exv10w5






Exhibit 10.5




AMENDED AND RESTATED EMPLOYMENT AGREEMENT




     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into
as of December 23, 2008 (the “Effective Date”) by and between Medicis Pharmaceutical
Corporation (the “Company” or “Medicis”) and Mark A. Prygocki
(“Executive”).



     WHEREAS, Executive is employed by the Company pursuant to that certain Employment Agreement
dated as of July 25, 2006 (the “Existing Employment Agreement”);



     WHEREAS, Executive is a participant in the Medicis Pharmaceutical Corporation Executive
Retention Plan (the “Executive Retention Plan”); and



     WHEREAS, the Company and Executive (the “Parties”) wish to terminate Executive’s
participation in the Executive Retention Plan and replace the Existing Employment Agreement with a
new agreement setting forth 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 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 and Duties. Executive shall serve as the Executive Vice President and
Chief Operating Officer of the Company, and shall have such authority, duties and responsibilities
as ordinarily assigned to an employee holding the position of Chief Operating Officer with a
publicly a traded company (or following a Change in Control, the ultimate parent entity of the
Company) and provided to Executive in writing. 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
$535,000 (the “Base Compensation”), effective January 1, 2008. 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. If the Base Compensation is not increased in one or more years during the
Term, the Company shall provide Executive with a written notice setting forth the rationale for
such decision.



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     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 actual amount of such cash bonus shall be
determined based on the Executive’s achievement of certain individual performance goals and 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 bonus compensation shall be paid not later than the
fifteenth (15th) day of the third (3rd) month following the end of the
Company’s tax year in which Executive becomes entitled to such bonus compensation.



     3.3 Benefits. During the Term, Executive shall be entitled to participate in all
pension, 401(k) and other employee benefit plans, 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 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.



     3.5 Vacation. Executive shall be entitled to thirty-six (36) days of paid vacation and as
many paid holidays as granted to all other employees of the Company 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 may provide reasonable notice
of his intent to take vacation time to his supervisor. Executive must make reasonable efforts to
be accessible to the Company during periods of vacation.



     3.6 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 shall act in the
best interests of the Company. Executive shall devote substantially all of his business time,
attention and energies to the business of the Company.



     4.2 Other Activities. Executive may engage in other activities during business hours
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 (other than
charitable or community activities, including, without limitation, activities for the organizations



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set forth on Schedule A), Executive shall notify the Board of all such activities and
shall not begin such activities until Executive receives written approval from the Chief Executive
Officer, which shall not be unreasonably withheld or unduly delayed. This restriction shall not
apply to passive ownership by Executive of securities representing either:



          (a) less than one percent (1%) of the securities of a publicly traded entity with a market
capitalization greater than $500,000,000 at the time of Executive’s investment (a “Large
Publicly Traded Entity”); or




          (b) less than $500,000 and less than five percent (5%) of the securities of any entity that is
not a Large Publicly Traded Entity.




5. TERMINATION




     5.1 Due to Death. Executive’s employment shall terminate as of the date of his death.



     5.2 Due to Disability. Unless otherwise prohibited by law, Executive’s employment
with the Company will terminate on the effective date of Executive’s Disability, as defined below.
For purposes of this Section 5.2, the term “Disability” means that Executive with or
without any accommodation required by law, is, by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, receiving income replacement benefits for a period of
not less than 3 months under an accident and health plan covering employees of the Company. The
effective date of Executive’s Disability is the last day of the third month for which Executive
receives the income replacement benefits.



     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 (30) days’ written notice
to Executive.



     5.4 By Executive Without Good Reason. Executive may terminate his employment without
Good Reason, as defined in Section 5.6 below, at any time upon thirty (30) days’ written notice
(the “Notice Period”) to the Company. During the Notice Period, Executive 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, at any time upon thirty (30) days’ written notice to Executive. Such notice shall specify
the grounds for Cause and a date within such thirty (30) day period on which Executive shall have
an opportunity to address a majority of the Board as to the grounds for termination. The Company
may relieve Executive of some or all 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
his employment 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 contendere to any felony;




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          (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 determined in accordance
with Section 2.1 (other than such failure resulting from Executive’s incapacity due to physical or
mental illness), or failed to exercise appropriate diligence, effort and skill, in
either case, which failure has not been remedied within thirty (30) days after delivery to
Executive by the Company of a written demand for substantial performance specifically identifying
the manner in which the Company believes that Executive has not substantially performed Executive’s
duties; provided, that following the earlier of (i) the public announcement of a transaction which,
if consummated would be a Change in Control or (ii) the commencement of material negotiations (as
determined by the Board) between the Company and another entity with regard to a transaction which,
if consummated would be a Change in Control, that Executive’s failure to substantially perform or
exercise appropriate diligence, effort and skill shall have been willful. The Company shall not be
entitled to terminate Executive’s employment for “Cause” under this Section 5.5(c) solely on the
basis of the Company’s performance, in and of itself;




          (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 delivery
to Executive by the Company of a written notice specifically identifying the breach that the
Company believes has occurred; or




          (e) Executive has engaged in willful misconduct towards the Company or in any conduct
involving moral turpitude that is demonstrably injurious to the business or the reputation of the
Company.




     5.6 By Executive For Good Reason. Executive may terminate his employment for Good
Reason if Executive gives to the Company written notice of the breach or action giving rise to Good
Reason within thirty (30) days of the initial existence of such breach or action. Notwithstanding
any provision of this Agreement to the contrary, none of the events described in this Section 5.6
will constitute Good Reason if, within thirty (30) days after Executive gives the Company written
notice specifying the occurrence or existence of the breach or action that Executive believes
constitutes Good Reason, the Company has fully corrected (or reversed) such breach or action.



