EMPLOYMENT AGREEMENT
 
     THIS AGREEMENT, made and entered into as of April 19, 2000, by and between
Perrigo Company (the "Company") and David T. Gibbons (the "Executive");
 
                                WITNESSETH THAT:
 
     WHEREAS, the Company and Executive desire to enter into this Agreement
pertaining to the employment of the Executive by the Company;
 
     NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Executive and the Company hereby agree as follows:
 
     1. Performance of Services. The Executive's employment with the Company
shall be subject to the following:
 
(a)  Subject to the terms of this Agreement, the Company hereby agrees to employ
     the Executive as its President and Chief Executive Officer during the
     Agreement Term (as defined below) and the Executive hereby agrees to remain
     in the employ of the Company during the Agreement Term. The Executive shall
     be appointed as a member of the Board of Directors of the Company (the
     "Board") at the first regularly-scheduled Board meeting coincident with or
     next following the Executive's commencement of employment with the Company,
     and during the Agreement Term, while the Executive is employed by the
     Company, the Board shall use its best efforts to cause the Executive to
     continue as a member of such Board.
 
(b)  During the Agreement Term, while the Executive is employed by the Company,
     the Executive shall devote his full time (reasonable sick leave and
     vacations excepted) and best efforts, energies and talents to serving as
     its President and Chief Executive Officer.
 
(c)  The Executive agrees that he shall perform his duties faithfully and
     efficiently subject to the direction of the Board. The Executive's duties
     shall include providing services for both the Company and its Affiliates
     (as defined below), as determined by the Board (as used herein, Company
     shall mean and include the Company and all of its Affiliates); provided,
     that the Executive shall not, without his consent, be assigned tasks that
     would be inconsistent with those of President and Chief Executive Officer.
     The Executive will have such authority, power, responsibilities and duties
     as are inherent to his position (and the undertakings applicable to his
     position) and necessary to carry out his responsibilities and the duties
     required of him hereunder.
 
(d)  Notwithstanding the foregoing provisions of this paragraph 1, during the
     Agreement Term the Executive may devote reasonable time to activities other
     than those required under this Agreement, including activities involving
     professional, charitable, educational,
 
 
<PAGE>   2
 
 
     religious and similar types of organizations, speaking engagements,
     membership on the boards of directors of other profit or not-for-profit
     organizations, and similar activities, to the extent that such other
     activities do not, in the judgment of the Board, inhibit or prohibit the
     performance of the Executive's duties under this Agreement or conflict in
     any material way with the Company's business.
 
(e)  Subject to the terms of this Agreement, the Executive shall not be required
     to perform services under this Agreement during any period that he is
     Disabled (as defined in paragraph 3(b)).
 
(f)  The "Agreement Term" shall be the period beginning on May 1, 2000 and
     ending on June 30, 2005. Thereafter, the Agreement shall automatically be
     extended for additional 12-month periods, unless either party to this
     Agreement provides notice of non-renewal to the other party at least 90
     days before the last day of the Agreement Term. The term "Agreement Term"
     shall also include any renewal period under the foregoing provisions of
     this paragraph 1(f).
 
(g)  Notwithstanding the foregoing provisions of this Agreement, this Agreement
     and commencement of the Executive's employment hereunder shall be
     contingent on the background investigative report ordered by the Company
     being received and approved by the Chairman of the Compensation Committee
     of the Board (the "Compensation Committee"). The General Counsel of the
     Company shall notify the Executive in writing when the Chairman has
     approved such report.
 
(h)  For purposes of this Agreement, the term "Affiliate" shall mean any
     corporation, partnership, joint venture or other entity in which at least a
     fifty percent interest in such entity is owned, directly or indirectly, by
     the Company (or a successor to the Company).
 
     2. Compensation and Benefits. Subject to the terms of this Agreement,
during the Agreement Term while the Executive is employed by the Company, the
Company shall compensate him for his services as follows:
 
(a)  Base Salary. The Executive shall receive for the 14-month period beginning
     on May 1, 2000 base salary at an annual rate of $440,000, payable in
     substantially equal monthly or more frequent installments (the "Salary").
     For the fiscal year beginning July 1, 2001 and thereafter, the Executive's
     Salary shall be reviewed by the Board no less frequently than annually to
     determine whether an increase in the amount of Salary is appropriate.
 
