10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2004.

Or

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                       .

Commission file number 0-18443

MEDICIS PHARMACEUTICAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	52-1574808
(State of other jurisdiction	(I.R.S. Employer Identification No.)
of incorporation or organization)
8125 North Hayden Road, Scottsdale, Arizona	85258-2463
(Address of principal executive office)	(Zip Code)

Registrant’s telephone number, including area code: (602)808-8800

Securities registered pursuant to Section 12(b) of the Act: Class A common stock, $0.014 par value

New York Stock Exchange	Preference Share Purchase Rights
Name of each exchange on which	(Title of each Class)
registered)

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form or any amendment to this Form 10-K [  ].

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act) Yes [X] No [  ]

The aggregate market value of the voting stock held on December 31, 2003 by non-affiliates of the registrant was $1,469,091,795 (calculated by excluding all shares held by executive officers, directors and holders known to the registrant of five percent or more of the voting power of the registrant’s common stock, without conceding that such persons are “affiliates” of the registrant for purposes of the federal securities laws). As of September 8, 2004, there were 56,946,488 outstanding shares of Class A common stock and 758,032 outstanding shares of Class B common stock.

Documents incorporated by reference:

Portions of the Proxy Statement for the registrant’s 2004 Annual Meeting of Shareholders are incorporated herein by reference in Part III of this Form 10-K to the extent stated herein.

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TABLE OF CONTENTS

PART I
	ITEM 1: BUSINESS
	ITEM 2: PROPERTIES
	ITEM 3: LEGAL PROCEEDINGS
	ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
	ITEM 5: MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
	ITEM 6: SELECTED FINANCIAL DATA
	ITEM 7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
	ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	ITEM 9A: CONTROLS AND PROCEDURES
	ITEM 9B: OTHER INFORMATION
PART III
	ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	ITEM 11: EXECUTIVE COMPENSATION
	ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
	ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
SIGNATURES
Report of Independent Registered Public Accounting Firm
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
EXHIBIT INDEX
EX-3.1
EX-4.1(d)
EX-10.1
EX-10.2
EX-10.3
EX-10.72(f)
EX-10.102
EX-10.103
EX-12
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I

ITEM 1: BUSINESS

     Medicis Pharmaceutical Corporation, together with its wholly owned subsidiaries (“Medicis”, the “Company”, or as used in the context of “we”, “us” or “our”) is a leading independent specialty pharmaceutical company focusing primarily on helping patients attain a healthy and youthful appearance and self-image through the development and marketing of products in the United States for the treatment of dermatologic, aesthetic and podiatric conditions in the United States and Canada. We believe that annual U.S. pharmaceutical sales in the dermatological market exceeds $5 billion. According to the American Society for Aesthetic Plastic Surgery, nearly 8.3 million surgical and non-surgical cosmetic procedures were performed in the United States during 2003. From 2002 to 2003, there was a 20% increase in the number of cosmetic procedures performed by physicians.

     We have built our business by executing a four-part growth strategy. This strategy consists of promoting existing core brands, developing new products and important product line extensions, entering into strategic collaborations, and acquiring complementary products, technologies and businesses.

     We offer a broad range of products addressing various conditions including acne, fungal infections, rosacea, hyperpigmentation, photoaging, psoriasis, eczema, skin and skin-structure infections, seborrheic dermatitis and cosmesis (improvement in the texture and appearance of skin). We currently offer 13 branded products. Our core brands are DYNACIN^®(minocycline HCI), LOPROX^® (ciclopirox), OMNICEF^® (cefdinir), PLEXION^® (sodium sulfacetamide/sulfur), RESTYLANE^® (hyaluronic acid) and TRIAZ^® (benzoyl peroxide). For the fiscal year ended June 30, 2004, core brands, including ORAPRED^®, accounted for approximately 87% of our total net revenues. All of our core brands enjoy branded market leadership in the segments in which they compete. Because of the significance of these brands to our business, we concentrate our sales and marketing efforts in promoting them to physicians in our target markets. We also sell a number of other products, but which are considered less critical to our business.

     In March 2003, we expanded into the dermal aesthetic market through our acquisition of the exclusive U.S. and Canadian rights to market, distribute and commercialize the dermal restorative products known as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ from Q-Med AB, a Swedish biotechnology/medical device company and its affiliates, collectively Q-Med. RESTYLANE^® has been approved by the Food and Drug Administration (the “FDA”) for use in the United States as a medical device. RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ have been approved for use in Canada. Q-Med currently promotes these market-leading, patented non-animal stabilized hyaluronic acid (“NASHA^™”) brands in over 75 countries, where over 1.5 million procedures have been performed. NASHA^™ products are manufactured by Q-Med in Uppsala, Sweden.

     RESTYLANE^® is marketed and sold in over 75 countries outside the United States. Since 1996, dermatologists and plastic surgeons outside the U.S. have used it to contour and restore volume to skin and temporarily eliminate wrinkles and facial folds. Additionally, in certain countries other than the U.S. (such as Canada), RESTYLANE^® also is approved to enhance the appearance and fullness of lips.

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OUR PRODUCTS

     We currently offer 13 branded products. Our sales and marketing efforts are currently focused on our core brands, which, during fiscal 2004, accounted for approximately 87% of our total net revenues. The following chart details certain important features of our core brands:

Brand	Treatment	U.S. Market Impact
DYNACIN®	Oral adjunctive treatment for moderate to severe acne	The number one branded minocycline product in the U.S. DYNACIN® tablets and capsules are available in a range of strengths for moderate to severe acne
LOPROX®	Topical treatment for certain fungal and yeast infections	A leading antifungal agent, including the only gel and shampoo approved for seborrheic dermatitis
OMNICEF®	A patented oral cephalosporin for skin and skin-structure infections	Superior kill rate compared to most frequently prescribed antibiotic for this indication
PLEXION®	Topical treatments for rosacea and acne-related conditions	The leading branded prescription cleanser indicated for the treatment of rosacea
RESTYLANE®	Injectable gel for treatment of fine lines and wrinkles, shaping facial contours and correcting deep facial folds	Launched on January 6, 2004, following approval by FDA
TRIAZ®	Topical patented gel, cleanser and pad treatments for acne	The leading branded prescription benzoyl peroxide product

PRESCRIPTION PHARMACEUTICALS

     Our principal branded pharmaceutical products are described below:

     DYNACIN^® is an oral antibiotic, available in 50-mg., 75-mg. and 100-mg. tablet and capsule dosage forms, and is prescribed as an adjunctive treatment for moderate to severe acne. The most commonly prescribed systemic acne treatments are tetracycline and its derivatives, minocycline and doxycycline. Minocycline, the active ingredient in DYNACIN^®, is widely prescribed for the treatment of acne for several reasons. It has a more convenient dosing schedule, one or two doses per day, as compared to other forms of tetracycline, which can require up to four doses per day. Other forms of tetracycline, including doxycycline, require ingestion on an empty stomach and have been reported to often cause gastric irritation. Moreover, the other forms of tetracycline may increase patient sensitivity to sunlight, creating a greater risk of sunburn. In addition, resistance to several commonly used antibiotics, including erythromycin, clindamycin, doxycycline and tetracycline, by the primary bacterial organism responsible for acne has been documented. Studies suggest that bacterial resistance to erythromycin, doxycycline and tetracycline exceeds 50%, while the bacteria showed virtually no resistance to minocycline. DYNACIN^® capsules were launched in fiscal 1993 with 50-mg. and 100-mg. dosage forms available. We launched DYNACIN^® capsules in a 75-mg. dosage form in fiscal 1999. During fiscal 2003, we launched DYNACIN^® in tablet form in 75-mg. and 100-mg. dosages, and we launched the 50-mg. dosage in fiscal 2004. On July 18, 2004, Glades Pharmaceuticals, LLC, a wholly owned subsidiary of Stiefel Laboratories, Inc., announced the launch of myracT (minocycline hydrochloride tablets, USP), as a branded pharmaceutical product. MyracT tablets is a prescription product that competes directly with our DYNACIN^® tablet products.

