company all lawful acts and execute,
acknowledge and deliver all such instruments deemed necessary by the Company to vest in the Company
the entire right, title and interest in and to such discoveries, inventions and improvements, and
to enable the Company to properly prepare, file and prosecute applications for and obtain patents
(including like kinds of industrial property) thereon in any and all countries selected by the
Company as well as reissues, renewals and extensions thereof, and to obtain and record title to
such applications and patents so that the Company shall be the sole and absolute owner thereof in
any and all countries in which it may desire patent or like protection.

16

 

     (b) Any provision in this Agreement requiring the Executive to assign his rights in any
invention does not apply to an invention for which no equipment, supplies, facility, or trade
secret information of the Company was used and which was developed entirely on the Executive’s own
time, and: (a) which does not relate (i) to the Business of the Company or (ii) to the Company’s
actual or demonstrably anticipated research or development, or (b) which does not result from any
work performed by the Executive for the Company.

     15. Business and Travel Expense. The Executive shall be reimbursed for his out-of-pocket
expenses incurred in carrying out the Company’s business, including all travel and entertainment
expenses reasonably required by the Executive in his position as Chairman and Chief Executive
officer, in accordance with Company policy and upon proof of such expenditures. It is understood
that the Executive’s significant other may accompany him on business travel when the Executive
determines that her presence will enable him to further the interests of the Company and in such
circumstances the Executive shall be reimbursed for her reasonable out-of-pocket travel and
entertainment expenses as well.

     16. Financial Planning Expenses. The Company shall reimburse the Executive for reasonable
costs and expenses incurred by the Executive for financial, estate and tax planning up to an
aggregate of Ten Thousand Dollars ($10,000) annually.

     17. Legal and Consulting Fees. The Company shall pay all reasonable legal fees and
consulting expenses incurred by the Executive in connection with the negotiation and preparation of
this Agreement.

     18. Resolution of Disputes.

     (a) Any controversy or claim arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration in the City of Phoenix, in accordance with the rules of
the American Arbitration Association (the “AAA”). The arbitration shall be before three (3)
arbitrators, all of whom shall be attorneys. One arbitrator shall be appointed by the Executive;
one arbitrator shall be appointed by the Company, and the third Arbitrator shall be selected by the
two appointed Arbitrators. In the event the two appointed Arbitrators are unable to agree upon the
third Arbitrator, either party may petition the Superior Court of the State of Arizona, Maricopa
County, for appointment of the third arbitrator. The arbitrators shall not have the authority to
add to, subtract from or in any way modify the express written terms of the Agreement, and in
rendering an award, the arbitrators shall be required to adhere to the express written provisions
of this Agreement and the intention of the parties appearing therefrom. The decision of the
arbitrators shall be final and binding on the parties hereto and judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof.

     (b) The costs for the arbitration shall be borne equally by both parties.

     (c) Pending the outcome or resolution of any arbitration, the Company shall continue payment
of all amounts when and as due the Executive under this Agreement without regard to any dispute;
provided, however, that if the arbitration shall be decided in favor of the Company, the, Executive
shall promptly repay to the Company, with interest at the prime rate as published from time to time
by Chemical Bank, all amounts he would not have been entitled to receive

17

 

under this Agreement had the dispute not been taken to arbitration, and the arbitration award
in favor of the Company shall be deemed an award in the amount of the repayment due to the Company.

     19. Compliance With Securities Laws. The Executive shall comply with all federal and
state securities laws and Company policies and guidelines relating thereto concerning insider
trading, reporting requirements, and confidentiality of undisclosed internal material information
about the Company.

