Exhibit 10.1
EMPLOYMENT AGREEMENT
     THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of July
25, 2006 (the “Effective Date”) by and between Medicis Pharmaceutical
Corporation Company” or “Medicis”) and Mark A. Prygocki (“Executive”).
     WHEREAS, the Company currently employs Executive;
     WHEREAS, the Company and Executive (the “Parties”) wish to set forth in
writing the terms on which Executive will continue to be employed by the
Company;
     THEREFORE, the Parties agree as follows:
1. TERM
     1.1 Term. The term of this Agreement shall commence on the date Effective
Date, and shall continue on the terms and conditions set forth below, until
Executive’s employment is terminated as provided in Section 5 (the “Term”).
2. POSITION AND DUTIES
     2.1 Position or Duties. Executive shall serve as the Executive Vice
President & Chief Financial Officer of the Company, and shall have such
authority, duties and responsibilities as ordinarily assigned to an employee
holding such position. Executive shall also have such additional authority,
duties and responsibilities as assigned to him by the Company from time to time
with his consent.
3. COMPENSATION
     3.1 Base Compensation. Executive shall be paid a salary at the annual rate
of $496,000 (the “Base Compensation”). The Base Compensation shall be reviewed
at least annually, and may be increased, but not decreased. In the event that
the Base Compensation is increased, the new salary shall be the Base
Compensation for purposes of this Agreement thereafter.
     3.2 Bonus Compensation. For each fiscal year during the term of employment,
Executive shall be eligible to receive a cash bonus based on a target bonus of
not less than 75 % of Executive’s Base Compensation for that fiscal year the
portion of which shall be awarded based on the Company’s achievement of certain
operating, financial or other corporate goals established by the Board of
Directors (the “Board”) of the Company, or the Compensation Committee (the
“Committee”) of the Board. The target bonus for any fiscal year that is less
than twelve months shall be prorated by multiplying the target bonus by a
fraction the numerator of which is the number of months in the fiscal year and
the denominator of which is twelve. The bonus compensation shall be paid not
later than the 15th day of the third month following the end of the Company’s
tax year.

 

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     3.3 Benefits. Executive shall be entitled to participate in all pension,
401(k) and other employee plans and benefits, including without limitation,
medical, dental, vision, disability and life insurance plans, in accordance with
the terms of such plans or policies as they may be in effect from time to time,
on the same basis as other executive-level employees of the Company.
     3.4 Indemnification and Directors and Officers’ Insurance.
          (a) During the Employment Period and thereafter, the Company shall
indemnify the Executive to the fullest extent permitted under law from and
against any expenses (including but not limited to attorneys’ fees, expenses of
investigation and preparation and fees and disbursements of the Executive’s
accountants and other experts), judgments, fines, penalties and amounts paid in
settlement actually and reasonably incurred by the Executive in connection with
any proceeding in which the Executive was or is made party or was or is involved
(for example, as a witness) by reason of the fact the Executive was or is
employed by the Company.
          (b) Such indemnification is subject to:
               (i) the Company promptly receiving written notice that a claim or
liability has been asserted or threatened (“Notice of Claim”);
               (ii) the Executive providing reasonable cooperation and
assistance in the defense or settlement of a claim; and
               (iii) the Company being afforded the opportunity to have the sole
control over the defense and/or settlement of such claim or liability.
          (c) Unless within twenty days after receiving the Notice of Claim, the
Company notifies the Executive in writing of its intent to defend against such
claim or liability, the Executive may defend, settle and/or compromise any such
claim or liability, and be indemnified for all losses resulting from such
defense, settlement and/or compromise, and the Company shall advance to the
Executive all costs and expenses incurred by him in connection with any
proceeding covered by this provision within twenty days after receipt by the
Company of a written request for such advance, provided such request shall
include an undertaking by the Executive to repay the amount of such advance if
it shall ultimately be determined that he is not entitled to be indemnified
against such costs and expenses. If the Company gives the Executive such written
notice the Executive also may participate in such defense at his own cost and
expense.
          (d) Such indemnification shall continue as to the Executive during the
Employment Period and for ten years from the Date of Termination with respect to
acts or omissions which occurred prior to his cessation of employment with the
Company and shall inure to the benefit of the Executive’s heirs, executors and
administrators.
          (e) The Company agrees to continue and maintain directors’ and
officers’ liability insurance policies covering the Executive to the extent that
the Company provides such coverage for its other executive officers. Such
insurance coverage shall continue as to the Executive even if he has ceased to
be an employee or agent of the Company with respect to acts or omissions which
occurred prior to his cessation of employment with the Company.