     LOPROX^® cream and topical suspension are both broad-spectrum prescription antifungal agents indicated for the topical treatment of tinea pedis, tinea corporis, tinea cruris, tinea versicolor and cutaneous candidiasis. LOPROX^® works with a unique mode of action that has been shown to have fungistatic and fungicidal properties and enhanced penetration. We believe this unique mode of action makes LOPROX^® an appropriate choice for topical treatment alone, or as concomitant treatment with an oral antifungal. For these reasons, we believe LOPROX^® is a highly effective product to manage the often-complicated mix of organisms involved in tinea infections. In clinical trials, LOPROX^® was shown to produce clinical improvement of 82% to 93% of subjects after a single week of treatment across the range of cutaneous mycoses. The most frequently prescribed topical antifungal products in addition to LOPROX^® include Spectazole^®, Nizoral^®, Oxistat^® and Lotrisone^® (steroid/antifungal combination). In

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addition to the cream and topical suspension formulations of LOPROX^®, we market LOPROX^® Gel for the treatment of seborrheic dermatitis and fungal infections. Currently, LOPROX^® Gel is the only gel approved in the United States for seborrheic dermatitis. During fiscal 2003, we launched LOPROX^® Shampoo, which is the first and only prescription antifungal shampoo approved in the United States for the treatment of seborrheic dermatitis of the scalp, a common fungal infection. On August 6, 2004, the FDA approved an Abbreviated New Drug Application (“ANDA”) submitted by Altana, Inc. for its ciclopirox topical suspension, a generic version of our LOPROX^® TS product.

     OMNICEF^® is promoted to dermatologists and podiatrists pursuant to our exclusive co-promotion agreement with Abbott Laboratories (“Abbott”). OMNICEF^® is indicated for the treatment of uncomplicated skin and skin-structure infections. Studies show that OMNICEF^® has superior pathogen eradication rates versus Cephalexin, the most frequently prescribed antibiotic for uncomplicated skin and skin-structure infections. Since May 2001, we have promoted OMNICEF^® capsules in the U.S. market to dermatologists and podiatrists. In return, we receive commission revenue from Abbott based on prescriptions generated in these categories. Our agreement with Abbott expires in 2013.

     PLEXION^® treats rosacea and acne-related conditions with internally developed cleanser and topical therapies. Rosacea is a chronic skin condition causing inflammation and redness of the face. PLEXION^® is designed to be used in conjunction with other prescription rosacea therapies. The active ingredients in our PLEXION^® products are sodium sulfacetamide and sulfur. PLEXION^®, the leading branded prescription cleanser indicated for the treatment of rosacea, was launched in fiscal 2000. The topical acne rosacea market is comprised of products such as MetroGel^®, MetroCream^® and MetroLotion^®. PLEXION TS^®, a gentle topical suspension treatment for acne, was launched in fiscal 2001. In addition, during fiscal 2002 we launched PLEXION SCT^®, a short contact therapy with a silica base that helps remove impurities from the skin pores.

     TRIAZ^®, a patented, internally developed topical therapy prescribed for the treatment of numerous forms and varying degrees of acne, is available as a gel, cleanser or pad in three concentrations. While other topical acne treatments, including Cleocin-T^®, Benzamycin^® and BenzaClin^®, are generally effective, TRIAZ^® offers advantages over each of these products, including improved stability, greater convenience of use, reduced cost and fewer side effects. TRIAZ^® products are manufactured using the active ingredient benzoyl peroxide in a patented vehicle containing glycolic acid and zinc lactate. Studies conducted by third parties have shown that benzoyl peroxide is the most efficacious agent available for eradicating the bacteria that cause acne with no reported resistance. We believe glycolic acid enhances the effectiveness of benzoyl peroxide by exfoliating the outer layer of the skin and that zinc lactate reduces the appearance of inflammation and irritation often associated with acne. We introduced the TRIAZ^® brand in fiscal 1996. During July 2003, we launched TRIAZ^® Pads, the first and only benzoyl peroxide pad available in the U.S. indicated for the topical treatment of acne vulgaris.

DERMAL RESTORATIVE PRODUCTS

     Our principal branded dermal restorative products are described below:

     RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ are injectable, transparent, NASHA^™ gels, which require no patient sensitivity tests in advance of product administration. These “tissue tailored,” transparent, injectable products have varying gel particle sizes which provide physicians with flexibility in treating fine lines and wrinkles, shaping facial contours and correcting deep facial folds. Pre-packaged, glass syringes provide physicians with various options to treat nasolabial folds, glabellar lines, periorbital lines, vermillion borders, chins, cheeks, smiles lines, worry lines and oral commissures. In the United States, the FDA regulates these products as medical devices. Medicis offers all three of these products in Canada, and began offering RESTYLANE^® in the United States on January 6, 2004. PERLANE^® and RESTYLANE FINE LINES ^™ have not yet been approved by the FDA for use in the United States. We acquired the exclusive U.S. and Canadian rights to these dermal restorative products from Q-Med through a license agreement.

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PRODUCTS IN DEVELOPMENT

     We have developed and obtained rights to pharmaceutical agents in various stages of development. We have a variety of products under development, ranging from new products to existing product line extensions and reformulations of existing products. Our strategy involves the rapid evaluation and formulation of new therapeutics by obtaining preclinical safety and efficacy data, when possible, followed by rapid safety and efficacy testing in humans. Over the next four years, our objective is to launch one new product annually through our research and development efforts. As a result of our increasing financial strength, we have begun adding long-term projects to our development pipeline and may add longer-term projects with inherently greater risk in the future. Historically, we have supplemented our research and development efforts by entering into research and development agreements with other pharmaceutical and biotechnology companies.

     Our research and development costs for sponsored and unreimbursed co-sponsored pharmaceutical projects for fiscal 2004, 2003 and 2002 were $16.5 million, $29.6 million and $15.1 million, respectively. Research and development costs for fiscal 2004 include $2.4 million paid to Dow Pharmaceutical Services, Inc. (“Dow”) for the development and commercialization of a patented dermatologic product, under an agreement that we entered into in September 2002. Research and development costs for fiscal 2003 include $14.2 million paid to Dow under this agreement and $6.0 million paid to aaiPharma, Inc. (“aaiPharma”) for a development milestone payment under an agreement that we entered into in June 2002 for the development, commercialization and license of a key dermatologic product. Research and development costs for fiscal 2002 include $7.7 million paid to aaiPharma under this agreement. In addition to the payments made during fiscal 2004, 2003 and 2002, the Dow and aaiPharma agreements include potential future payments due to Dow and aaiPharma upon the successful completion of various development milestones.

     On July 15, 2004, we entered into an exclusive license agreement with Q-Med to market, distribute, sell and commercialize in the United States and Canada Q-Med’s product currently known as SubQ^™. Q-Med will have the exclusive right to manufacture SubQ^™ for Medicis. SubQ^™ is not approved currently for use in the United States and Canada. Under the terms of the agreement, Medicis Aesthetics Holdings Inc., a wholly owned subsidiary of Medicis, will license SubQ^™ for approximately $80 million, due as follows: approximately $30 million upon closing of the transaction, which was recorded as research and development expense during the first quarter of fiscal 2005; approximately $10 million upon completion of certain clinical milestones; approximately $20 million upon the satisfaction of certain defined regulatory milestones; and approximately $20 million upon U.S. launch of SubQ^™. We also will make additional milestone payments to Q-Med upon the achievement of certain commercial milestones. SubQ^™ is comprised of the same NASHA^™ substance as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ with a larger gel particle size and is understood to have patent protection until at least 2015.