     20. Severability, etc.

     (a) The Executive agrees that the covenants and agreements contained in Sections 10, 11, 12
and 13 of this Agreement, and the subsections of those Sections, are of the essence of this
Agreement; that each of such covenants is reasonable and necessary to protect and preserve the
interests and properties of the Company and the Business of the Company; that the company is
engaged in the Business of the company; that irreparable loss and damage will be suffered by the
Company should the Executive breach any of such covenants and agreements; that each of such
covenants and agreements is separate, distinct and severable not only from the other of such
covenants and agreements but also from the other and remaining provisions of this Agreement; that
the unenforceability of any such covenant or agreement shall not affect the validity or
enforceability of any other such covenant or agreements or any other provision or provisions of
this Agreement; and that, in addition to other remedies available to it, the Company shall be
entitled to seek both temporary and permanent injunctive relief to prevent a breach or contemplated
breach by the Executive of any of such covenants or agreements.

     (b) In the event any provision of this Agreement is held by a court of competent jurisdiction
to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction,
the validity of the remaining provisions shall not be affected, and the rights and obligations of
the parties shall be construed and enforced as if this Agreement did not contain such invalid or
unenforceable provisions.

     21. No Set-Off By the Company. The Company shall continue to provide to the Executive all
compensation, benefits and prerequisites of the office of Chairman and Chief Executive Officer
provided for in this Agreement notwithstanding the existence of any claim, dispute, action or cause
of action by the Company against the Executive, whether based upon this Agreement or otherwise.
Such dispute, claim or cause of action by the Company against the Executive shall be resolved in
accordance with Section 18 hereof, with the exception of the Company’s right to seek injunctive
relief provided for in Section 20 hereof.

     22. Headings. The headings of the Sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

     23. Notices. Any notice to either party hereunder shall be in writing, and shall be
deemed to be sufficiently given to or served on such party, for all purposes, if the same shall be
personally delivered to such party, or sent to such party by registered mail, postage prepaid, at
the address of such party given above. Either party hereto may change the address to which

18

 

notices
are to be sent to such party hereunder by written notice of such new address given to the other party
hereto.

     24. Governing Law. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Arizona applicable to contracts to be performed therein,
without regard to conflict of laws principles.

     25. Assignment. This Agreement may not be assigned by the Company without the prior
written consent of the Executive. The Executive shall have the right to designate a beneficiary,
his executor, his administrator or his estate to receive any payments or benefits payable under
this Agreement upon his death.

     26. Waiver. Except as otherwise provided for in this Agreement, no term or condition of
this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the
enforcement of any provision of this Agreement, except by written instrument of the party charged
with such waiver or estoppel. No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the specific term or
condition waived and shall not constitute a waiver of such term or condition for the future or as
to any act other than that specifically waived.

     27. Amendment of Agreement. This Agreement may not be modified or amended except by an
instrument in writing signed by the parties hereto.

     28. Entire Agreement. This Agreement represents the entire understanding of the parties
hereto and supersedes any prior understandings or agreements between the parties, except that this
Agreement shall not affect or operate to reduce any benefit or compensation inuring to the
Executive of a kind elsewhere provided and not expressly provided in this Agreement.

     29. Counterparts.

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

[Remainder of page intentionally left blank]

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     IN WITNESS WHEREOF, the Executive has executed this Agreement and the Company has caused this
Agreement to be executed by its representative thereunto duly authorized as of the date set forth
above.

	 	 	 	 	 
	 	MEDICIS PHARMACEUTICAL CORPORATION

 	 
	 	By:  	/s/ Jason D. Hanson
 	 
	 	 	Jason D. Hanson 	 
	 	 	Chief Operating Officer 	 
	 
	 	 	 
	 	By:  	                     /s/ Spencer Davidson
 	 
	 	 	Spencer Davidson 	 
	 	 	Chairman, Stock Option and Compensation
Committee, Member of Board of Directors 	 
	 
	 	 	 
	 	By:  	                                              /s/ Jonah Shacknai
 	 
	 	 	Jonah Shacknai 	 
	 	 	 	 

 

 

	 	 	 	 	 

EXHIBIT A

     The following sets forth the Executive’s compensation in accordance with paragraph 3(a):

	 	 	 

	1. Annual base compensation* (“Base
Salary”)

	 	$1,100,000 per year
	 
	 	 
	2. Health/Medical and other Employee
benefits provided to other employees
of the Company.

	 	Actual cost
	 
	 	 
	3. Stock Options and Restricted
Stock Grants

	 	Grants as determined by Stock Option
and Compensation Committee from time
to time
	 
	 	 
	4. Annual Cash Bonus

	 	The Board agrees to determine, in
good faith, the annual cash bonus to
be provided to the Executive based
upon the Executive’s performance and
the performance of the Company
measured against the Company’s
fiscal plan for the prior fiscal
year calculated in accordance with
the Company’s bonus plans as they
may be in effect from time to time.