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     3.5 Method of Payment. The monetary compensation payable and any benefits
due to Executive hereunder may be paid or provided in whole or in part, from
time to time, by the Company and/or its respective parents, subsidiaries and
affiliates, but shall at all times remain the responsibility of the Company.
     3.6 Vacation. Executive shall be entitled to 28 days of paid vacation
annually during the Term. Executive’s vacation pay shall not be subject to the
Company’s policies applicable to non-executive employees concerning accrual, use
and scheduling of vacation, as such policies may be in effect from time to time.
Executive’s vacation pay shall vest in equal increments each pay period during
each year, and may not be carried over from year to year. Executive shall
provide reasonable notice of his intent to take vacation time to his supervisor
and obtain his supervisor’s approval before taking vacation time. Executive must
make reasonable efforts to be accessible to the Company during periods of
vacation..
     3.7 Business Expenses. Executive shall be entitled to reimbursement of
reasonable business expenses in accordance with Company policies, as they may be
in effect from time to time.
4. PRIMARY DUTY TO THE COMPANY
     4.1 Devotion of Time and Effort. Executive shall use Executive’s good faith
best efforts and judgment in performing Executive’s duties as required hereunder
and to act in the best interests of the Company. Executive shall devote all of
his business time, attention and energies to the business of the Company.
     4.2 Other Activities. Executive may engage in other activities for
Executive’s own account while employed hereunder, including without limitation,
charitable, community and other business activities, provided that in the
judgment of the Board such other activities do not materially interfere with the
performance of Executive’s duties hereunder, and do not violate Sections 6 and
7. With regard to any other businesses or activities, Executive shall notify the
Board of all such activities and shall not begin such activities until Executive
receives written approval from the Board, which shall not be unreasonably
withheld or unduly delayed. This restriction shall not apply to a passive
ownership by Executive of less than one percent of the securities of a publicly
traded entity with a market capitalization greater than $500,000,000 at the time
of Executive’s investment.
5. TERMINATION
     5.1 Due to Death. Executive’s employment shall terminate as of the date of
his death.
     5.2 Due to Disability. The Company may terminate Executive’s employment if
he becomes “disabled”, as defined below, upon thirty days’ written notice to
Executive. For purposes of this Agreement, the term “Disability” shall mean a
physical or mental incapacity as a result of which Executive becomes unable to
continue to perform the essential functions of his job with or without
accommodation hereunder for six consecutive calendar months or for shorter
periods aggregating 125 business days in any twelve month period, or, if this
provision is inconsistent with any applicable law, to the extent not prohibited
by law.

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     5.3 By the Company Without “Cause”. The Company may terminate Executive’s
employment without “Cause” as defined in Section 5.5 below at any time upon
thirty days’ written notice to Executive.
     5.4 By Executive Without “Good Reason”. Executive may terminate his
employment hereunder without Good Reason, as defined in Section 5.6 below, at
any time upon thirty days’ written notice (the “Notice Period”) to the Company.
During the Notice Period, Executive shall continue to perform Executive’s duties
hereunder and shall not be employed by any other person or entity.
     5.5 By The Company For “Cause”. The Company may terminate Executive’s
employment for “Cause”. Not less than thirty days prior to the date of
termination, Executive shall be notified in writing of the Company’s intention
to terminate, the grounds for doing so and the date of the termination. The
notice shall specify a date within thirty days of the notice on which Executive
shall have an opportunity to address the Board as to the grounds for
termination. The Company may relieve Executive of his duties between the date of
the notice and the proposed date of termination, and such action shall not
constitute “Good Reason” for Executive to terminate under Section 5.6. For
purposes of this Agreement, “Cause” shall mean the Board’s reasonable
determination that one or more of the following conditions exist:
          (a) Executive has been convicted of or pled guilty or nolo contendre
to any felony;
          (b) Executive has committed one or more acts of theft, embezzlement or
misappropriation against the Company;
          (c) Executive has failed to substantially perform Executive’s duties
hereunder (other than such failure resulting from Executive’s incapacity due to
physical or mental illness), which failure has not been remedied within thirty
days after written demand for substantial performance was delivered by the
Company which demand specifically identified the manner in which the Company
believes that Executive has not substantially performed Executive’s duties;
          (d) Executive has materially breached his obligations under this
Agreement, including without limitation, Sections 6 and 7, which breach was not
remedied within thirty (30) days after written notice was delivered by the
Company which specifically identified the breach that the Company believes has
occurred;
          (e) Executive has engaged in willful misconduct towards the Company or
in any conduct involving moral turpitude that is detrimental to the business or
the reputation of the Company; or
          (f) Executive has failed to perform Executive’s duties with
appropriate diligence, effort and skill (other than such failure resulting from
Executive’s incapacity due to physical or mental illness) as reasonably
determined by the Company’s Chief Executive Officer in consultation with the
Board, which failure has not been remedied within thirty days after written
notice of specifying the failure was delivered by the Chief Executive Officer to
Executive.