SALES AND MARKETING

     Our combined dedicated sales force, consisting of 139 employees as of June 30, 2004, focuses on high prescribing dermatologists, plastic surgeons and podiatrists. Since a relatively small number of physicians are responsible for writing a majority of prescriptions and performing dermal aesthetic procedures, we believe that the size of our sales force is appropriate to reach our target physicians. Our dermatology and podiatric sales force consists of 102 employees who regularly call on approximately 5,000 dermatologists and 3,000 podiatrists. Our dermal aesthetic sales force consists of 37 employees who regularly call on leading plastic surgeons and aesthetic dermatologists. We also have four national account managers who regularly call on managed care organizations, large retail chains, formularies and related organizations.

     We cultivate relationships of trust and confidence with the high prescribing dermatologists and podiatrists and the leading plastic surgeons in the U.S. We use a variety of marketing techniques to promote our products including sampling, journal advertising, promotional materials, specialty publications, coupons, money-back or product replacement guarantees, educational conferences and informational websites.

     We believe we have created an attractive incentive program for our sales force that is based upon goals in prescription growth and market share achievement.

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WAREHOUSING AND DISTRIBUTION

     We utilize an independent national warehousing corporation to store and distribute our products from primarily two regional warehouses in Nevada and Georgia, as well as an additional warehouse in Maryland. Upon the receipt of a purchase order through electronic data input (“EDI”), phone, mail or facsimile, the order is processed into our inventory systems. The order is transmitted electronically to the appropriate warehouse for picking and packing, with shipment to the customer occurring within 24 hours. Upon shipment, the warehouse sends back to us via EDI the necessary information to automatically process the invoice in a timely manner.

CUSTOMERS

     Our customers include certain of the nation’s leading wholesale pharmaceutical distributors, such as AmerisourceBergen Corporation (“AmerisourceBergen”), Cardinal Health, Inc. (“Cardinal”), McKesson Corporation (“McKesson”), Quality King Distributors (“Quality King”) and other major drug chains. During the last three fiscal years, these customers accounted for the following portions of our net revenues:

	Fiscal 2004			Fiscal 2003			Fiscal 2002
McKesson		36.9	%		20.2	%		19.4	%
Cardinal		23.8	%		25.4	%		22.4	%
Quality King		*			17.0	%		26.7	%
AmerisourceBergen		*			15.5	%		11.1	%

     * less than 10%

     McKesson is our sole distributor of our RESTYLANE^® product, which was launched in January 2004.

MANUFACTURING

     We currently outsource all of our manufacturing needs, and we are required by the FDA to contract only with manufacturers that comply with current Good Manufacturing Practices (“cGMP”) regulations and other applicable laws and regulations. Typically our manufacturing contracts are short-term. We review our manufacturing arrangements on a regular basis and assess the viability of alternative manufacturers if our current manufacturers are unable to fulfill our needs.

     Patheon, Inc. (“Patheon”) manufactures the capsule form of our DYNACIN^® branded products under a supply agreement that automatically renews on an annual basis. Par Pharmaceutical, Inc. (“Par”) manufactures the tablet form of our DYNACIN^® branded products in accordance with a supply agreement that expires in June 2012.

     Our PLEXION^® and TRIAZ^® branded products are manufactured by Contract Pharmaceuticals Limited pursuant to a manufacturing agreement that automatically renews on an annual basis.

     Our LOPROX^® cream and gel branded products are manufactured by Aventis S.A. in accordance with a supply agreement that renews automatically on an annual basis. Our LOPROX^® TS product is manufactured by DPT Lakewood on a purchase order basis. Our LOPROX^® shampoo branded product is manufactured by Patheon under a supply agreement that automatically renews on an annual basis.

     Our OMNICEF^® branded product, which we promote through a license agreement with Abbott, is manufactured by Abbott. The license agreement expires in 2013.

     Our RESTYLANE^® branded product is manufactured by Q-Med pursuant to a long-term supply agreement that expires after 2013, at the earliest.

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LICENSE AND ROYALTY AGREEMENTS

     Pursuant to license agreements with third parties, we have acquired rights to manufacture, use or market certain of our existing products, as well as many of our proposed products and technologies. Such agreements typically contain provisions requiring us to use our best efforts or otherwise exercise diligence in pursuing market development for such products in order to maintain the rights granted under the agreements and may be canceled upon our failure to perform our payment or other obligations. In addition, we have licensed certain rights to manufacture, use and sell certain of our technologies outside the United States and Canada to various licensees.

TRADEMARKS, PATENTS, AND PROPRIETARY RIGHTS

     We believe that trademark protection is an important part of establishing product and brand recognition. We own a number of registered trademarks and trademark applications and have acquired the rights to several trademarks by license. U.S. federal registrations for trademarks remain in force for 10 years and may be renewed every 10 years after issuance, provided the mark is still being used in commerce.

     We have obtained a number of patents covering key aspects of certain of our products, including a U.S. patent expiring in October 2015 covering various formulations of TRIAZ^® and a U.S. patent expiring in 2015 covering RESTYLANE^®. We have two patent applications pending related to our LOPROX^® gel and shampoo formulations. We are also pursuing several other U.S. and foreign patent applications.

     We rely and expect to continue to rely upon unpatented proprietary know-how and technological innovation in the development and manufacture of many of our principal products. Our policy is to require all our employees, consultants and advisors to enter into confidentiality agreements with us.

COMPETITION

     The pharmaceutical and dermal aesthetics industries are characterized by intense competition, rapid product development and technological change. Competition is intense among manufacturers of prescription pharmaceuticals and dermal injection products, such as for our core brands.

     Many of our competitors are large, well-established pharmaceutical, chemical, cosmetic or health care companies with considerably greater financial, marketing, sales and technical resources than those available to us. Additionally, many of our present and potential competitors have research and development capabilities that may allow them to develop new or improved products that may compete with our product lines. Our products could be rendered obsolete or made uneconomical by the development of new products to treat the conditions addressed by our products, technological advances affecting the cost of production, or marketing or pricing actions by one or more of our competitors. Each of our products competes for a share of the existing market with numerous products that have become standard treatments recommended or prescribed by dermatologists and podiatrists and administered by plastic surgeons and aesthetic dermatologists.

     Several of our core prescription brands compete or may compete in the near future with generic (non-branded) pharmaceuticals, which claim to offer equivalent therapeutic benefits at a lower cost. In some cases, insurers and other third-party payors seek to encourage the use of generic products, making branded products less attractive, from a cost perspective, to buyers.

GOVERNMENT REGULATION

     The manufacture and sale of cosmetics, drugs and medical devices are subject to regulation principally by the FDA and state and local authorities in the United States, and by comparable agencies in certain foreign countries. The Federal Trade Commission (“FTC”) and state and local authorities regulate the advertising of over-the-counter drugs and cosmetics. The Food and Drug Act and the regulations promulgated thereunder, and other federal and state statutes and regulations, govern, among other things, the testing, manufacture, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of our products.