     For purposes of this Agreement, “Good Reason” shall mean:



          (a) a material diminution in Executive’s base salary;




          (b) a material diminution in Executive’s authority, duties, or responsibilities as set forth
in Section 2.1;




          (c) a material diminution in the authority, duties or responsibilities of the supervisor to
whom Executive is required to report;




          (d) a material change in the geographic location of Executive’s principal office;




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          (e) during the twenty-four (24) month period following the most recent Change in Control, the
Company amends (in a manner materially adverse to Executive) or terminates any performance-based
bonus or incentive plan of the Company in which Executive participates immediately prior to the
effective date of a Change in Control and pursuant to which Executive receives a material amount of
Executive’s compensation, without providing a replacement benefit or program of substantially
similar value; or




          (f) any other action or inaction that constitutes a material breach by the Company of the
Agreement (including without limitation the breach by the Company of its obligation under Section
2.1 to maintain Executive’s duties as those consistent with the duties of a Chief Operating Officer
of a publicly traded company or following a Change in Control, as Chief Operating Officer of the
ultimate parent entity of the Company).




     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 (30) days of Executive’s initial knowledge of the event that gives
rise to such breach or action. Executive’s termination for Good Reason must occur within the two
(2) year period following the initial existence of the breach or action giving rise to Good Reason.



     5.7 Severance Payment. In the event Executive’s employment terminates pursuant to
Section 5.4 (By Executive Without Good Reason) or Section 5.5 (By the Company For Cause), (i)
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, (ii) Executive shall continue
to receive Executive’s Base Compensation and benefits as otherwise provided under this Agreement
through the Effective Date of Termination and (iii) after 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 paragraph (f) 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, the effective date of Executive’s Disability
under Section 5.2 and the date specified in the written notice of termination for a termination
under Sections 5.3, 5.4, 5.5, or 5.6, which date shall not be less than thirty (30) days, nor more
than forty-five (45) days, unless cured by the Executive or the Company, following the date
such written notice is delivered to Executive or the Company, as applicable.



     In the event that Executive’s employment is terminated pursuant to Section 5.1 (Death),
Section 5.2 (Disability), Section 5.3 (By the Company Without Cause), or Section 5.6 (By Executive
For Good Reason) and such an employment termination qualifies as a “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”), (i) 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 determined in accordance with this Section 5.7 and (ii) Executive or Executive’s trust
or estate, as applicable shall be entitled to severance pay and benefits as set forth in
subparagraphs (a) through (e) below, provided that not later than sixty (60) days



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following Executive’s 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
(or Executive’s trust or estate, as applicable) has not revoked, a general release of claims
against the Company, its Board, its affiliates, and their employees and agents in the form
attached hereto as Exhibit A, or, in the event of a change in the law that would limit the
effect of the general release of claims attached as Exhibit A, a general release of claims
that would have the same scope and effect as the general release of claims attached hereto as
Exhibit A had as of the Date of this Agreement (the “General Release”), and
Executive is not in material breach of any of the material provisions of this Agreement. The
Company shall provide Executive (or Executive’s trust or estate, as applicable) with any proposed
amendments to Exhibit A, the General Release, not later than one (1) week following
Executive’s Separation from Service. In the event that Executive’s employment is terminated
pursuant to Section 5.2 (Disability), Section 5.3 (By the Company Without Cause) or Section 5.6 (By
Executive 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.



          (a) Amount. In addition to other compensation payable to Executive for services
rendered through the Effective Date of Termination, during the sixty-five (65) day period following
the date on which Executive’s Separation from Service occurs, the Company shall pay Executive an
amount (the “Severance Amount”), in a single lump sum cash payment, equal to the following:





          (i) in the event of termination under Section 5.1 (Death) or Section 5.2 (Disability),
the sum of one (1) year’s Base Compensation and one (1) times the highest annual
bonus received by Executive in the three (3) year period immediately preceding the Effective
Date of Termination; or




          (ii) in the event of termination under Section 5.3 (By the Company Without Cause) or
Section 5.6 (By the Executive For Good Reason), the sum of:




          (A) two (2) times the highest rate of Executive’s annual Base Compensation in
effect during the three (3) year period immediately preceding the Effective Date of
Termination,




          (B) two (2) times the highest annual bonus received by Executive in the three
(3) year period immediately preceding the Effective Date of Termination, and




          (C) a prorated bonus for the year in which the termination occurs determined by
multiplying the highest annual bonus received by the Executive in the three (3) year
period immediately preceding the Effective Date of Termination 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 365.


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.




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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, restricted stock and other equity-based awards held by Executive shall immediately vest as
of the Effective Date of Termination (the “Vesting”).




          (c) Benefits. In addition to the Severance Amount and the Vesting, during the
sixty-five (65) day period following the date on which Executive’s Separation from Service occurs,
the Company shall pay to Executive in a single lump sum, an amount equal to twenty-four (24) times
the applicable monthly COBRA premium for Executive and his covered dependents (the “COBRA
Benefits”). The payment of the COBRA Benefits shall not affect Executive’s eligibility to
elect to continue health care benefits under COBRA at Executive’s own expense. Nothing in this
Section 5.7 shall be deemed to extend Executive’s right to continuation coverage under COBRA or any
applicable law beyond his period of eligibility thereunder.




          (d) Life and/or Disability Insurance. In addition to the Severance Amount, the Vesting and
the COBRA Benefits, the Company shall pay to Executive (or his trust or estate, as applicable) a
lump sum cash payment, during the sixty-five (65) day period following the date on which
Executive’s Separation from Service occurs, in lieu of two years of life and disability insurance
coverage (the “Insurance Payment”). The Insurance Payment will be an amount equal to four hundred
percent (400%) of the total premiums that would be paid by the Company and the Executive pursuant
to the Company’s life and disability insurance plans in order to provide Executive with the
standard benefits provided under such plans for the insurance contract year in which the Effective
Date of Termination occurs.