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     5.6 By Executive For “Good Reason.” Executive may terminate his employment
for good reason upon at least thirty days prior written notice to the Company.
For purposes of this Agreement, “Good Reason” shall mean: (a) the Company’s
material breach of the salary and benefit obligations hereunder, and either such
breach is incurable or, if curable, has not been cured within fifteen days
following receipt of written notice by Executive to the Company of such breach
by the Company; (b) a material, substantial, and permanent reduction in the
authority of Executive without Executive’s prior written consent; (c) a material
change in Executive’s title without Executive’s prior written consent;
(d) Executive’s primary reporting relationship being changed such that Executive
no longer reports to an officer above the rank of Executive Vice President of
the Company without Executive’s prior written consent; or (e) a relocation of
Executive’s primary office to a location that would increase Executive’s
commuting distance more than thirty-five (35) miles from Scottsdale, Arizona,
without Executive’s prior written consent. Executive shall be deemed to have
waived Executive’s right to terminate for “Good Reason” with respect to any such
breach or action if Executive does not notify the Company in writing of such
breach or action within thirty days of such breach or action. The fact that the
Company becomes a subsidiary of another entity, or that the Company’s status
changes from publicly-traded to privately-held, as a result of the change in
control, shall not, by itself, constitute a material reduction in the authority
of Executive, a material adverse change in Executive’s title, or Executive’s
primary reporting relationship being changed such that Executive no longer
reports to an officer above the rank of Executive Vice President of the Company.
     5.7 Severance Payment. In the event Executive’s employment terminates
pursuant to Sections 5.4 (Without Good Reason) or 5.5 (For Cause), Executive, if
requested and able to do so, shall continue to render services to the Company
pursuant to this Agreement until the Effective Date of Termination, and
Executive shall continue to receive Executive’s Base Compensation and benefits
as otherwise provided under this Agreement through the Effective Date of
Termination. Executive shall have no further right to receive compensation,
benefits or other consideration from the Company, and Executive shall not be
entitled to any severance payments or benefits, except as set forth in the final
paragraph of this Section 5.7 or as required by applicable law or the Company’s
pension or welfare benefit plans. The “Effective Date of Termination” shall be
the date of Executive’s Death for a termination under Section 5.1, and the date
specified in the written notice of termination for a termination under
Sections 5.2, 5.3, 5.4, 5.5 or 5.6.
     In the event that Executive’s employment is terminated pursuant to
Section 5.1 (Death), Section 5.2 (Due to Disability), Section 5.3 (Without
Cause), or Section 5.6 (For Good Reason), Executive, if requested and able to do
so, shall continue to render services to the Company pursuant to this Agreement
until the Effective Date of Termination, and Executive or Executive’s Trust or
estate, as applicable, shall continue to receive compensation as provided in
this Agreement through the Effective Date of Termination. Thereafter, Executive
shall be entitled to severance pay and benefits as set forth in subparagraph
(a) through (c) below provided that not later than sixty days following
Executive’s “separation from service,” within the meaning of
Section 409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the
“Code”), and any Treasury Regulations or other guidance issued thereunder
(“Separation from Service”), Executive (or Executive’s trust or estate, as
applicable) executes and delivers, and any revocation period required by law has
run and Executive has not revoked, a general release of claims in a