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     RESTYLANE^® is a medical device intended for human use and is subject to regulation by the FDA in the United States. Unless an exemption applies, each medical device we market in the U.S. must have a Premarket Approval Application (“PMA”) in accordance with the Federal Food, Drug, and Cosmetic Act, as amended, or a 510(k) clearance (a demonstration that the new device is “substantially equivalent” to a device already on the market). FDA regulations generally require reasonable assurance of safety and effectiveness prior to marketing, including safety data obtained under approved clinical protocols and require compliance with “good manufacturing practices” (“GMPs”), as verified by detailed FDA inspections of manufacturing facilities. These regulations also require reporting of alleged product defects to the FDA. FDA regulations divide medical devices into three classes. Class I devices are subject to general controls that require compliance with device establishment registration, product listing, labeling, GMPs and other general requirements. Class II devices are subject to special controls in addition to general controls. Class III devices are subject to the most extensive regulation and in most cases require submission to the FDA of a PMA application that includes data supporting the safety and effectiveness of the device. Periodic reports must be submitted to the FDA, including any descriptions of any adverse events reported. RESTYLANE^® is regulated as a Class III medical device. RESTYLANE^® has been approved by the FDA under a PMA.

     In general, products falling within the FDA’s definition of “new drugs” require premarketing clearance by the FDA. Products falling within the FDA’s definition of “cosmetics” or of “drugs” that are not “new drugs” and that are generally recognized as “safe and effective” do not require premarketing clearance. The steps required before a “new drug” may be marketed in the United States include (i) preclinical laboratory and animal testing, (ii) submission to the FDA of an Investigational New Drug (or “IND”) application, which must become effective before clinical trials may commence, (iii) adequate and well-controlled clinical trials to establish the safety and efficacy of the drug, (iv) submission to the FDA of a New Drug Application (or “NDA”) and (v) FDA approval of the NDA prior to any commercial sale or shipment of the drug. In addition to obtaining FDA approval for each product, each domestic drug-manufacturing establishment must be registered with, and approved by, the FDA.

     Preclinical testing is generally conducted on laboratory animals to evaluate the potential safety and the efficacy of a drug. The results of these studies are submitted to the FDA as a part of an IND application, which must be approved before clinical trials in humans can begin. Typically, clinical evaluation involves a time consuming and costly three-phase process. In Phase I, clinical trials are conducted with a small number of subjects to determine the early safety profile, the pattern of drug distribution and metabolism. In Phase II, clinical trials are conducted with groups of patients afflicted with a specific disease to determine preliminary efficacy, optimal dosages and expanded evidence of safety. In Phase III, large-scale, multi-center, comparative trials are conducted with patients afflicted with a target disease to provide sufficient data to demonstrate the efficacy and safety required by the FDA. The FDA closely monitors the progress of each of the three phases of clinical trials and may, at its discretion, re-evaluate, alter, suspend or terminate the testing based upon the data that have been accumulated to that point and its assessment of the risk/benefit ratio to the patient.

     In general, FDA approval is required before a new drug product may be marketed in the United States. However, most over-the-counter drugs are exempt from the FDA’s premarketing approval requirements. In 1972, the FDA instituted the ongoing over-the-counter Drug Review to evaluate the safety and effectiveness of over-the-counter drug ingredients then in the market. Through this process, the FDA issues monographs that set forth the specific active ingredients, dosages, indications and labeling statements for over-the-counter drug ingredients that the FDA will consider generally recognized as safe and effective and therefore not subject to premarket approval. Over-the-counter drug ingredients are classified by the FDA in one of three categories: Category I ingredients which are deemed “safe and effective for over-the-counter use;” Category II ingredients which are deemed “not generally recognized as safe and effective for over-the-counter use;” and Category III ingredients which are deemed “possibly safe and effective with studies ongoing.” Based upon the results of these ongoing studies, the FDA may reclassify all Category III ingredients as Category I or Category II ingredients. For certain categories of over-the-counter drugs not yet subject to a final monograph, the FDA usually permits such drugs to continue to be marketed until a final monograph becomes effective, unless the drug will pose a potential health hazard to consumers. Drugs subject to final monographs, as well as drugs that are subject only to proposed monographs, are subject to various FDA regulations concerning, for example, cGMP, general and specific over-the-counter labeling requirements and prohibitions against promotion for conditions other than those stated in the labeling. Over-the-counter drug

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manufacturing facilities are subject to FDA inspection, and failure to comply with applicable regulatory requirements may lead to administrative or judicially imposed penalties.

     Each of the active ingredients in LOPROX^® and OMNICEF^® have been approved by the FDA under an NDA. The active ingredient in DYNACIN^® has been approved by the FDA under an ANDA. The active ingredient in the TRIAZ^® products has been classified as a Category III ingredient under a tentative final FDA monograph for over-the-counter use in treatment of labeled conditions. The FDA has requested, and a task force of the Non-Prescription Drug Manufacturers Association (or “NDMA”), a trade association of over-the-counter drug manufacturers, has undertaken further studies to confirm that benzoyl peroxide, an active ingredient in the TRIAZ^® products, is not a tumor promoter when tested in conjunction with UV light exposure. The TRIAZ^® products, which we sell on a prescription basis, have the same ingredients at the same dosage levels as the over-the-counter products. When the FDA issues the final monograph, we may be required by the FDA to sell TRIAZ^® as an over-the-counter drug unless we file an NDA covering such product. There can be no assurance as to the results of these studies or any FDA action to reclassify benzoyl peroxide. In addition, there can be no assurance that adverse test results would not result in withdrawal of TRIAZ^® from marketing. An adverse decision by the FDA with respect to the safety of benzoyl peroxide could result in the assertion of product liability claims against us and could have a material adverse effect on our business, financial condition and results of operations.

     Our TRIAZ^® branded products must meet the composition and labeling requirements established by the FDA for products containing their respective basic ingredients. We believe that compliance with those established standards avoids the requirement for premarketing clearance of these products. There can be no assurance that the FDA will not take a contrary position. Our PLEXION^® branded products, which contain the active ingredients sodium sulfacetamide and sulfur, are marketed under the FDA compliance policy entitled “Marketed New Drugs without Approved NDAs or ANDAs.”

     We believe that certain of our products, as they are promoted and intended by us for use, are exempt from being considered “new drugs” based upon the introduction date of their active ingredients and therefore do not require premarketing clearance. There can be no assurance that the FDA will not take a contrary position. If the FDA were to do so, we may be required to seek FDA approval for these products, market these products as over-the-counter products or withdraw such products from the market. We believe that these products are subject to regulations governing product safety, use of ingredients, labeling, promotion and manufacturing methods.

     We also will be subject to foreign regulatory authorities governing clinical trials and pharmaceutical sales for products we seek to market outside the United States. Whether or not FDA approval has been obtained, approval of a product by the comparable regulatory authorities of foreign countries must be obtained prior to the commencement of marketing the product in those countries. The approval process varies from country to country, the approval process time required may be longer or shorter than that required for FDA approval, and any foreign regulatory agency may refuse to approve any product we submit for review.

EMPLOYEES

     At June 30, 2004, we had 319 full-time employees. No employees are subject to a collective bargaining agreement. We believe our relationship with our employees is good.

AVAILABLE INFORMATION

     We make available free of charge on or through our Internet website, www.medicis.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, if any, filed or furnished pursuant to Section 13(a) of 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after they are electronically filed with, or furnished to, the Securities and Exchange Commission. We also make available free of charge on or through our website our Business Code of Conduct and Ethics, Corporate Governance Guidelines, Nominating and Corporate Governance Committee Charter, Compensation Committee Charter and Audit Committee Charter. The information contained on our website is not intended to be incorporated into this annual report on Form 10-K.

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RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

     Our discussion and analysis in this report, in other reports that we file with the Securities and Exchange Commission, in our press releases and in public statements of our officers and corporate spokespersons contain forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements by the fact that they do not relate strictly to historical or current events. They use words such as “anticipate,” “estimate,” “expect,” “intend,” “will”, “plan,” “believe” and other words of similar meaning in connection with discussion of future operating or financial performance. These include statements relating to future actions, prospective products or product approvals, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings and financial results.

     Forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many factors mentioned in this report — for example, governmental regulation and competition in our industry — will be important in determining future results. No forward-looking statement can be guaranteed, and actual results may vary materially from those anticipated in any forward-looking statement.

     Medicis undertakes no obligation to update any forward-looking statement. We provide the following discussion of risks and uncertainties relevant to our business. These are factors that we think could cause our actual results to differ materially from expected and historical results. Our business, financial condition or results of operation could also be adversely affected by other factors besides those listed here. However, these are the risks our management currently believes are material.

RISKS RELATED TO OUR BUSINESS

We Derive A Majority Of Our Prescription Volume From Our Core Prescription Products, And Any Factor Adversely Affecting The Prescription Volume Related To These Products Could Harm Our Business, Financial Condition And Results Of Operations

     We believe that the prescription volume of our core prescription products and sales of our dermal aesthetic product, RESTYLANE^®, which we began selling in the United States on January 6, 2004, will constitute the majority of our sales for the foreseeable future. Accordingly, any factor adversely affecting our sales related to these products, individually or collectively, could harm our business, financial condition and results of operations. Many of our core prescription products, including DYNACIN^® and LOPROX^®, are subject to generic competition or may be in the near future. On July 18, 2004, Glades Pharmaceuticals, LLC, a wholly owned subsidiary of Stiefel Laboratories, Inc., announced the launch of myracT (minocycline hydrochloride tablets, USP), as a branded pharmaceutical product. MyracT tablets is a prescription product that competes directly with our DYNACIN^® tablet products. On August 6, 2004, the FDA approved an ANDA submitted by Altana, Inc. for its ciclopirox topical suspension, a generic version of our LOPROX^® TS product. Each of our core products could be rendered obsolete or uneconomical by regulatory or competitive changes. Sales related to our core prescription products and RESTYLANE^® could also be adversely affected by other factors, including:

• manufacturing or supply interruptions;

• the development of new competitive pharmaceuticals and technological advances to treat the conditions addressed by our core products;

• marketing or pricing actions by one or more of our competitors;

• regulatory action by the FDA and other government regulatory agencies;

• changes in the prescribing or procedural practices of dermatologists, plastic surgeons and / or podiatrists;

• changes in the reimbursement or substitution policies of third-party payors or retail pharmacies;

• product liability claims;

• the outcome of disputes relating to trademarks, patents, license agreements and other rights; and

• restrictions on travel affecting the ability of our sales force to market to prescribing physicians and plastic surgeons in person.

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We Cannot Assure You That Our Dermal Aesthetic Enhancement Products Will Maintain Widespread Acceptance

     We cannot assure you that we will be able to maintain market acceptance of our dermal aesthetic enhancement products. This market is very competitive and some of our competitors have been competing in this market for a significant period of time. Additionally, we expect that new competitors will be entering this market. If we are unable to anticipate, identify or react to competitive products or if changing consumer preferences in the dermal aesthetic enhancement marketplace shift to other treatments for the treatment of fine lines and wrinkles, shaping facial contours and correcting deep facial folds, we may experience difficulties in maintaining market acceptance or may experience a decline in demand for RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™. In addition, the popular media may produce negative reports on the efficacy, safety or side effects of these products, which could negatively impact consumer perceptions of the product and negatively influence market acceptance or cause a decline in demand. We cannot assure you that consumers will prefer RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ over other treatment options, or that we will be able to respond in a timely manner to changes in consumer preferences.

If Q-Med Is Unable To Protect Its Intellectual Property And Proprietary Rights With Respect To Our Dermal Aesthetic Enhancement Products, Our Business Could Suffer

     RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ currently have patent protection in the U.S. until 2015, and the exclusivity period of the license granted to us by Q-Med ends when the last patent covering the products expires. If the validity or enforceability of these patents is successfully challenged, the cost to our Company could be significant and our business may be harmed. If any such challenge is successful, Q-Med may be unable to supply products to us. We may be unable to market, distribute and commercialize the products or it may no longer be profitable for us to do so.

     On June 21, 2004 the United States International Trade Commission (“ITC”) instituted an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended, at the request of Inamed Corporation (“Inamed”). The investigation identifies Medicis Aesthetics, Inc., a wholly owned subsidiary of Medicis, and Q-Med as Respondents in the investigation regarding Inamed’s allegation of infringement of its U.S. Patent No. 4,803,075, dated February 7, 1989, by the dermal filler, RESTYLANE^®. Inamed has filed a parallel infringement action against Medicis and Q-Med in the U.S. District Court of the Southern District of California regarding the same patent. This action has been stayed pending the outcome of the ITC investigation. After a preliminary investigation regarding the above complaints, it is our belief that we have meritorious defenses as to the infringement claims and as to the validity of the Inamed patent.

Our Operating Results And Financial Condition May Fluctuate

     Our operating results and financial condition may fluctuate from quarter to quarter and year to year, depending upon the relative timing of events or uncertainties which may arise. The following events or occurrences, among others, could cause fluctuations in our financial performance from period to period:

• changes in the amount we spend to develop, acquire or license new products, technologies or businesses;

• untimely contingent research and development payments under our third-party product development agreements;

• changes in the amount we spend to promote our products;

• delays between our expenditures to acquire new products, technologies or businesses and the generation of revenues from those acquired products, technologies or businesses;

• changes in treatment practices of physicians that currently prescribe our products;

• changes in reimbursement policies of health plans and other similar health insurers, including changes that affect newly developed or newly acquired products;

• increases in the cost of raw materials used to manufacture our products;

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• manufacturing and supply interruptions, including failure to comply with manufacturing specifications;

• development of new competitive products by others;

• the mix of products that we sell during any time period;

• our responses to price competition;

• expenditures as a result of legal actions;

• market acceptance of our products;

• the impairment and write-down of goodwill or other intangible assets;

• implementation of new or revised accounting or tax rules or policies;

• disposition of core products, technologies and other rights;

• termination or expiration of, or the outcome of disputes relating to, trademarks, patents, license agreements and other rights;

• increases in insurance rates for existing products and the cost of insurance for new products;

• general economic and industry conditions, including changes in interest rates affecting returns on cash balances and investments that affect customer demand;

• seasonality of demand for our products;

• our level of research and development activities;

• new accounting standards and/or changes to existing accounting standards that would have a material effect on our consolidated financial position, results of operations or cash flows;

• costs and outcomes of any tax audits or any litigation involving intellectual property, customers or other issues; and

• timing of revenue recognition related to licensing agreements and/or strategic collaborations.

We May Not Be Able To Collect All Scheduled License Payments From BioMarin

     As part of our transaction with BioMarin Pharmaceutical Inc. (“BioMarin”) discussed in Note 9 to our consolidated financial statements, BioMarin will make license payments to us of approximately $12.5 million per quarter for four quarters beginning in July 2004; approximately $2.5 million per quarter for the subsequent four quarters beginning in July 2005; approximately $2 million per quarter for the subsequent eight quarters beginning in July 2006; and approximately $1.75 million per quarter for the last four quarters of the five-year period beginning in July 2008. Pursuant to the terms of the transaction, BioMarin is required to deposit $25 million of cash and $25 million of BioMarin common stock in escrow until the last of the four quarterly $12.5 million payments beginning July 2004 have been made. While we did receive the first quarterly $12.5 million license payment during August 2004, we cannot give any assurances as to BioMarin’s ability to make payments to us above and beyond the escrow amount, or the future value of the BioMarin common stock held in escrow.