          (e) Pension Supplement. In addition to the Severance Amount, the Vesting, the COBRA Benefits
and the Insurance Payment, the Company shall pay to Executive (or his trust or estate, as
applicable) a lump sum cash payment (the “Pension Supplement”), if applicable, in an amount equal
to the lump sum value of the retirement pension to which Executive would have been entitled under
the Company’s pension plan, excess benefit plan and supplemental retirement plan, if any, if
Executive’s employment had continued for an additional period of twenty four (24) months, reduced
by the present value (determined as of Executive’s normal retirement date) of Executive’s actual
benefits under the Company’s pension plan, excess benefit plan and supplemental retirement plan.
The Pension Supplement shall be paid to Executive during the sixty-five (65) day period following
the date on which Executive’s Separation from Service occurs.




          (f) Payments on Termination for “Cause” under Section 5.5(c). In the event that
Executive’s employment is terminated pursuant to Section 5.5 (By the Company For Cause) on the
basis of events constituting “Cause” only under clause (c) of the definition of “Cause” and such
employment termination constitutes a Separation from Service, the Company shall pay to
Executive three installment payments each of which will be in an amount equal to one-twelfth
(1/12) of Executive’s Base Compensation as of the Effective Date of Termination, provided that
Executive is not otherwise in material breach of any of the provisions of this Agreement, including
without limitation, Sections 6 and 7. The installment payments described in the preceding sentence
will be paid to Executive on the thirtieth (30th), sixtieth (60th) and
ninetieth




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(90th) days after Executive’s Separation from Service, provided that, in any event,
all amounts due pursuant to the preceding sentence that have not yet been paid by March 14 of the
year following the year in which Executive’s Separation from Service occurs shall be paid on such
date. The amount described in this Section 5.7(f) 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 (30) day period following Executive’s Separation from Service, the
Company may elect, but shall not be obligated, to offer to Executive an additional amount (such
amount, the “Section 5.7 Payment”) equal to the Monthly Payment, defined below, multiplied
by a number selected by the Company that shall be not less than one (1) nor more than twenty-one
(21) (the “Multiplier”). The “Monthly Payment” shall be equal to:





          (i) one-twelfth (1/12) of the highest rate of Executive’s annual Base Compensation in
effect during the three (3) year period immediately preceding the Effective Date of
Termination; plus




          (ii) one-twelfth (1/12) of the highest annual bonus received by Executive for a twelve
(12) month fiscal or twelve (12) month bonus year in the three (3) year period immediately
preceding the Effective Date of Termination.



     If the Company, in its discretion, decides to offer a Section 5.7 Payment, such payment will
be in consideration for Executive’s agreement to extend the Post-Termination Non-Compete Period
described in Section 7.2(b). The Company shall structure the Section 5.7 Payment to comply with
Code Section 409A or an exception thereto. In addition, in order to be eligible to receive the
Section 5.7 Payment, within sixty (60) days following the Company’s offer, 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, the General Release, and
Executive must not be in material breach of any of the material provisions of this Agreement,
including without limitation, Sections 6 and 7. Subject to Section 5.11(a), the Section 5.7
Payment shall be payable in a number of equal monthly installments equal to the Multiplier. The
first monthly installment of the Section 5.7 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 Additional “Change in Control” Severance Benefits. 



          (a) General Rule. In addition to the severance payments and benefits to which
Executive may become entitled under Section 5.7, including without limitation, the Section 5.7
Payment, if Executive’s employment is terminated in connection with a Change in Control, as
determined in accordance with this Section 5.8, Executive shall also be entitled to the severance
payments and benefits set forth in subparagraphs (i) through (iii) below (collectively, the
“Additional Change in Control Benefits”), provided, that not later than sixty (60) days
following Executive’s 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
(or Executive’s trust or estate, as applicable) has not revoked, the General Release (Change in
Control) attached hereto as Exhibit B, and Executive is not in material breach of any of
the provisions of this Agreement, including, without limitation, Sections 6.




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               (i) Additional Severance. In the event of Executive’s termination of employment under
Section 5.1 (Death) or Section 5.2 (Disability), a lump sum cash payment during the sixty-five (65)
day period following the date on which Executive’s Separation from Service occurs, in an amount
equal to the excess of:




               (A) two (2) times the sum of:




               (1) the highest rate of Executive’s annual Base Compensation in effect during
the three (3) year period immediately preceding the Effective Date of Termination,
plus




               (2) the highest annual bonus received by Executive in the three (3) year period
immediately preceding the Effective Date of Termination; less




               (B) the Severance Amount.



               (ii) Reasonable Legal Fees. Reimbursement of all reasonable legal fees and expenses
(including but not limited to fees and expenses in connection with any arbitration) incurred by
Executive as a result of his termination of employment (including, without limitation, all such
fees and expenses, if any, incurred by Executive in contesting or disputing such termination of
employment, in seeking to obtain or enforce any right or benefit provided by this Agreement, or in
interpreting this Agreement), unless Executive’s claim is determined by a court of competent
jurisdiction to be frivolous or otherwise without merit. The Company shall pay such fees and
expenses, and the Executive shall be entitled to recover such fees and expenses, only if such fees
and expenses are incurred during the ten (10) year period following the Effective Date of
Termination and Executive submits documentation of such fees and expenses within ninety (90) days
of the date such fees and expenses are incurred. The legal fees and expenses paid to the
Executive, or subject to recovery by the Executive, for any taxable year of the Executive shall not
affect the legal fees and expenses paid to the Executive or subject to recovery by the Executive,
for any other taxable year of the Executive. The Executive’s right to payment or recovery of legal
fees and expenses shall not be subject to liquidation or exchange for any other benefit. The
reimbursement of eligible fees and expenses pursuant to this Section 5.8(a)(ii) shall be made
during the thirty (30) day period following the Company’s receipt of documentation for such fees
and expenses; provided, that in no event shall reimbursement of an eligible fee or expense be made
after the last day of Executive’s taxable year following the taxable year in which such fee or
expense was incurred.