(b)  Annual Bonus. The Executive shall be eligible to participate in the
     Management Incentive Bonus Plan (the "MIB") administered by the
     Compensation Committee, or any successor annual bonus plan or arrangement
     generally made available to the executive officers of the Company. The MIB
     shall provide the Executive with a target bonus opportunity of not less
     than 100% of annual Salary for each fiscal year of the Company (July 1 to
     June 30); provided, that the Executive shall be guaranteed a minimum bonus
     under the MIB for the fiscal years ending June 30, 2000 and June 30, 2001
     of $36,667
 
 
 
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<PAGE>   3
 
 
     and $220,000, respectively. Any bonus payable under this paragraph 2(b)
     shall be paid in accordance with the terms of the MIB.
 
     (c) Transition Bonus. The Executive shall receive a transition bonus
payable in accordance with the following:
 
     (i)   Restricted Stock Award. On a date to be determined by the
           Compensation Committee but in no event later than June 30, 2000, the
           Executive shall be awarded shares of common stock of the Company
           subject to the restrictions described below ("Restricted Stock"), the
           number of shares of which shall be determined by dividing $240,000 by
           the fair market value of a share of common stock on such date. "Fair
           market value" shall mean the average of the highest and lowest price
           at which the common stock is traded on such award date, as reported
           on the NASDAQ National Market. Such Restricted Stock award shall be
           subject to the terms and conditions of the restricted stock agreement
           set forth in Exhibit A. Except as otherwise specifically provided in
           this Agreement or the restricted stock agreement, such shares of
           Restricted Stock shall be forfeited if the Executive's Date of
           Termination occurs prior to the end of the Restricted Period. The
           "Restricted Period" shall end with respect to all of the shares
           awarded under this paragraph 2(c)(i) on June 30, 2003.
 
     (ii)  Cash Award. The Executive shall be entitled to a lump sum cash
           payment of $160,000, which shall be paid as soon as practicable
           following the Executive's commencement of employment.
 
(d)  Contingent Restricted Stock Award. On a date to be determined by the
     Compensation Committee but in no event later than June 30, 2000, the
     Executive shall also be awarded 50,000 shares of Restricted Stock (referred
     to as "Contingent Restricted Stock"). Such Contingent Restricted Stock
     award shall be subject to the terms and conditions of the restricted stock
     award agreement set forth in Exhibit B. Except as otherwise specifically
     provided in this Agreement or the restricted stock agreement, the shares of
     Contingent Restricted Stock shall be permanently forfeited if the
     Executive's Date of Termination occurs prior to June 30, 2001 (the
     "Contingent Vesting Date"). If the Executive is employed by the Company on
     the Contingent Vesting Date, the Company shall review the number of shares
     of Common Stock that the Executive has purchased in open market
     transactions and shall contingently vest the Executive in one share of the
     Contingent Restricted Stock for each two shares of Company common stock so
     purchased by the Executive and held by him on the Contingent Vesting Date.
     Any shares of Contingent Restricted Stock that are not contingently vested
     on the Contingent Vesting Date in accordance with foregoing provisions of
     this paragraph 2(c)(ii) shall be permanently forfeited on such date. Except
     as otherwise specifically provided in this Agreement or the restricted
     stock agreement, (A) the Contingent Restricted Stock still held after June
     30, 2001, if any, shall become fully vested and nonforfeitable on June 30,
     2003, and (B) the Contingent Restricted Stock shall be permanently
     forfeited if the Executive's Date of Termination occurs prior to such date.
 
 
 
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<PAGE>   4
 
 
(e)  Stock Options. The Executive shall be granted an option to purchase 750,000
     shares of common stock of the Company ("Common Stock") under the Perrigo
     Company Employee Incentive Stock Option Plan (the "Option Plan") as of a
     date to be determined by the Compensation Committee but in no event later
     than June 30, 2000 (the "Grant Date"). The shares subject to such option
     shall have an exercise price equal to the fair market value (as defined in
     the Option Plan) of a share of Common Stock on the Grant Date and shall
     become exercisable with respect to 187,500 of the shares granted on each of
     the second, third, fourth and fifth anniversaries of the Grant Date. Such
     option shall be subject to the terms and conditions of the option agreement
     set forth in Exhibit C. The Option Plan as in effect on the date of this
     Agreement is attached hereto as Exhibit D.
 
     The Executive shall also be eligible for annual stock option grants under
     the Option Plan in amounts determined by the Compensation Committee;
     provided, however, for the fiscal years ended June 30, 2001 and June 30,
     2002, each such annual option grant shall not be less than 125,000 shares.
     Such annual option grants shall vest with respect to 25% of the shares
     awarded on each of the second through fifth anniversaries of the grant
     date; provided, however, if the Executive remains employed until the end of
     the Agreement Term, all unvested outstanding options shall become fully
     vested. Such options shall be nonqualified stock options and, except as
     specifically provided in this Agreement, such annual option awards shall be
     subject to the terms and conditions of the Option Plan and the applicable
     provisions of the option agreement attached to this Agreement as Exhibit C.
 