We Depend Upon Our Key Personnel And Our Ability To Attract, Train, And Retain Employees

     Our success depends significantly on the continued individual and collective contributions of our senior management team. We have not entered into employment agreements with any of our key managers, with the exception of our Chairman and Chief Executive Officer. The loss of the services of any member of our senior management or the inability to hire and retain experienced management personnel could adversely affect our ability to execute our business plan and harm our operating results. In addition, our future success depends on our ability to hire, train and retain skilled employees. Competition for these employees is intense.

Our Continued Growth Depends Upon Our Ability To Develop New Products

     We have internally developed potential pharmaceutical compounds and agents. We also have acquired the rights to certain potential compounds and agents in various stages of development. We currently have a variety of new products in various stages of research and development and are working on possible improvements, extensions and reformulations of some existing products. These research and development activities, as well as the clinical testing and regulatory approval process, which must be completed before commercial quantities of these developments can be sold, will require significant commitments of personnel and financial resources. Due to the limited financial resources available for research and development, we cannot assure you that we will be able to develop a product or technology in a timely manner, or at all. Delays in the research, development, testing or

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approval processes will cause a corresponding delay in revenue generation from those products. Regardless of whether they are ever released to the market, the expense of such processes will have already been incurred.

     We reevaluate our research and development efforts regularly to assess whether our efforts to develop a particular product or technology are progressing at a rate that justifies our continued expenditures. On the basis of these reevaluations, we have abandoned in the past, and may abandon in the future, our efforts on a particular product or technology. Products that we research or develop may not be successfully commercialized. If we fail to take a product or technology from the development stage to market on a timely basis, we may incur significant expenses without a near-term financial return.

     We have in the past, and may in the future, supplement our internal research and development by entering into research and development agreements with other pharmaceutical companies. We may, upon entering into such agreements, be required to make significant up-front payments to fund the projects. We cannot be sure, however, that we will be able to locate adequate research partners or that supplemental research will be available on terms acceptable to us in the future. If we are unable to enter into additional research partnership arrangements, we may incur additional costs to continue research and development internally or abandon certain projects. Even if we are able to enter into collaborations, we cannot assure you that these arrangements will result in successful product development or commercialization.

     In March 2003, we completed our acquisition of the rights to market, distribute and commercialize the dermal filler product lines known as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ in the U.S. and Canada. The products are approved for sale in Canada, and RESTYLANE^® was approved for use in the U.S. on December 12, 2003. We cannot assure you that the FDA will approve PERLANE^® and RESTYLANE FINE LINES^™ in a timely fashion, or for the same indications as approved in other countries, or at all.

We May Not Be Able To Identify And Acquire Products, Technologies And Businesses On Acceptable Terms, If At All, Which May Constrain Our Growth

     Our strategy for continued growth includes the acquisition of products, technologies and businesses. These acquisitions could involve acquiring other pharmaceutical companies’ assets, products or technologies. In addition, we may seek to obtain licenses or other rights to develop, manufacture and distribute products. We cannot be certain that we will be able to identify suitable acquisition or licensing candidates or if any will be available on acceptable terms. Other pharmaceutical companies, with greater financial, marketing and sales resources than we have, have also tried to grow through similar acquisition and licensing strategies. Because of their greater resources, our competitors may be able to offer better terms for an acquisition or license than we can offer, or they may be able to demonstrate a greater ability to market licensed products.

We Could Experience Difficulties In Obtaining Supplies of RESTYLANE^®, PERLANE^® And RESTYLANE FINE LINES^™

     The manufacturing process to create bulk non-animal stabilized hyaluronic acid necessary to produce RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ is technically complex and requires significant lead-time. Any failure by us to accurately forecast demand for finished product could result in an interruption in the supply of RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ and a resulting decrease in sales of the products.

     We depend exclusively on Q-Med for our supply of RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™. There are currently no alternative suppliers of these products. Q-Med has committed to supply RESTYLANE^® to us under a perpetual license that is subject to customary conditions and our delivery of specified milestone payments. Q-Med manufactures RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^™ at its facility in Uppsala, Sweden. We cannot be certain that Q-Med will be able to meet our current or future supply requirements. Any impairment of Q-Med’s manufacturing capacities could significantly affect our inventories and our supply of products available for sale.

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We Depend On Licenses From Others, And Any Loss Of Such Licenses Could Harm Our Business, Market Share And Profitability

     We have acquired the rights to manufacture, use and market certain products, including certain of our core products. We also expect to continue to obtain licenses for other products and technologies in the future. Our license agreements generally require us to develop a market for the licensed products. If we do not develop these markets within specified time frames, the licensors may be entitled to terminate these license agreements.

     We may fail to fulfill our obligations under any particular license agreement for various reasons, including insufficient resources to adequately develop and market a product, and lack of market development despite our diligence and lack of product acceptance. Our failure to fulfill our obligations could result in the loss of our rights under a license agreement.

     Our inability to continue the distribution of any particular licensed product could harm our business, market share and profitability. Also, certain products we license are used in connection with other products we own or license. A loss of a license in such circumstances could materially harm our ability to market and distribute these other products.

     Our growth and acquisition strategy depends upon the successful integration of licensed products with our existing products. Therefore, any loss, limitation or flaw in a licensed product could impair our ability to market and sell our products, delay new product development and introduction, and harm our reputation. These problems, individually or together, could harm our business and results of operation.

We Depend On A Limited Number Of Customers, And If We Lose Any Of Them, Our Business Could Be Harmed

     Our customers include some of the nation’s leading wholesale pharmaceutical distributors, such as AmerisourceBergen, Cardinal, McKesson, Quality King, and major drug chains. During fiscal 2004, McKesson and Cardinal accounted for 36.9%, and 23.8%, respectively, of our net revenues. The loss of any of these customers’ accounts or a material reduction in their purchases could harm our business, financial condition or results of operations. In addition, we may face pricing pressure from our customers.

     The distribution network for pharmaceutical products has, in recent years, been subject to increasing consolidation. As a result, a few large wholesale distributors control a significant share of the market. In addition, the number of independent drug stores and small chains has decreased as retail consolidation has occurred. Further consolidation among, or any financial difficulties of, distributors or retailers could result in the combination or elimination of warehouses which may result in product returns to our company, cause a reduction in the inventory levels of distributors and retailers, or otherwise result in reductions in purchases of our products, any of which could harm our business, financial condition and results of operations.

We Rely On Others To Manufacture Our Products

     Currently, we outsource our entire product manufacturing needs. Typically, our manufacturing contracts are short-term. We are dependent upon renewing agreements with our existing manufacturers or finding replacement manufacturers to satisfy our requirements. As a result, we cannot be certain that manufacturing sources will continue to be available or that we can continue to outsource the manufacturing of our products on reasonable or acceptable terms.

     The underlying cost to us for manufacturing our products is established in our agreements with these outside manufacturers. Because of the short-term nature of these agreements, our expenses for manufacturing are not fixed and could change from contract to contract. If the cost of production increases, our gross margins could be negatively affected.

     In addition, we rely on outside manufacturers to provide us with an adequate and reliable supply of our products on a timely basis. Loss of a supplier or any difficulties that arise in the supply chain could significantly

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affect our inventories and supply of products available for sale. We do not have alternative sources of supply for all of our products. If a primary supplier of any of our core products is unable to fulfill our requirements for any reason, it could reduce our sales, margins and market share, as well as harm our overall business and financial results. If we are unable to supply sufficient amounts of our products on a timely basis, our revenues and market share could decrease and, correspondingly, our profitability could decrease.