               (iii) Cancellation of Forfeiture Provisions. The forfeiture provisions of any stock
option agreements with Executive regarding the Company’s rights to profits from the exercise of
options within three (3) years of Executive’s termination shall be null and void.



          (b) Definitions.




               (i) For purposes of this Section 5.8, Executive’s employment shall be deemed to be terminated
“in connection with a Change in Control” if:



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                    (A) Executive’s employment is terminated under Section 5.3 (Without Cause) subsequent to the
announcement of a Change of Control or on or within twenty-four (24) months following the
consummation of a Change in Control;



                    (B) Executive’s employment is terminated under Section 5.6 (For Good Reason) subsequent to the
announcement of a Change of Control or on or within twenty-four (24) months following the
consummation of the most recent Change in Control;



                    (C) Executive’s employment is terminated under Section 5.1 (Death) or Section 5.2 (Disability)
subsequent to the announcement of a Change of Control or on or within twelve (12) months following
the consummation of the most recent Change in Control;



                    (D) Executive’s employment is terminated under Sections 5.2 (Disability), Section 5.3 (Without
Cause) and 5.6 (By the Executive for Good Reason) within twelve (12) months prior to the
consummation of a Change in Control.



               (ii) For purposes of this Agreement, “Change in Control” shall mean each occurrence of
any 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 (1) the then outstanding shares of
common stock of the Company (the “Outstanding Common Stock”) or (2) the combined voting
power of the then outstanding securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Voting Securities”); excluding, however, the following: (a)
any acquisition directly from the Company (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 Company), (b) any acquisition by the Company, (c) any
acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company
or any corporation controlled by the Company or (d) any acquisition by any corporation pursuant to
a transaction which complies with clauses (1), (2) and (3) of subsection (C) of this definition of
“Change in Control”;



                    (B) individuals who, as of the date hereof constitute the Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of such Board; provided that
any individual who becomes a director of the Company subsequent to such date whose election or
nomination for election by the Company’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; and provided further, that any individual who was initially elected as a director
of the Company as a result of a solicitation of proxies or consents by or on behalf of any Person
other than the Board 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 Company (a “Corporate Transaction”);



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excluding, however, a Corporate Transaction pursuant to which (1) 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, as the case may be, 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 Company’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, (2) no Person (other than: the Company;
any employee benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company; the corporation 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 (3) 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.




     5.9 Change in Control Accelerated Vesting. Notwithstanding anything to the contrary
in any plan document or award agreement, all unvested stock options, restricted stock and other
equity-based awards granted to Executive by the Company shall immediately vest and become
exercisable (if applicable) immediately prior to the consummation of a Change in Control.



     5.10 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
Executive, within thirty (30) days of any payments giving rise to excise tax, an additional amount
(the “gross-up payment”) such that the net amount retained by Executive, after deduction of
any excise tax on the Total Payments and any federal, state and local income and employment tax and
excise tax on the gross-up payment provided for by this Section 5.10, will equal the Total
Payments. For purposes of determining the amount of the gross-up payment, Executive will be deemed
to pay federal, state and local income taxes at Executive’s actual marginal rate of federal, state
and local income taxation in the calendar year that the payment or benefit to which the excise tax
relates is to be made or provided, 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



11









 







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 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,
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 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. The gross-up payment and any
payment of any income or other taxes to be paid by the Company under this Section 5.10 shall be
made not later than the end of Executive’s taxable year next following Executive’s taxable year in
which Executive remits the related taxes.



     (a) 5.11 Delayed Distributions and Code Section 409A Compliance.



          (a) Six-Month Delay for Specified Employees. If Executive is a “specified employee,”
as defined in Code Section 409A(a)(2)(B)(i), on the date of Executive’s Separation from Service,
the payments or benefits under this Agreement subject to Code Section 409A shall be delayed to the
extent necessary to avoid a prohibited distribution under Section 409A(a)(2)(B)(i) of the Code, and
such payments or benefits shall be paid or distributed to Executive (or his estate) during the
thirty (30) day period commencing on the earlier of (i) the expiration of the six (6) month period
measured from the date of Executive’s Separation from Service or (ii) the date of Executive’s
death. Upon the expiration of the applicable six (6) month period under Section 409A(a)(2)(B)(i)
of the Code, all payments deferred pursuant to this Section 5.11 shall be paid in a lump sum
payment to Executive. Any remaining payments due under the Agreement shall be paid as otherwise
provided herein.




          (b) Section 409A Compliance Strategy. The Company intends that the following payments
due under this Agreement qualify for the short-term deferral exception to Code Section 409A (as
described in Treas. Reg. § 1.409A-1(b)(4)) and therefore are not subject to the six-month delay
described in paragraph 5.11(a): the Severance Amount described in Section 5.7(a), the COBRA
Benefits described in Section 5.7(c), the Insurance Payment described in Section 5.7(d), the
Pension Supplement described in Section 5.7(e), the standard payments described in Section 5.7(f),
and the Additional Severance described in Section 5.8(a)(i). This Agreement shall be interpreted
and administered on the basis of the Company’s intentions unless the Company concludes, based upon
the advice of counsel selected by the Company, that a particular payment does not qualify for the
exceptions described above. If the Company decides to pay to Executive the Section 5.7 Payment,
such payment shall be paid in compliance with Code Section 409A unless the Company concludes that
an exception to Code Section 409A applies, in which case the payment shall be paid in a manner that
is exempt from Code Section 409A. The Company has concluded that the legal fee reimbursement
payments provided under Section 5.8(a)(ii) and the tax gross-up payments provided under Sections
5.10 and 5.14 may be subject to the requirements of Code Section 409A. To ensure that such



12









 






payments comply with Code Section 409A, the payments are payable at a specified time or
pursuant to a fixed schedule within the meaning of Treas. Reg. § 1.409A-3(i)(1)(iv).