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form acceptable to the Company in its sole and absolute discretion, and
Executive is not in material breach of any of the provisions of this Agreement.
The Company shall provide Executive with a general release of claims in a form
acceptable to the Company not later than one week following Executive’s
Separation from Service.
          (a) Amount. In addition to other compensation payable to Executive for
services rendered through the Effective Date of Termination, subject to
Section 5.9, on the sixtieth day after a Separation from Service, the Company
shall pay Executive, as a single severance payment: (i) in the event of
termination under Section 5.1 (Death) or Section 5.2 (Disability), one year’s
Base Compensation; or (ii) in the event of termination under Section 5.3
(Without Cause) or Section 5.6 (For Good Reason), the sum of two times the
highest rate of Executive’s annual Base Compensation in effect during the three
years preceding the Effective Date of Termination, two times the highest annual
bonus received by the Executive for a twelve month fiscal or twelve month bonus
year in the three years preceding the Effective Date of Termination; and a
prorated bonus for the year in which the termination occurs determined by
multiplying the bonus most recently paid (which shall be annualized for any
fiscal year of less than twelve months or year in which Executive received a
pro-rated bonus) by a fraction, the numerator of which is the number of days
elapsed in the calendar year in which the termination occurs as of the Effective
Date of Termination, and the denominator of which is the number of days in the
period for which the most recent bonus was paid (collectively, the “Severance
Amount”). In the event of termination under Section 5.1 (Death) and/or
Section 5.2 (Disability), the Company may elect to provide the Severance Amount
directly or through an insurance benefit. Executive agrees to reasonably
cooperate with the Company in connection with the Company’s efforts to obtain
such insurance, if any.
          (b) Vesting of Equity Awards. In addition to the Severance Amount, all
unvested stock options and restricted stock of the Company held by the Executive
shall immediately vest as of the Effective Date of Termination (the “Vesting”).
          (c) Benefits. In addition to the Severance Amount and the Vesting,
subject to Section 5.9, on the sixtieth (60th) day after a Separation from
Service, the Company shall pay to Executive in a single lump sum, an amount
equal to twenty-four times the applicable monthly COBRA premium for Executive
and his covered dependents (the “Severance Benefits”). The payment of the
Severance Benefits shall not affect Executive’s eligibility to elect to continue
health care benefits under COBRA at Executive’s own expense.
     In the event of a termination pursuant to Section 5.5(c) or (f), on the
thirtieth, sixtieth and ninetieth days after a Separation from Service, the
Company shall pay Executive, as a single severance payment, an amount equal to
one-thirty-sixth (1/36) of the Executive’s Base Compensation as of the Effective
Date of Termination, provided that Executive is not in material breach of any of
the provisions of this Agreement, including without limitation, Sections 6 and
7. This amount shall be in addition to all other compensation payable to
Executive for services rendered through the Effective Date of Termination. In
addition, during the thirty day period following the Executive’s Separation form
Service with the Company, the Company may elect, but shall not be obligated, to
offer to Executive an additional amount equal to the Monthly Payment, defined
below, multiplied by a number selected by the Company that shall be not less
than one nor more than twenty-one (the “Multiplier”). The “Monthly Payment”
shall be equal

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to: (i) one-twelfth (1/12) of the Executive’s Base Compensation as of the
Effective Date of Termination the highest rate of Executive’s annual Base
Compensation in effect during the three years preceding the Effective Date of
Termination; and (ii) one-twelfth (1/12) of the highest annual bonus received by
the Executive for a twelve month fiscal or twelve month bonus year in the three
years preceding the Effective Date of Termination. The amount, if any, so
offered, shall be referred to as the “Section 5.5 Payment”. If a Section 5.5
Payment is offered, in order to be eligible to receive the Section 5.5 Payment,
within sixty days following the Company’s election to offer a Section 5.5
Payment to Executive, Executive (or Executive’s trust or estate, as applicable)
must execute and deliver, and any revocation period required by law must have
run and Executive must not have revoked, a general release of claims in a form
acceptable to the Company in its sole and absolute discretion, and Executive
must not be in material breach of any of the provisions of this Agreement,
including without limitation, Sections 6 and 7. The Section 5.5 Payment shall be
payable in a number of monthly installments equal to the Multiplier. The first
monthly installment of the Section 5.5 Payment, if any, shall be payable on the
first business day of the fourth month after Executive’s Separation from
Service, and the subsequent installments shall be made on the first business day
of each month thereafter until all installments have been made.
     5.8 Certain Additional Payments. If any payment or benefit received or to
be received by Executive in connection with a change in control of the Company
or termination of Executive’s employment (whether payable pursuant to the terms
of this Agreement, a stock option plan or any other plan or arrangement with the
Company) (the “Total Payments”) will be subject to the excise tax imposed by
Section 4999 of the Code, as amended, the Company will pay to the Executive,
within thirty days of any payments giving rise to excise tax, an additional
amount (the “gross-up payment”) such that the net amount retained by the
Executive, after deduction of any excise tax on the Total Payments and any
federal and state and local income and employment tax and excise tax on the
gross-up payment provided for by this Section 5.8, will equal the total
payments. For purposes of determining the amount of the gross-up payment, the
Executive will be deemed to pay federal income taxes at the highest marginal
rate of federal income taxation in the calendar year that the payment is to be
made, and state and local income taxes at the highest marginal rate of taxation
in the state and locality of the Executive’s residence on the date of
termination or the date that excise tax is withheld by the Company, net of the
maximum reduction in federal income taxes that could be obtained by deducting
such state and local taxes. For purposes of determining whether any of the Total
Payments would not be deductible by the Company and would be subject to the
excise tax, and the amount of such excise tax, (1) Total Payments will be
treated as “parachute payments” within the meaning of Section 280G(b)(2) of the
Code, and all parachute payments in excess of the base amount within the meaning
of Section 280G(b)(3) will be treated as subject to the excise tax unless, in
the opinion of tax counsel selected by the Company’s independent auditors prior
to the change in control and acceptable to the Executive, such Total Payments
(in whole or in part) are not parachute payments, or such parachute payments in
excess of the base amount (in whole or in part) are otherwise not subject to the
excise tax, and (2) the value of any non-cash benefits or any deferred payment
will be determined by the Company’s independent auditors in accordance with
Sections 280G(d)(3) and (4) of the Code. If the excise tax is subsequently
determined to be less than the amount originally taken into account hereunder,
the Executive will repay to the Company, when such reduction in excise tax is
finally determined, the portion of the gross-up payment attributable to such
reduction. If the excise tax is determined to exceed the amount