(f)  Temporary Housing and Moving Expenses. Through August 31, 2000 or, if
     earlier, the date the Executive relocates his primary residence to
     Michigan, the Executive shall be entitled to reimbursement for temporary
     housing expenses, air travel and other out-of-pocket travel expenses in
     connection with commuting from his residence in the Santa Barbara,
     California area to his temporary residence in western Michigan, including
     reimbursement of expenses relating to family travel for purposes of
     locating permanent housing in Michigan. Expenses related to the Executive's
     relocation of his primary residence to Michigan shall be fully reimbursed,
     subject to the terms of the Company's relocation policy for executives. The
     Company's relocation policy is attached to this Agreement as Exhibit E. All
     reimbursements under this paragraph 2(f) shall be subject to the
     Executive's presenting supporting documentation of such expenses as may be
     reasonably required by the Company.
 
(g)  Other Benefits. The Executive shall be eligible to participate in any and
     all plans maintained by the Company from time to time to provide benefits
     for its senior executives, and for its salaried employees generally,
     including, without limitation, any pension, profit sharing or other
     retirement plan, any life, accident, medical, hospital or similar group
     insurance program and any other fringe benefit plan, subject to the normal
     terms and conditions of such plans.
 
(h)  Perquisites. The Executive shall be entitled to the perquisites
     historically provided by the Company to its Chief Executive Officer,
     excluding country club dues and car allowance.
 
 
 
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<PAGE>   5
 
 
(i)  Deferred Compensation. The Company agrees that it will cooperate with the
     Executive in the establishment of a deferred compensation plan with terms
     that are mutually agreeable to both parties to defer until a future date
     payment of such portion of the Executive's annual compensation as he may
     elect to defer.
 
     3. Termination. The Executive's employment with the Company during the
Agreement Term may be terminated under the following circumstances.
 
(a)  Death. The Executive's employment hereunder shall terminate upon his death.
 
(b)  Disability. If the Executive becomes Disabled, the Company may terminate
     his employment with the Company. For purposes of this Agreement, the
     Executive shall be deemed to be "Disabled" if (i) he is eligible for
     disability benefits under the Company's long term disability plan, or (ii)
     he has a physical or mental disability which renders him incapable, after
     reasonable accommodation, of performing substantially all of his duties
     hereunder for a period of 180 days (which need not be consecutive) in any
     12-month period. In the event of a dispute as to whether the Executive is
     Disabled, the Company may, at its expense, refer him to a licensed
     practicing physician of the Company's choice and the Executive agrees to
     submit to such tests and examination as such physician shall deem
     appropriate. The determination of such physician shall be final and binding
     on the Company and Executive.
 
(c)  Cause. The Company may terminate the Executive's employment hereunder
     immediately and at any time for Cause by written notice to the Executive
     detailing the basis for the Cause termination. For purposes of this
     Agreement, "Cause" means in the reasonable judgment of the Board (i) gross
     negligence or willful and continued failure by the Executive to
     substantially perform his duties as an employee of the Company (other than
     any such failure resulting from incapacity due to physical or mental
     illness), (ii) willful misconduct by the Executive which is demonstrably
     and materially injurious to the Company, monetarily or otherwise, (iii) the
     engaging by the Executive in egregious misconduct involving serious moral
     turpitude to the extent that his creditability and reputation no longer
     conforms to the standard of senior executives of the Company, or (iv) the
     commission by the Executive of a material act of dishonesty or breach of
     trust resulting or intending to result in personal benefit or enrichment to
     the Executive at the expense of the Company. For purposes of this
     provision, no act or failure to act shall be deemed "willful" unless done
     or omitted to be done not in good faith and without reasonable belief that
     such action or omission was in the best interest of the Company.
 
(d)  Good Reason. The Executive may terminate his employment hereunder for Good
     Reason, provided that he gives the Company notice of such Good Reason
     within a reasonable period (but, except as provided below, in no event more
     than 30 days) after he has knowledge of the events giving rise to the Good
     Reason and the Company fails to correct such events within a reasonable
     period (but in no event more than 30 days) after receiving such notice from
     the Executive. "Good Reason" means, without the Executive's consent, (i)
     assigning duties to the Executive that are inconsistent in any substantial
     respect with the position, authority, or responsibilities associated with
     the
 
 
 
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<PAGE>   6
 
 
     office of President and Chief Executive Officer, (ii) the failure by the
     Company to pay the Executive any portion of his current compensation within
     ten (10) business days of the date such compensation is due, (iii) the
     failure by the Company to continue any incentive compensation plan in which
     the Executive participates which is material to his compensation, unless an
     equitable substitute plan or alternative plan is made available to the
     Executive; and (iv) the failure by the Company to obtain a satisfactory
     agreement from any successor to the business of the Company to assume and
     agree to perform this Agreement. In the case of clause (iv) next above,
     notice of termination for Good Reason shall be given, if at all, within 30
     days following the occurrence of the event giving rise to the right to
     terminate for Good Reason.
 