     5.12 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 received by Executive from any other source.



     5.13 Termination of Rights under the Executive Retention Plan. Effective upon
execution of this Agreement by Executive and the Company, Executive’s participation in the Medicis
Pharmaceutical Corporation Amended and Restated Executive Retention Plan (the “Executive
Retention Plan”) shall terminate and Executive shall have no further rights to receive any
severance, payments or benefits under such plan. Upon request by the Company, Executive shall
execute and deliver such additional agreements or other instruments (if any) reasonably necessary
or appropriate to terminate Executive’s rights under the Executive Retention Plan.



     5.14 Limited Section 409A Payments. One of the purposes of this amended and restated
Agreement is to comply with the documentation requirements of Code Section 409A. The Company has
assumed the responsibility to modify this Agreement to satisfy these requirements. It is the
Company’s intention that any payment due to Executive under the Agreement that is subject to Code
Section 409A will be paid in compliance with the requirements of Code Section 409A. If it is
finally determined by a court of competent jurisdiction that a particular provision of this
Agreement does not comply with the documentation requirements of Code Section 409A, or that a
particular payment due under this Agreement has not been paid in compliance with the requirements
of Code Section 409A, and it is not possible to correct such noncompliance pursuant to any
correction programs available to the Company, the Company will reimburse Executive for any
additional tax imposed under Code Section 409A on amounts paid hereunder. Any additional payment
to be paid by the Company under this Section 5.14 shall be made not later than the end of
Executive’s taxable year next following Executive’s taxable year in which Executive remits the
related taxes.



     The Company has the right to challenge in a court of competent jurisdiction any determinations
made by the Internal Revenue Service with respect to the imposition of any additional tax under
Code Section 409A. If the Company agrees to indemnify Executive from any taxes, interest and
penalties that may be imposed upon Executive (including any taxes, interest and penalties on the
amounts paid pursuant to the Company’s indemnification agreement), Executive must cooperate fully
with the Company in connection with any such challenge. The Company shall bear all costs
associated with the challenge of any determination made by the Internal Revenue Service and the
Company shall control all such challenges. Executive must notify the Company in writing of any
claim or determination by the Internal Revenue Service that, if upheld, would result in the payment
of additional taxes pursuant to Code Section 409A. Such notice shall be given as soon as possible
but in no event later than fifteen (15) days following Executive’s receipt of notice of the
Internal Revenue Service’s position. The Company’s decision to challenge the imposition of
additional taxes upon Executive under this Section 5.14 shall not be subject to the alternative
dispute resolution provisions set forth in Section 8.



13









 





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. Confidential Information shall not include information which is
generally known to the public or in the industry or which becomes known other than through a breach
of this Agreement by the Executive. 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 intentionally
disclose Confidential Information to any person or entity other than the Company and its employees
or other persons authorized by the Company to receive the information, 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.



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 Section 5.2 (Disability), Section 5.3 (By the
Company Without Cause) or Section 5.6 (By Executive For Good Reason) following a Change in Control,
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 in the event the Company has reduced or changed its line(s) of business as
of the date on which the Post-Termination Non-Compete Period begins, any business that engages in
the line(s) of business in which the Company is engaged on such date (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



14









 






Company or the Board; provided, however, that Executive’s passive ownership of securities
shall not be a violation of this Section 7.2 if such securities represent:





          (i) less than one percent (1%) of the publicly traded securities of any Large Publicly
Traded Entity (determined at the time of Executive’s investment); or




          (ii) less than $500,000 and less than five percent (5%) of the securities of any entity
that is not a Large Publicly Traded Entity.


Notwithstanding the foregoing, during the Term and throughout the Post-Termination Non-Compete
Period, as defined in Section 7.2(b) below, 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 twenty (20) hours in the aggregate during any month
and not more than one hundred and fifty (150) hours in the aggregate during any twelve (12) month
period in any such capacity; provided, that (1) Executive voluntarily resigns from the Company
pursuant to Section 5.4 (By Executive Without Good Reason) on or after the date Executive reaches
the age of sixty-three (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. This Section 7.2 shall not apply during any period
of time following a material breach by the Company of its obligations under Section 5.7 and Section
5.8 of this Agreement, which breach was not remedied within thirty (30) days after delivery to the
Company by Executive of a written notice specifically identifying the breach that Executive
believes has occurred.




          (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 ninety (90) day period
immediately following the Effective Date of Termination, if Executive is terminated under Section
5.5(c) and Executive is not offered a Section 5.7 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) and the Section 5.7 Payment is offered to
Executive.




          (c) 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. Subject to Section 5.14, 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,



15









 







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 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. Executive and the Company will select a single neutral
arbitrator by mutual agreement. If Executive and the Company are unable to agree on a neutral
arbitrator within thirty (30) 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 (30) 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.



16









 





     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,
provided, however, that in the event of a termination in connection with a Change in Control (as
defined in Section 5.8, above) the Company shall pay Executive’s costs of arbitration and attorneys
fees in accordance with Section 5.8(c)(ii) above.



     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
	 

	 	7720 N. Dobson Road
	 

	 	Scottsdale, AZ 85256
	 

	 	Attention: Chief Executive Officer
	 

	 	Facsimile: (480) 291-5175
	 
	 	 
	with a copy to:

	 	Medicis Pharmaceutical Corporation
	 

	 	7720 N. Dobson Road
	 

	 	Scottsdale, AZ 85256
	 

	 	Attention: General Counsel
	 

	 	Facsimile: (480) 291-8508






17









 






	 	 	 
	If to Executive:

	 	Mark A. Prygocki
	 

	 	7720 N. Dobson Road
	 

	 	Scottsdale, AZ 85256
	 

	 	Facsimile: (480) 419-2759






     In the event that the Executive is no longer receiving delivery of mail at the above address,
the default notice address will be the Executive’s home address confidentially held by the Human
Resources Department. 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. Except for the Indemnification Agreement and any other
agreement approved by the Board for the benefit and protection of the Executive, this Agreement
constitutes the entire agreement of the parties with respect to the subject matter hereof, and
supersedes all prior representations, warranties, agreements and understandings, both written and
oral, made by the Company or any of its affiliates, representatives or agents with respect to the
payments and benefits Executive would otherwise be eligible to receive under the Original
Employment Agreement, the Executive Retention Plan or otherwise; 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.