 

			
	* 	 	The Stock Option and Compensation Committee will review the base salary amount annually
and provide an increase in the Executive’s base annual compensation as appropriate and within its
discretion.

Exhibit A
— Page 1

 

EXHIBIT B

Limitation on Payments.

     (a) Notwithstanding any other provisions of this Agreement, in the event that any payment or
benefit received or to be received by the Executive (including any payment or benefit received in
connection with a Change in Ownership or Control or the termination of the Executive’s employment,
whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all
such payments and benefits, including the payments and benefits under Sections 5, 8 and 9 of this
Agreement, being hereinafter referred to as the “Total Payments”) would be subject (in whole or
part), to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then, after
taking into account any reduction in the Total Payments provided by reason of Section 280G of the
Code in such other plan, arrangement or agreement, the cash severance payments shall first be
reduced, and the noncash severance payments shall thereafter be reduced, to the extent necessary so
that no portion of the Total Payments is subject to the Excise Tax but only if (i) the net amount
of such Total Payments, as so reduced (and after subtracting the net amount of federal, state and
local income taxes on such reduced Total Payments and after taking into account the phase out of
itemized deductions and personal exemptions attributable to such reduced Total Payments) is greater
than or equal to (ii) the net amount of such Total Payments without such reduction (but after
subtracting the net amount of federal, state and local income taxes on such Total Payments and the
amount of Excise Tax to which the Executive would be subject in respect of such unreduced Total
Payments and after taking into account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments). The Total Payments shall be reduced by the Company
in its reasonable discretion in the following order: (A) reduction of any cash severance payments
otherwise payable to the Executive that are exempt from Section 409A of the Code, (B) reduction of
any other cash payments or benefits otherwise payable to the Executive that are exempt from Section
409A of the Code, but excluding any payment attributable to the acceleration of vesting or payment
with respect to any stock option or other equity award with respect to the Company’s Common Stock
that are exempt from Section 409A of the Code, (C) reduction of any other payments or benefits
otherwise payable to the Executive on a pro-rata basis or such other manner that complies with
Section 409A of the Code, but excluding any payment attributable to the acceleration of vesting and
payment with respect to any stock option or other equity award with respect to the Company’s common
stock that are exempt from Section 409A of the Code, and (D) reduction of any payments attributable
to the acceleration of vesting or payment with respect to any stock option or other equity award
with respect to the Company’s common stock that are exempt from Section 409A of the Code.

     (b) For purposes of determining whether and the extent to which the Total Payments will be
subject to the Excise Tax, (i) no portion of the Total Payments the receipt or enjoyment of which
the Executive shall have waived at such time and in such manner as not to constitute a “payment”
within the meaning of Section 280G(b) of the Code shall be taken into account, (ii) no portion of
the Total Payments shall be taken into account which, in the written opinion of independent
auditors of nationally recognized standing (“Independent Advisors”) selected by the Company, does
not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating the Excise Tax, no
portion of such Total Payments shall be taken into account which, in the opinion

Exhibit B — Page 1

 

 

of Independent Advisors, constitutes reasonable compensation for services actually rendered, within
the meaning of Section 280G(b)(4)(B) of the Code, in excess of the Base Amount (as defined in
Section 280G(b)(3) of the Code) allocable to such reasonable compensation, and (iii) the value of
any non cash benefit or any deferred payment or benefit included in the Total Payments shall be
determined by the Independent Advisors in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code.

Exhibit B — Page 2

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