     Under several exclusive supply agreements, with certain exceptions, we must purchase most of our product supply from specific manufacturers. If any of these exclusive manufacturer or supplier relationships were terminated, we would be forced to find a replacement manufacturer or supplier. The FDA requires that all manufacturers used by pharmaceutical companies comply with the FDA’s regulations, including the cGMP regulations applicable to manufacturing processes. The cGMP validation of a new facility and the approval of that manufacturer for a new drug product may take a year or more before manufacture can begin at the facility. Delays in obtaining FDA validation of a replacement manufacturing facility could cause an interruption in the supply of our products. Although we have business interruption insurance covering the loss of income for up to 12 months, which may mitigate the harm to us from the interruption of the manufacturing of our largest selling products caused by certain events, the loss of a manufacturer could still cause a reduction in our sales, margins and market share, as well as harm our overall business and financial results.

Our Reliance On Third-Party Manufacturers And Suppliers Can Be Disruptive To Our Inventory Supply

     We and the manufacturers of our products rely on suppliers of raw materials used in the production of our products. Some of these materials are available from only one source and others may become available from only one source. Any disruption in the supply of raw materials or an increase in the cost of raw materials to our manufacturers could have a significant effect on their ability to supply us with our products.

     We try to maintain inventory levels that are no greater than necessary to meet our current projections. Any interruption in the supply of finished products could hinder our ability to timely distribute finished products. If we are unable to obtain adequate product supplies to satisfy our customers’ orders, we may lose those orders and our customers may cancel other orders and stock and sell competing products. This, in turn, could cause a loss of our market share and reduce our revenues.

Supply Interruptions May Disrupt Our Inventory Levels And The Availability Of Our Products

     Numerous factors could cause interruptions in the supply of our finished products, including:

• timing, scheduling and prioritization of production by our contract manufacturers;

• labor interruptions;

• changes in our sources for manufacturing;

• the timing and delivery of domestic and international shipments;

• our failure to locate and obtain replacement manufacturers as needed on a timely basis; and

• conditions affecting the cost and availability of raw materials.

     We estimate customer demand for our prescription products primarily through use of third party syndicated data sources which track prescriptions written by health care providers and dispensed by licensed pharmacies. These data are extrapolations from information provided only by certain pharmacies, and are estimates of historical demand levels. We observe trends from these data, and, coupled with certain proprietary information, prepare demand forecasts that are the basis for purchase orders for finished and component inventory from our third party manufacturers and suppliers. Our forecasts may fail to accurately anticipate ultimate customer demand for products. Overestimates of demand may result in excessive inventory production; underestimates may result in inadequate supply of our products in channels of distribution.

     We sell our products primarily to major wholesalers and retail pharmacy chains. Consistent with pharmaceutical industry patterns, approximately 80% of our revenues are derived from four major drug wholesale concerns. While we attempt to estimate inventory levels of our products at our major wholesale customers, using historical prescription information and historical purchase patterns, this process is inherently imprecise. Rarely do

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wholesale customers provide us complete inventory levels at regional distribution centers, or within their national distribution systems. We rely wholly upon our wholesale and drug chain customers to effect the distribution allocation of our products. There can be no assurance that these customers will adequately manage their local and regional inventories to avoid spot outages. Based upon historically consistent purchasing patterns of our major wholesale customers, we believe our estimates of trade inventory levels of our products are reasonable. We further believe that inventories of our products among wholesale customers, taken as a whole, are similar to those of other specialty pharmaceutical companies, and that our trade practices, which periodically involve volume discounts and early payment discounts, are typical of the industry.

     We periodically offer promotions to wholesale and chain drugstore customers to encourage dispensing of our products, consistent with prescriptions written by licensed health care providers. Because many of our products compete in multi-source markets, it is important for us to ensure the licensed health care providers’ dispensing instructions are fulfilled with our branded products and are not substituted with a generic product or another therapeutic alternative product which may be contrary to the licensed health care providers’ recommended prescribed Medicis brand. We believe that a critical component of our brand protection program is maintenance of full product availability at drugstore and wholesale customers. We believe such availability strongly reduces the probability of local and regional product substitutions, shortages and backorders, which could result in lost sales. We expect to continue providing favorable terms to wholesale and retail drug chain customers as may be necessary to ensure the fullest possible distribution of our branded products within the pharmaceutical chain of commerce.

     We cannot control or influence greatly the purchasing patterns of wholesale and retail drug chain customers. These are highly sophisticated customers that purchase our products in a manner consistent with their industry practices and, presumably, based upon their projected demand levels. Purchases by any given customer, during any given period, may be above or below actual prescription volumes of any of our products during the same period, resulting in fluctuations in product inventory in the distribution channel.

Fluctuations In Demand For Our Products Create Inventory Maintenance Uncertainties

     As a result of customer buying patterns, a substantial portion of our revenues has been recognized in the last month of each quarter. We schedule our inventory purchases to meet anticipated customer demand. As a result, relatively small delays in the receipt of manufactured products by us could result in revenues being deferred or lost. Our operating expenses are based upon anticipated sales levels, and a high percentage of our operating expenses are relatively fixed in the short term. Consequently, variations in the timing of revenue recognition could cause significant fluctuations in operating results from period to period and may result in unanticipated periodic earnings shortfalls or losses.

Our Success Depends On Our Ability To Manage Our Growth

     We recently experienced a period of rapid growth from both acquisitions and internal expansion of our operations. This growth has placed significant demands on our human and financial resources. We must continue to improve our operational, financial and management information controls and systems and effectively motivate, train and manage our employees to properly manage this growth. Even if these steps are taken, we cannot be sure that our recent acquisitions will be assimilated successfully into our business operations. If we do not manage this growth effectively, maintain the quality of our products despite the demands on our resources and retain key personnel, our business could be harmed.

If We Are Unable To Secure And Protect Our Intellectual Property and Proprietary Rights, Our Business Could Suffer

     We believe that the protection of our trademarks and service marks is an important factor in product recognition and in our ability to maintain or increase market share. If we do not adequately protect our rights in our various trademarks and service marks from infringement, their value to us could be lost or diminished. If the marks we use are found to infringe upon the trademark or service mark of another company, we could be forced to stop using those marks and, as a result, we could lose the value of those marks and could be liable for damages caused by an infringement.

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     The patents and patent applications in which we have an interest may be challenged as to their validity or enforceability. Challenges may result in potentially significant harm to our business. The cost of responding to these challenges and the inherent costs to defend the validity of our patents, including the prosecution of infringements and the related litigation, could be substantial. Such litigation also could require a substantial commitment of our management’s time.

     We are pursuing several U.S. patent applications, although we cannot be sure that any of these patents will ever be issued. We also have acquired rights under certain patents and patent applications in connection with our licenses to distribute products and by assignment of rights to patents and patent applications from certain of our consultants and officers. These patents and patent applications may be subject to claims of rights by third parties. If there are conflicting claims to the same patent or patent application, we may not prevail and, even if we do have some rights in a patent or patent application, those rights may not be sufficient for the marketing and distribution of products covered by the patent or patent application.

     The ownership of a patent or an interest in a patent does not always provide significant protection. Others may independently develop similar technologies or design around the patented aspects of our technology. We only conduct patent searches to determine whether our products infringe upon any existing patents when we think such searches are appropriate. As a result, the products and technologies we currently market, and those we may market in the future, may infringe on patents and other rights owned by others. If we are unsuccessful in any challenge to the marketing and sale of our products or technologies, we may be required to license the disputed rights, if the holder of those rights is willing, or to cease marketing the challenged products, or to modify our products to avoid infringing upon those rights. A claim or finding of infringement regarding one of our products could harm our business, financial condition and results of operations. The costs of responding to infringement claims could be substantial and could require a substantial commitment of our management’s time. The expiration of patents may expose our products to additional competition.