     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 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.



     9.7 Attorneys’ Fees. If any legal action, arbitration or other proceeding, is brought
against Executive, the Company will be responsible for the reimbursement of all reasonable legal
fees and expenses (including but not limited to fees and expenses in connection with any



18









 







arbitration) incurred by Executive as a result of his termination of employment or otherwise,
unless Executive’s claim is determined by a court of competent jurisdiction to be frivolous or
otherwise without merit. The Company shall pay such fees and expenses, and the Executive shall be
entitled to recover such fees and expenses, only if Executive submits documentation of such fees
and expenses within ninety (90) days of the date such fees and expenses are incurred. The legal
fees and expenses paid to the Executive, or subject to recovery by the Executive, for any taxable
year of the Executive shall not affect the legal fees and expenses paid to the Executive or subject
to recovery by the Executive, for any other taxable year of the Executive. The Executive’s right
to payment or recovery of legal fees and expenses shall not be subject to liquidation or exchange
for any other benefit. The reimbursement of eligible fees and expenses pursuant to this Section
5.8(c) shall be made during the thirty (30) day period following the Company’s receipt of
documentation for such fees and expenses.



     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 believes 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, meeting with and reviewing documents
provided by the Company and its agents, accountants and attorneys during normal business hours or
other mutually agreeable hours upon reasonable notice and making himself available for depositions
and hearings, if requested and upon reasonable notice. If Executive’s cooperation is required
after the termination of Executive’s employment, the Company shall reimburse Executive for any
reasonable out of pocket expenses incurred and any wages lost by Executive in the course of
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, COBRA Benefits,
Insurance Payment, Pension Supplement, Section 5.7 Payment, Additional Change in Control Benefits



19









 







and/or payments under Section 5.10, 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




	 	 	 	 	 
	 

	 	/s/ Jonah Shacknai
	 	Date: December 23, 2008
	By:

	 	Jonah Shacknai	 	 
	 

	 	Its: Chairman of the Board
of Directors 

and Chief
Executive Officer	 	 
	 
	 	 	 	 
	EXECUTIVE:	 	 
	 

	 	 	 	Date: December 23, 2008
	 
	 	 	 	 
	/s/ Mark A. Prygocki	 	 
	Mark A. Prygocki	 	 







20









 








Schedule A




List of Organizations




Whispering Hope Ranch Foundation

Visions of Hope




 









 








Exhibit A




GENERAL RELEASE AGREEMENT




     This General Release of Claims (this “Release”) is made by Mark A. Prygocki
(“Executive”) in favor or Medicis Pharmaceutical Corporation (the “Company”) and
the “Company Releasees” (as defined below), as of the date of Executive’s execution of this
Release.



1. RELEASE BY EXECUTIVE




     1.1 General Release. In exchange for certain severance payments and benefits provided
for in the Amended and Restated Employment Agreement entered into by and between the Company and
Executive, dated as of December 22, 2008 to which this Release is an exhibit (the “Employment
Agreement”), Executive does hereby release and forever discharge the “Company
Releasees” herein, consisting of the Company, its parent, subsidiary and affiliate
corporations, and each of their respective past and present parents, subsidiaries, affiliates,
associates, owners, members, stockholders, predecessors, successors, assigns, employees, agents,
directors, officers, partners, representatives, lawyers, and all persons acting by, through, under,
or in concert with them, or any of them, of and from any and all manner of claims or causes of
action, in law or in equity, of any nature whatsoever, known or unknown, fixed or contingent
(hereinafter called “Claims”), that Executive now has or may hereafter have against the
Company Releasees by reason of any and all acts, omissions, events or facts occurring or existing
prior to Executive’s execution of this Release. The Claims released hereunder include, without
limitation, any alleged breach of any express or implied agreement (including without limitation
the Employment Agreement); any alleged torts or other alleged legal restrictions relating to the
Executive’s service to the Company and the termination thereof; and any alleged violation of any
federal, state or local statute or ordinance including, without limitation, Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. § 2000, et seq.; the Americans with
Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of
1973, as amended, 29 U.S.C. § 701 et seq.; the Age Discrimination in Employment
Act, as amended, 29 U.S.C. § 621, et seq. (“ADEA”); the Civil Rights Act of
1866, and the Civil Rights Act of 1991; 42 U.S.C. § 1981, et seq.; the Equal Pay
Act, as amended, 29 U.S.C. § 206(d); regulations of the Office of Federal Contract Compliance, 41
CFR § 60, et seq.; the Worker Adjustment and Retraining Notification Act, as
amended, 29 U.S.C. § 2101 et seq; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601
et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201
et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001
et seq.; and any state or local laws of similar effect. This release shall not
apply to the Company’s obligations to provide severance benefits under the Employment Agreement, to
Executive’s rights to indemnification under the Indemnification Agreement and the Employment
Agreement, the Articles or Bylaws of the Company or applicable law, to claims for workers’
compensation benefits, or Executive’s vested rights under any stock option, restricted stock,
retirement or welfare benefit plan.



1









 





     1.2 Rights Under the Older Worker’s Benefit Protection Act. Executive agrees and
expressly acknowledges that this Release includes a waiver and release of all claims which he has
or may have under the Older Worker’s Benefit Protection Act and the ADEA. The following terms and
conditions apply to and are part of the waiver and release of the Older Worker’s Benefit Protection
Act claims and ADEA claims under this Release:



          (a) This paragraph, and this Release are written in a manner calculated to be understood by
Executive.