(e)  Termination by Executive. The Executive may terminate his employment
     hereunder at any time for any reason by giving the Company prior written
     notice not less than 30 days prior to such termination. Any termination
     pursuant to this paragraph 3(e) shall preclude a later claim that such
     termination was for Good Reason.
 
(f)  Mutual Agreement. This Agreement may be terminated at any time by mutual
     written agreement of the parties.
 
(g)  Termination by the Company without Cause. The Company may terminate the
     Executive's employment hereunder at any time for any reason by giving the
     Executive written notice of such termination; provided, however,
     termination by the Company shall be deemed to have occurred under this
     paragraph 3(g) only if such termination by the Company is not pursuant to
     paragraph 3(b), 3(c) or 3(f).
 
(h)  Date of Termination. "Date of Termination" means the last day that the
     Executive is employed by the Company under the terms of this Agreement,
     provided that his employment is terminated in accordance with one of the
     foregoing provisions of this paragraph 3.
 
     4. Rights Upon Termination. The Executive's right to payments and benefits
under this Agreement for periods after his Date of Termination shall be
determined in accordance with the following provisions of this paragraph 4:
 
(a)  If the Executive's Date of Termination occurs during the Agreement Term for
     any reason, the Company shall pay to the Executive:
 
     (i)   The Executive's Salary for the period ending on the Date of
           Termination.
 
     (ii)  Payment for unused vacation days, as determined in accordance with
           Company policy as in effect from time to time.
 
     (iii) Any other payments or benefits to be provided to the Executive by the
           Company pursuant to any employee benefit plans or arrangements
           adopted by the Company, to the extent such payments and benefits are
           earned and vested as of the Date of
 
 
 
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<PAGE>   7
 
 
           Termination, or are required by law to be offered for periods
           following the Executive's Date of Termination.
 
     The amounts payable under clauses (i) and (ii) above shall be paid in a
     lump sum as soon as practicable following such Date of Termination. Any
     amounts payable under clause (iii) above shall be paid in accordance with
     the terms of the applicable plan or arrangement.
 
(b)  Notwithstanding the terms of the MIB plan, if the Executive's Date of
     Termination occurs under paragraph 3(a) (relating to death) or paragraph
     3(b) (relating to being Disabled), then in addition to the amounts payable
     in accordance with paragraph 4(a), the Executive will be entitled to:
 
     (i)   a pro rata bonus payment for the year in which such Date of
           Termination occurs, which shall be an amount equal to the product of:
 
           (A)  the bonus the Executive would have received for the fiscal year
                which includes his Date of Termination if he had remained
                employed by the Company until the end of such year,
 
                Multiplied by
 
           (B)  a fraction, the numerator of which is the number of days in the
                fiscal year preceding the Executive's Date of Termination and
                the denominator of which is 365.
 
           Such pro rata bonus shall be payable in a lump sum payment on the
           next installment date on which bonus payments are made to
           participants in the MIB plan following the end of the fiscal year to
           which such bonus relates.
 
     (ii)  Vesting in outstanding stock options and restricted stock in
           accordance with the applicable agreement.
 
(c)  If the Executive's Date of Termination occurs under paragraph 3(d)
     (relating to termination by the Executive for Good Reason) or paragraph
     3(g) (relating to non-Cause termination by the Company), then in addition
     to the amounts payable under paragraph 4(a), the Executive shall be
     entitled to:
 
     (i)   An amount equal to 12 months of Salary, at the rate in effect as of
           his Date of Termination.
 
     (ii)  A pro rata bonus payment for the year in which the Date of
           Termination occurs, determined using the method described in
           paragraph 4(b).
 
     (iii) Vesting in outstanding stock options and restricted stock in
           accordance with the applicable agreement.
 
 
 
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<PAGE>   8
     The amount payable under clause (i) above shall be paid in a lump sum cash
     payment as soon as practicable following the Executive's Date of
     Termination, but in no event later than 30 days thereafter.
 