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originally taken into account hereunder (including by reason of any payment, the
existence or amount of which cannot be determined at the time of the gross-up
payment), the Company will make an additional gross-up payment in respect of
such excess (plus any interest payable with respect to such excess) when such
excess if finally determined.
     5.9 Compliance With Internal Revenue Code Section 409A.
          (a) Short-Term Deferral Exemption. This Agreement is not intended to
provide for any deferral of compensation subject to Code Section 409A and,
accordingly, the benefits provided pursuant to this Agreement are intended to be
paid not later than the later of: (i) the fifteenth day of the third month
following Executive’s first taxable year in which such benefit is no longer
subject to a substantial risk of forfeiture, and (ii) the fifteenth day of the
third month following the first taxable year of the Company in which such
benefit is no longer subject to a substantial risk of forfeiture, as determined
in accordance with Code Section 409A and any Treasury Regulations and other
guidance issued thereunder. The date determined under this subsection is
referred to as the “Short-Term Deferral Date.”
          (b) Compliance with Code Section 409A. Notwithstanding anything to the
contrary herein, in the event that any benefits provided pursuant to this
Agreement are not actually or constructively received by the Executive on or
before the Short-Term Deferral Date, to the extent such benefit constitutes a
deferral of compensation subject to Code Section 409A, then: (i) subject to
clause (ii), such benefit shall be paid upon Executive’s Separation from
Service, with respect to the Company and its affiliates, and (ii) if Executive
is a “specified employee,” as defined in Code Section 409A(a)(2)(B)(i), with
respect to the Company and its affiliates, such benefit shall be paid upon the
date which is six months after the date of Executive’s Separation from Service
(or, if earlier, the date of Executive’s death). In the event that any benefit
provided for in this Agreement is subject to this subsection, such benefit shall
be paid on the sixtieth day following the payment date determined under this
subsection, and shall be made subject to the requirements of Section 5.7.
     5.10 No Duty to Mitigate
     Executive shall be entitled to the full severance benefits provided under
this Section 5, without regard to Executive’s efforts or lack of efforts to
obtain alternative employment, and the severance benefits provided to Executive
shall not be reduced by any amounts earned by Executive from any other source.
     5.11 Other Severance Benefits.
     To the extent Executive is entitled to receive any severance or similar
payment and/or benefits under both the Medicis Pharmaceutical Corporation
Amended and Restated Executive Retention Plan (the “Retention Plan”) and this
Agreement, Executive shall receive the greater of the payments and/or benefits
under this Agreement or the Retention Plan, but shall not be entitled to receive
both; provided, however, that the timing and form of payment and/or benefits
shall be governed by this Agreement to the extent such payment or benefit is in
lieu of any payment or benefit under this Agreement (determined based upon the
timing and form of payment and/or benefit that would otherwise have been
provided under this agreement).