          (b) The waiver and release of claims under the ADEA contained in this Release does not cover
rights or claims that may arise after the date on which he signs this Release.




          (c) The Employment Agreement provides for consideration in exchange for this release in
addition to anything of value to which Executive is already entitled.




          (d) Executive has been advised to consult an attorney before signing this Release and the
Employment Agreement.




          (e) Executive has been granted not less than twenty-one (21) days (or forty-five (45) days in
the event of an exit incentive or other employment termination program) after Executive is
presented with this Release and the Effective Date of Termination (as defined in the Employment
Agreement) to decide whether or not to sign this Release. If Executive executes this Release prior
to the expiration of such period, Executive does so voluntarily and after having had the
opportunity to consult with an attorney, and hereby waives the remainder of the twenty-one (21) day
period (or forty-five (45) day period, if applicable).




          (f) Executive has the right to revoke this Release within seven (7) days of signing this
Release. In the event this Release is revoked, Executive understands that this Release will be
null and void, and he will not be entitled to any compensation or benefits under the Employment
Agreement which are expressly conditioned upon the execution and non-revocation of this Release.




          If Executive wishes to revoke this Release, Executive shall deliver written notice stating his
intent to revoke this Release to the Chairman of the Board of Directors, at the offices of the
Company on or before 5:00 p.m. on the seventh (7th) day after the date on which he signs
this Release.




     1.3 No Assignment. Executive represents and warrants to the Company Releasees that
there has been no assignment or other transfer of any interest in any Claim that the Executive may
have against the Company Releasees, or any of them. Executive agrees to indemnify and hold
harmless the Company Releasees from any liability, claims, demands, damages, costs, expenses and
attorneys’ fees incurred as a result of any person asserting such assignment or transfer of any
right or claims under any such assignment or transfer from Executive.



     1.4 No Actions. Executive agrees that if Executive hereafter commences, joins in, or
in any manner seeks relief through any suit arising out of, based upon, or relating to any of the



2









 







Claims released hereunder or in any manner asserts against the Company Releasees any of the
Claims released hereunder, then Executive will pay to the Company Releasees against whom such
claim(s) is asserted, in addition to any other damages caused thereby, all attorneys’ fees incurred
by such Company Releasees in defending or otherwise responding to said suit or Claim. Provided,
however, that Executive shall not be obligated to pay the Company Releasees’ attorneys’ fees to the
extent such fees are attributable to claims under the ADEA or a challenge to the validity of the
release of claims under the ADEA.



2. MISCELLANEOUS




     2.1 No Admission. Executive understands and agrees that neither the payment of money
nor the execution of this Release shall constitute or be construed as an admission of any liability
whatsoever by the Company Releasees.



     2.2 Severability. The provisions of this Release are severable, and if any part of
this Release is found to be unenforceable, the other paragraphs (or portions thereof) shall remain
fully valid and enforceable.



     2.3 No Encouragement of Actions Against the Company. Executive agrees that except to
the extent required by law, Executive will not assist any person in bringing or pursuing legal
action against the Company, its agents, successors, representatives, employees and related and/or
affiliated companies, based on events occurring prior to Executive’s execution of this Release.



     2.4 Headings. The headings in this Release are provided solely for convenience, and
are not intended to be part of, nor to affect or alter the interpretation or meaning of, this
Release.



     2.5 Construction of Agreement. Executive has been represented by, or had the
opportunity to be represented by, counsel in connection with the negotiation and execution of this
Release. Any rule of construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of this Release.



	 	 	 	 	 
	 

	 	 	 	Executive
	 
	 	 	 	 
	Date:                                         	 	 	 	 
	 

	 	 
	 	 
	 

	 	 	 	Mark A. Prygocki






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Exhibit B




GENERAL RELEASE AGREEMENT (CHANGE IN CONTROL)




     This General Release of Claims (this “Release”) is made by and between Mark A.
Prygocki (“Executive”) and Medicis Pharmaceutical Corporation (the “Company”), as
of the date of the execution of this Release.



1. RELEASE BY EXECUTIVE




     1.1 General Release. In exchange for certain severance payments and benefits provided
for in the Amended and Restated Employment Agreement entered into by and between the Company and
Executive, dated as of December 22, 2008 to which this Release is an exhibit (the “Employment
Agreement”), Executive does hereby release and forever discharge the “Company
Releasees” herein, consisting of the Company, its parent, subsidiary and affiliate
corporations, and each of their respective past and present parents, subsidiaries, affiliates,
associates, owners, members, stockholders, predecessors, successors, assigns, employees, agents,
directors, officers, partners, representatives, lawyers, and all persons acting by, through, under,
or in concert with them, or any of them, of and from any and all manner of claims or causes of
action, in law or in equity, of any nature whatsoever, known or unknown, fixed or contingent
(hereinafter called “Claims”), that Executive now has or may hereafter have against the
Company Releasees by reason of any and all acts, omissions, events or facts occurring or existing
prior to Executive’s execution of this Release. The Claims released hereunder include, without
limitation, any alleged breach of any express or implied agreement (including without limitation
the Employment Agreement); any alleged torts or other alleged legal restrictions relating to the
Executive’s service to the Company and the termination thereof; and any alleged violation of any
federal, state or local statute or ordinance including, without limitation, Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. § 2000, et seq.; the Americans with
Disabilities Act, as amended, 42 U.S.C. § 12101 et seq.; the Rehabilitation Act of
1973, as amended, 29 U.S.C. § 701 et seq.; the Age Discrimination in Employment
Act, as amended, 29 U.S.C. § 621, et seq. (“ADEA”); the Civil Rights Act of
1866, and the Civil Rights Act of 1991; 42 U.S.C. § 1981, et seq.; the Equal Pay
Act, as amended, 29 U.S.C. § 206(d); regulations of the Office of Federal Contract Compliance, 41
CFR § 60, et seq.; the Worker Adjustment and Retraining Notification Act, as
amended, 29 U.S.C. § 2101 et seq; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601
et seq.; the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201
et seq.; the Employee Retirement Income Security Act, as amended, 29 U.S.C. § 1001
et seq.; and any state or local laws of similar effect. This release shall not
apply to the Company’s obligations to provide severance benefits under the Employment Agreement, to
Executive’s rights to indemnification under the Employment Agreement, the Articles or Bylaws of the
Company or applicable law, to claims for workers’ compensation benefits, or Executive’s vested
rights under any stock option, restricted stock, retirement or welfare benefit plan.