(d)  In the event of a Change in Control of the Company (within the meaning of
     the Option Plan), all outstanding options held by the Executive shall
     become immediately vested and exercisable pursuant to the terms of the
     Option Plan and the restrictions on restricted stock awards shall lapse
     pursuant to the applicable restricted stock agreement.
 
(e)  Exercise of the Executive's options for periods following the Executive's
     Date of Termination shall be determined in accordance with the applicable
     option agreement.
 
(f)  Notwithstanding any provision of this Agreement to the contrary, in the
     event that the Executive's Date of Termination occurs for the reasons set
     forth in paragraph 3(c) (relating to termination for Cause), or the Board
     reasonably determines that the Executive has violated the terms of the
     Noncompetition and Nondisclosure Agreement described in paragraph 6, all
     outstanding options (vested and unvested), Restricted Stock and Contingent
     Restricted Stock held by the Executive shall be immediately forfeited and
     all payments and benefits under this Agreement, except those described in
     paragraph 4(a), shall cease and be permanently forfeited.
 
     5. Mitigation and Set Off. The Executive shall not be required to mitigate
the amount of any payment provided for in this Agreement by seeking other
employment or otherwise. The Company shall not be entitled to set off against
the amounts payable to the Executive, any amounts earned by the Executive in
other employment after termination of his employment with the Company, or any
amounts which might have been earned by the Executive had he sought such other
employment.
 
     6. Confidentiality and Noncompetition. The Executive acknowledges and
agrees that simultaneous with the execution of this Agreement, he will be
required to execute the Company's standard Noncompetition and Nondisclosure
Agreement in the form attached to this Agreement as Exhibit F. The Executive
further acknowledges that as a condition of receiving any option grants or
restricted stock awards, including those described in paragraphs 2(c) and (d),
he will be required to execute a new standard Noncompetition and Nondisclosure
Agreement substantially in the form attached to this Agreement as Exhibit F,
which shall supercede and replace any prior Noncompetition and Nondisclosure
Agreement as of the date it is executed.
 
     7. Nonalienation. The interests of the Executive under this Agreement are
not subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, attachment, or garnishment by the Executor's
creditors or beneficiaries.
 
     8. Successors. This Agreement shall be binding upon, and inure to the
benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business.
 
 
 
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<PAGE>   9
 
 
     9. Notices. Notices and all other communications provided for in this
Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice):
 
to the Company:
 
     Perrigo Company
     515 Eastern Avenue
     Allegan, Michigan  49010
 
     Attn.:  General Counsel
 
To the Executive:
 
     David T. Gibbons
     3249 Short Road
     Santa Ynez, California  93460
 
     10. Severability. The invalidity or unenforceability of any provision of
this Agreement will not affect the validity or enforceability of any other
provision of this Agreement, and this Agreement will be construed as if such
invalid or unenforceable provision were omitted (but only to the extent that
such provision cannot be appropriately reformed or modified).
 
     11. Waiver of Breach. No waiver of any party hereto of a breach of any
provision of this Agreement by any other party will operate or be construed as a
waiver of any subsequent breach by such other party. The failure of any party
hereto to take any action by reason of such breach will not deprive such party
of the right to take action at any time while such breach continues.
 
     12. Amendment. This Agreement may be amended or canceled only by mutual
agreement of the parties in writing without the consent of any other person. So
long as the Executive lives, no person, other than the parties hereto, shall
have any rights under or interest in this Agreement or the subject matter
hereof.
 
     13. Survival of Agreement. Except as otherwise expressly provided in this
Agreement, the rights and obligations of the parties to this Agreement shall
survive the termination of the Executive's employment with the Company.
 
     14. Entire Agreement. This Agreement constitutes the entire agreement
between the parties concerning the subject matter hereof and supersedes all
prior and contemporaneous agreements, if any, between the parties relating to
the subject matter hereof.
 
 
 
 
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     15. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of the State of Michigan without
regard to principals of conflict of laws.
 
     16. Acknowledgement by Executive. The Executive represents to the Company
that he is knowledgeable and sophisticated as to business matters, including the
subject matter of this Agreement, that he has read this Agreement and that he
understands its terms. The Executive acknowledges that, prior to assenting to
the terms of this Agreement, he has been given a reasonable time to review it,
to consult with counsel of his choice, and to negotiate at arm's-length with the
Company as to the contents. The Executive and the Company agree that the
language used in this Agreement is the language chosen by the parties to express
their mutual intent, and that no rule of strict construction is to be applied
against any party hereto.
 
     IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the
Company has caused these presents to be executed in its name and on its behalf,
as of the date above first written.
 
EXECUTIVE                                     PERRIGO COMPANY
 
 
 
 
____________________________                  By________________________________
 
                                              Its_______________________________