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6. CONFIDENTIALITY
     During the Term, Executive will have access to and become acquainted with
various information relating to the Company’s business operations, including
customer and supply lists, customer files, marketing data, business plans,
strategies, employee lists, contracts, financial records and accounts, products
in development, product plans, projections and budgets, and similar information.
Executive agrees that to the extent such information is not generally known to
or available to the public and/or the industry, and gives the Company an
advantage over competitors who do not know of or use such information, such
information and documents constitute “Confidential Information” of the Company.
Executive further agrees that any documents relating to the business of the
Company, whether they are prepared by Executive or come into Executive’s
possession in any other way, are owned by the Company, shall remain the
exclusive property of the Company, and must be returned to the Company upon
termination of employment. Executive shall not use any Confidential Information
of the Company, directly or indirectly, for Executive’s own benefit, or the
benefit of any person or entity other than the Company, nor shall Executive
disclose Confidential Information to any person or entity other than the Company
and its employees, either during the Term or at any time thereafter, except as
may be appropriate for Executive to perform his duties as an employee, officer
and/or director, directly or indirectly, of the Company. In the event Executive
violates this provision during any period in which he is receiving severance
under Section 5.7 of this Agreement, in addition to any other remedies the
Company may have, the Company may terminate the Severance Payments, Vesting and
Severance Benefits under Section 5.7.
7. NON-SOLICITATION/NON-COMPETITION
     7.1 Non-Solicitation. For a period of one year following the date
Executive’s employment hereunder is terminated, Executive shall not solicit or
induce any of the Company’s employees, agents or independent contractors to end
their relationship with the Company, or recruit, solicit or otherwise induce any
such person to perform services for Executive, or any other person, firm or
company.
     7.2 Non-Competition.
          (a) Executive acknowledges that the Company does business throughout
the world. During the Term, and throughout the Post-Termination Non-Compete
Period, as defined in Section 7.2(b) below, unless Executive’s employment is
terminated under Sections 5.2, 5.3 or 5.6 following a change of ownership or
effective control within the meaning of Section 280G of the Code and the
regulations thereunder, Executive shall not, directly or indirectly, serve as an
employee, consultant, officer, director, lender, investor, shareholder, partner,
manager or member of any person or entity, or own or act as a sole proprietor of
a business that engages in the production of dermatological or facial aesthetic
products, or similar business (a “Competitor”), during that period in any County
of the State of Arizona, any of the States of the United States of America, any
country in Europe, other than the Company or its affiliates, or as approved in
advance in writing by the CEO of the Company or the Board; provided, however,
that Executive’s passive ownership of less than one percent (1%) of the publicly
traded securities of any publicly traded entity that engages in the production
of dermatological or facial aesthetic products, or similar business, with a
market capitalization greater than $500,000,000 at the time

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of Executive’s investment shall not violate this Section 7.2. Notwithstanding
the foregoing, it shall not be a violation of this Section 7.2 for Executive to
provide services as an employee, consultant, officer, partner, manager or member
of one or more Competitors totaling not more than 20 hours in the aggregate
during any month and not more than 150 hours in the aggregate during any
12-month period in any such capacity; provided, that (1) Executive voluntarily
resigns from the Company pursuant to Section 5.4 on or after the date Executive
reaches the age of 63 and (2) Executive provides the Company with a written
certification that Executive does not intend to provide full-time services as an
employee, consultant, officer, partner, manager or member of any Competitor.
          (b) For purposes of this Section 7.2, “Post-Termination Non-Compete
Period” shall mean the twenty four (24) month period following the Effective
Date of Termination; provided, however, that “Post-Termination Non-Compete
Period” shall mean (i) the three month period immediately following the
Effective Date of Termination, if Executive is terminated under Section 5.5(c)
or (f) and Executive is not offered a Section 5.5 Payment of any amount, or
(ii) the number of months immediately following the Effective Date of
Termination equal to the Multiplier plus three months, if Executive is
terminated under Section 5.5(c) or (f) and the Section 5.5 Payment is offered to
the Executive.
          (c) In the event Executive violates this Section 7.2 during any period
in which he is receiving severance under Section 5.7 of this Agreement, in
addition to any other remedies the Company may have, the Company may terminate
the Severance Payments, Vesting and Severance Benefits under Section 5.7.
Executive acknowledges that these restrictions shall not prevent or unduly
restrict Executive from practicing his profession, or cause him economic
hardship.
8. ARBITRATION AGREEMENT
     8.1 Claims Subject to Arbitration. Any controversy, dispute or claim
between Executive and the Company, or its parents, subsidiaries, affiliates and
any of their officers, directors, agents or other employees, shall be resolved
by binding arbitration, at the request of either party.
     The arbitrability of any controversy, dispute or claim under this Agreement
shall be determined by application of the substantive provisions of the Federal
Arbitration Act (9 U.S.C. sections 1 and 2) and by application of the procedural
provisions of Arizona law, except as provided herein. Arbitration shall be the
exclusive method for resolving any dispute and all remedies available from a
court of competent jurisdiction shall be available; provided, however, that
either party may request provisional relief from a court of competent
jurisdiction, if such relief is not available in a timely fashion through
arbitration.
     The claims which are to be arbitrated include, but are not limited to any
claim arising out of or relating to this Agreement or the employment
relationship between Executive and the Company, claims for wages and other
compensation, claims for breach of contract (express or implied), claims for
violation of public policy, wrongful termination, tort claims, claims for
unlawful discrimination and/or harassment (including, but not limited to, race,
religious creed, color, national origin, ancestry, physical disability, mental
disability, gender identity or