     1.2 Rights Under the Older Worker’s Benefit Protection Act. Executive agrees and
expressly acknowledges that this Release includes a waiver and release of all claims which he has
or may have under the Older Worker’s Benefit Protection Act and the ADEA. The following



4









 







terms and conditions apply to and are part of the waiver and release of the Older Worker’s
Benefit Protection Act claims and ADEA claims under this Release:



          (a) This paragraph, and this Release are written in a manner calculated to be understood by
Executive.




          (b) The waiver and release of claims under the ADEA contained in this Release does not cover
rights or claims that may arise after the date on which he signs this Release.




          (c) The Employment Agreement provides for consideration in exchange for this release in
addition to anything of value to which Executive is already entitled.




          (d) Executive has been advised to consult an attorney before signing this Release and the
Employment Agreement.




          (e) Executive has been granted not less than twenty-one (21) days (or forty-five (45) days in
the event of an exit incentive or other employment termination program) after Executive is
presented with this Release and the Effective Date of Termination (as defined in the Employment
Agreement) to decide whether or not to sign this Release. If Executive executes this Release prior
to the expiration of such period, Executive does so voluntarily and after having had the
opportunity to consult with an attorney, and hereby waives the remainder of the twenty-one (21) day
period (or forty-five (45) day period, if applicable).




          (f) Executive has the right to revoke this Release within seven (7) days of signing this
Release. In the event this Release is revoked, Executive understands that this Release will be
null and void, and he will not be entitled to any compensation or benefits under the Employment
Agreement which are expressly conditioned upon the execution and non-revocation of this Release.




          If Executive wishes to revoke this Release, Executive shall deliver written notice stating his
intent to revoke this Release to the Chairman of the Board of Directors, at the offices of the
Company on or before 5:00 p.m. on the seventh (7th) day after the date on which he signs
this Release.




     1.3 No Assignment. Executive represents and warrants to the Company Releasees that
there has been no assignment or other transfer of any interest in any Claim that the Executive may
have against the Company Releasees, or any of them. Executive agrees to indemnify and hold
harmless the Company Releasees from any liability, claims, demands, damages, costs, expenses and
attorneys’ fees incurred as a result of any person asserting such assignment or transfer of any
right or claims under any such assignment or transfer from Executive.



     1.4 No Actions. Executive agrees that if Executive hereafter commences, joins in, or
in any manner seeks relief through any suit arising out of, based upon, or relating to any of the
Claims released hereunder or in any manner asserts against the Company Releasees any of the Claims
released hereunder, then Executive will pay to the Company Releasees against whom such claim(s) is
asserted, in addition to any other damages caused thereby, all attorneys’ fees



5









 







incurred by such Company Releasees in defending or otherwise responding to said suit or Claim.
Provided, however, that Executive shall not be obligated to pay the Company Releasees’ attorneys’
fees to the extent such fees are attributable to claims under the ADEA or a challenge to the
validity of the release of claims under the ADEA.



2. RELEASE BY COMPANY




     2.1 Release of Executive. In consideration of the promises set forth in this
Agreement, the Company hereby releases and forever discharges Executive from any and all claims,
complaints, causes of action, and demands of any kind, whether known or unknown, which Company has,
ever has had, or may have arising out of or related to the performance of Executive’s services to
Company as its Executive Vice President and Chief Operating Officer, but only to the extent to
which Executive is or would be entitled to indemnification pursuant to a written agreement entered
into with the Company with respect to such claim, complaint, cause of action or demand. The
purpose of this Section 2.1 is to release Executive only from those claims, complaints, causes of
action and demands with respect to which he is entitled to indemnification pursuant to a written
agreement entered into with the Company and this Section 2.1 shall be interpreted in a manner
consistent with this purpose.



3. MISCELLANEOUS




     3.1 No Admission. Executive understands and agrees that neither the payment of money
nor the execution of this Release shall constitute or be construed as an admission of any liability
whatsoever by the Company Releasees.



     3.2 Severability. The provisions of this Release are severable, and if any part of
this Release is found to be unenforceable, the other paragraphs (or portions thereof) shall remain
fully valid and enforceable.



     3.3 No Encouragement of Actions Against the Company. Executive agrees that except to
the extent required by law, Executive will not assist any person in bringing or pursuing legal
action against the Company, its agents, successors, representatives, employees and related and/or
affiliated companies, based on events occurring prior to Executive’s execution of this Release.



     3.4 Headings. The headings in this Release are provided solely for convenience, and
are not intended to be part of, nor to affect or alter the interpretation or meaning of, this
Release.



     3.5 Construction of Agreement. Executive has been represented by, or had the
opportunity to be represented by, counsel in connection with the negotiation and execution of this
Release. Any rule of construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation of this Release.



     In witness whereof, Executive has executed this Agreement and Company has caused this
Agreement to be executed by its duly authorized officer, on this
___ day of ______, 200___.



6









 





	 	 	 	 	 	 	 	 	 
	 	 	 	 	Company	 	 
	 
	 	 	 	 	 	 	 	 
	Date:                                         	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 	 
	 

	 	 	 	Its	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Executive	 	 
	 
	 	 	 	 	 	 	 	 
	Date:                                         	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Mark A. Prygocki	 	 







7