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expression, medical condition, marital status, age, pregnancy, sex or sexual
orientation) to the extent allowed by law, and claims for violation of any
federal, state, or other government law, statute, regulation, or ordinance,
except for claims for workers’ compensation and unemployment insurance benefits.
This Agreement shall not be interpreted to provide for arbitration of any
dispute that does not constitute a claim recognized under applicable law.
     8.2 Selection of Arbitrator. The Executive and the Company will select a
single neutral arbitrator by mutual agreement. If the Executive and the Company
are unable to agree on a neutral arbitrator within thirty days of a demand for
arbitration, either party may elect to obtain a list of arbitrators from the
Judicial Arbitration and Mediation Service (“JAMS”) or the American Arbitration
Association (“AAA”), and the arbitrator shall be selected by alternate striking
of names from the list until a single arbitrator remains. The party initiating
the arbitration shall be the first to strike a name.
     8.3 Demand for Arbitration. The demand for arbitration must be in writing
and must be made by the aggrieved party within the statute of limitations period
provided under applicable State and/or Federal law for the particular claim(s).
Failure to make a written demand within the applicable statutory period
constitutes a waiver of the right to assert that claim in any forum.
     8.4 Location of Arbitration. Arbitration proceedings will be held in
Scottsdale, Arizona.
     8.5 Choice of Law. The arbitrator shall apply applicable State and/or
Federal substantive law to determine issues of liability and damages regarding
all claims to be arbitrated, and shall apply the Federal Rules of Evidence to
the proceeding.
     8.6 Discovery. The parties shall be entitled to conduct reasonable
discovery and the arbitrator shall have the authority to determine what
constitutes reasonable discovery. The arbitrator shall hear motions for summary
judgment/adjudication as provided in the Federal Rules of Civil Procedure.
     8.7 Written Opinion and Award. Within thirty days following the hearing and
the submission of the matter to the arbitrator, the arbitrator shall issue a
written opinion and award which shall be signed and dated. The arbitrator’s
award shall decide all issues submitted by the parties, and the arbitrator may
not decide any issue not submitted. The opinion and award shall include factual
findings and the reasons upon which the decision is based. The arbitrator shall
be permitted to award only those remedies in law or equity which are requested
by the parties and allowed by law.
     8.8 Appeals. The final award may be appealed to another arbitrator who will
be chosen by the parties in the same manner as the original arbitrator. All the
rules governing judicial appeals of judgments from the Federal District Court
for the State of Arizona, the Ninth Circuit Court of Appeals shall apply to any
appeal of this award, including but not limited to the time frames, deadlines
and the standards of review.
     8.9 Costs of Arbitration. The cost of the arbitrator and other incidental
costs of arbitration that would not be incurred in a court proceeding shall be
borne by the Company. The parties shall each bear their own costs and attorneys’
fees in any arbitration proceeding,

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provided, however, that the arbitrator shall have the authority to require
either party to pay the costs and attorneys’ fees of the other party to the
extent permitted under applicable federal or state law, as a part of any remedy
that may be ordered.
     8.10 Waiver of Right to Jury. Both the Company and Executive understands
that by using arbitration to resolve disputes they are giving up any right that
they may have to a judge or jury trial with regard to all issues concerning
employment or otherwise covered by this Section 8.
9. GENERAL PROVISIONS
     9.1 Assignment; Binding Effect. Neither the Company nor Executive may
assign, delegate or otherwise transfer this Agreement or any of their respective
rights or obligations hereunder without the prior written consent of the other
party, except in the case of Executive’s death. Any attempted prohibited
assignment or delegation shall be void. This Agreement shall be binding upon and
inure to the benefit of any permitted successors or assigns of the parties and
the heirs, executors, administrators and/or personal representatives of
Executive.
     9.2 Notices. All notices, requests, demands and other communications that
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by telecopy, electronic or digital transmission
method with electronic confirmation of receipt; the day after it is sent, if
sent for next-day delivery to a domestic address by recognized overnight
delivery service (e.g., FedEx); and upon receipt, if sent by certified or
registered mail, return receipt requested. In each case notice shall be sent to:

     
If to the Company:
  Medicis Pharmaceutical Corporation
 
  8125 North Hayden Road
 
  Scottsdale, AZ 85258
 
  Attention: Chief Executive Officer
 
  Facsimile: 602-808-3875
 
   
If to Executive:
  Mark A. Prygocki
 
  8125 North Hayden Road
 
  Scottsdale, AZ 85258
 
  Fax: 602-778-6006

     Any party may change its address for the purpose of this Section 9.2 by
giving the other party written notice of its new address in the manner set forth
above.
     9.3 Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof, and supersedes all prior
agreements; provided, however, that this Agreement shall supplement, not
supersede, any prior agreements concerning the Confidential Information or other
intellectual property of the Company, and any conflicts or inconsistencies
between such agreements shall be resolved so that the provision providing
greater rights to the Company shall prevail.

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     9.4 Amendments; Waivers. This Agreement may be amended or modified, and any
of the terms and covenants may be waived, only by a written instrument executed
by the parties hereto, or, in the case of a waiver, by the party waiving
compliance. Any waiver by any party in any one or more instances of any term or
covenant contained in this Agreement shall neither be deemed to be nor construed
as a further or continuing waiver of any such term or covenant of this
Agreement.
     9.5 Provisions Severable. In case any one or more provisions of this
Agreement shall be invalid, illegal or unenforceable, in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not, in any way, be affected or impaired thereby. If any provision
hereof is determined by any court of competent jurisdiction to be invalid or
unenforceable by reason of such provision extending the covenants and agreements
contained herein for too great a period of time or over too great a geographical
area, or being too extensive in any other respect, such provision shall be
interpreted to extend only over the maximum period of time and geographical
area, and to the maximum extent in all other respects, as to which it is valid
and enforceable, all as determined by such court in such action.
     9.6 Attorney’s Fees. If any legal action, arbitration or other proceeding,
is brought for the enforcement of this Agreement, or because of an alleged
dispute, breach or default in connection with any of the provisions of this
Agreement, each of the parties hereto shall be responsible for payment of their
own attorneys’ fees and other costs incurred by them in that action or
proceeding, without regard to whomever is the prevailing party in such action or
proceeding with respect to such claims, except as otherwise provided in
Section 8.
     9.7 Governing Law. This Agreement shall be construed, performed and
enforced in accordance with, and governed by the laws of the State of Arizona
without giving effect to the principles of conflict of laws thereof.
     9.8 Non-Disparagement. During Executive’s employment and thereafter,
Executive and the Company agree to represent Executive and the Company in a
positive light and not to disparage or in any other way communicate to any
person or entity any negative information or opinion concerning each other, or
the Company’s parents, subsidiaries and affiliates, or any of their partners,
members, shareholders, officers, directors, employees or agents, or any of them.
This provision shall not prohibit Executive or the Company from making any
statements or taking any actions required by law, or reporting any actions or
inactions Executive or the Company believe to be unlawful. This provision shall
not be interpreted to require or encourage Executive or the Company to make any
misrepresentations.
     9.9 Return of Property. Upon termination of Executive’s employment,
Executive shall return to the Company any and all Company property, materials,
or equipment in his or her possession, including, without limitation, Company
property described in Section 6.
     9.10 Cooperation. During Executive’s employment with the Company and
thereafter, Executive agrees to cooperate with the Company and its agents,
accountants and attorneys concerning any matter with which Executive was
involved during his employment. Such cooperation shall include, but not be
limited to, providing information to, meeting with and reviewing documents
provided by the Company and its agents, accountants and attorneys during

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normal business hours or other mutually agreeable hours upon reasonable notice
and to make himself available for depositions and hearings, if necessary and
upon reasonable notice. If Executive’s cooperation is required after the
termination of Executive’s employment, the Company shall reimburse Executive for
any out of pocket expenses incurred in and any wages lost by Executive for time
spent performing his obligations hereunder.
     9.11 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.
     9.12 Headings. The headings contained in this Agreement are provided solely
for the Parties’ convenience and shall not be deemed to alter the meaning of the
text of the Agreement.
     9.13 Survival. Sections 6, 7, 8, and 9 shall survive the termination of
this Agreement. If Executive becomes entitled to the Severance Payment, Vesting
and Severance Benefits under Section 5.7 and/or payments under Section 5.8 in
connection with the termination of this Agreement, the Company’s obligation to
make such payments and provide such benefits shall survive the termination of
this Agreement.
     IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first written above.

                  THE COMPANY:            
 
                Medicis Pharmaceutical Corporation,
a Delaware corporation            
 
               
By:
  /s/ Jonah Shacknai       July 25, 2006    
 
               
 
  Jonah Shacknai       Date    
 
  Its: Chairman of the Board of Directors
and Chief Executive Officer            
 
                EXECUTIVE:            
 
               
/s/ Mark A. Prygocki
      July 24, 2006                   Mark A. Prygocki       Date    
 
               

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