     We also rely upon trade secrets, unpatented proprietary know-how and continuing technological innovation in developing and manufacturing many of our core products. It is our policy to require all of our employees, consultants and advisors to enter into confidentiality agreements prohibiting them from taking or disclosing our proprietary information and technology. Nevertheless, these agreements may not provide meaningful protection for our trade secrets and proprietary know-how if they are used or disclosed. Despite all of the precautions we may take, people who are not parties to confidentiality agreements may obtain access to our trade secrets or know-how. In addition, others may independently develop similar or equivalent trade secrets or know-how.

If We Become Subject To Product Liability Claims, Our Earnings And Financial Condition Could Suffer

     We are exposed to risks of product liability claims from allegations that our products resulted in adverse effects to the patient or others. These risks exist even with respect to those products that are approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA.

     In addition to our desire to reduce the scope of our potential exposure to these types of claims, many of our customers require us to maintain product liability insurance as a condition of conducting business with us. We currently carry product liability insurance in the amount of $50.0 million per claim and $50.0 million in the aggregate on a claims-made basis. Nevertheless, this insurance may not be sufficient to cover all claims made against us. We also cannot be certain that our current coverage will continue to be available in the future on reasonable terms, if at all. If we are liable for any product liability claims in excess of our coverage or outside of our coverage, the cost and expense of such liability could cause our earnings and financial condition to suffer.

We Selectively Outsource Certain Non-Sales And Non-Marketing Services, And Cannot Assure You That We Will Be Able To Obtain Adequate Supplies Of Such Services On Acceptable Terms

     To enable us to focus on our core marketing and sales activities, we selectively outsource certain non-sales and non-marketing functions, such as laboratory research, manufacturing and warehousing. As we expand our activities in these areas, additional financial resources are expected to be utilized. We typically do not enter into

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long-term manufacturing contracts with third party manufacturers. Whether or not such contracts exist, we cannot assure you that we will be able to obtain adequate supplies of such services or products in a timely fashion, on acceptable terms, or at all.

Our Reported Earnings Per Share May Be More Volatile Because Of The Conversion Contingency Provision In Our Old Notes And New Notes

     In June 2002, we sold Contingent Convertible Senior Notes, due in 2032 (the “Old Notes”), in the amount of $400.0 million. In August 2003, we exchanged approximately $230.8 million in principal of these Old Notes for approximately $283.9 million of our Contingent Convertible Senior Notes due in 2033 (the “New Notes”). Included in the terms of the Old Notes and the New Notes is a provision that allows the holders of the Old Notes and New Notes to convert the Old Notes and New Notes into our Class A common stock during any quarter commencing after June 30, 2002, and September 30, 2003, respectively, if the closing sale price of our Class A common stock reaches certain milestone thresholds. Unless this contingency is met, the shares underlying the remaining Old Notes and New Notes are not included in the calculation of fully diluted earnings per share. Should this contingency be met, earnings per share would be expected to decrease as a result of the inclusion of the underlying shares in the earnings per share calculation. Volatility in our stock price could cause this condition to be met in one quarter and not in a subsequent quarter, increasing the volatility of fully diluted earnings per share.

     During the quarters ended June 30, 2004, March 31, 2004 and December 31, 2003, the Old Notes met the criteria for the right of conversion into shares of the Company’s Class A common stock. This right of conversion of the holders of Old Notes was triggered by the stock closing above $31.96 on 20 of the last 30 trading days and the last trading day of the quarters ending June 30, 2004, March 31, 2004 and December 31, 2003. During these periods, the underlying shares related to the Old Notes were included in fully diluted earnings per share.

We May Not Be Able To Repurchase The Old Notes And New Notes When Required

     On June 4, 2007, 2012 and 2017 and upon the occurrence of a change in control, holders of the remaining Old Notes may require us to offer to repurchase their Old Notes for cash. On June 4, 2008, 2013 and 2018 and upon the occurrence of a change in control, holders of the New Notes may require us to offer to repurchase their New Notes for cash. We may not have sufficient funds at the time of any such events to make the required repurchases.

     The source of funds for any repurchase required as a result of any such events will be our available cash or cash generated from operating activities or other sources, including borrowings, sales of assets, sales of equity or funds provided by a new controlling entity. We cannot assure you, however, that sufficient funds will be available at the time of any such events to make any required repurchases of the Notes tendered. Furthermore, the use of available cash to fund the repurchase of the Old Notes or New Notes may impair our ability to obtain additional financing in the future.

RISKS RELATED TO OUR INDUSTRY

The Growth Of Managed Care Organizations, Other Third-Party Reimbursement Policies, State Regulatory Agencies And Retailer Fulfillment Policies May Harm Our Pricing, Which May Reduce Our Market Share And Margins

     Our operating results and business success depend in large part on the availability of adequate third-party payor reimbursement to patients for our prescription-brand products. These third-party payors include governmental entities such as Medicaid, private health insurers and managed care organizations. Because of the size of the patient population covered by managed care organizations, marketing of prescription drugs to them and the pharmacy benefit managers that serve many of these organizations has become important to our business.

     Managed care organizations and other third party payors try to negotiate the pricing of medical services and products to control their costs. Managed care organizations and pharmacy benefit managers typically develop formularies to reduce their cost for medications. Formularies can be based on the prices and therapeutic benefits of the available products. Due to their lower costs, generic products are often favored. The breadth of the products

18

covered by formularies varies considerably from one managed care organization to another, and many formularies include alternative and competitive products for treatment of particular medical conditions. Exclusion of a product from a formulary can lead to its sharply reduced usage in the managed care organization patient population. Payment or reimbursement of only a portion of the cost of our prescription products could make our products less attractive, from a net-cost perspective, to patients, suppliers and prescribing physicians. We cannot be certain that the reimbursement policies of these entities will be adequate for our branded pharmaceutical products to compete on a price basis. If our products are not included within an adequate number of formularies or adequate reimbursement levels are not provided, or if those policies increasingly favor generic products, our market share and gross margins could be harmed, as could our overall business and financial condition.

     Some of our products are not of a type generally eligible for reimbursement. It is possible that products manufactured by others could address the same effects as our products and be subject to reimbursement. If this were the case, some of our products may be unable to compete on a price basis. In addition, decisions by state regulatory agencies, including state pharmacy boards, and/or retail pharmacies may require substitution of generic for branded products, may prefer competitors’ products over our own, and may impair our pricing and thereby constrain our market share and growth.

     Managed care initiatives to control costs have influenced primary-care physicians to refer fewer patients to dermatologists and other specialists. Further reductions in these referrals could reduce the size of our potential market, and harm our business, financial condition and results of operation.

We Are Subject To Extensive Governmental Regulation

     Pharmaceutical companies are subject to significant regulation by a number of national, state and local agencies. The FDA administers requirements covering testing, manufacturing, safety, effectiveness, labeling, storage, record keeping, approval, sampling, advertising and promotion of our products. In addition, the FTC and state and local authorities regulate the advertising of over-the-counter drugs and cosmetics. Failure to comply with applicable regulatory requirements could, among other things, result in:

• fines;

• changes to advertising;

• suspensions of regulatory approvals of products;

• product recalls;

• delays in product distribution, marketing and sale; and

• civil or criminal sanctions.

     Our prescription and over-the-counter products receive FDA review regarding their safety and effectiveness. However, the FDA is permitted to revisit and change its prior determinations. We cannot be sure that the FDA will not change its position with regard to the safety or effectiveness of our products. If the FDA’s position changes, we may be required to change our labeling or formulations or cease to manufacture and market the challenged products. Even prior to any formal regulatory action, we could voluntarily decide to cease distribution and sale or recall any of our products if concerns about the safety or effectiveness develop.

     Before marketing any drug that is considered a “new drug” by the FDA, the FDA must provide its approval of the product. All products which are considered drugs which are not “new drugs” and that generally are recognized by the FDA as safe and effective for use do not require the FDA’s approval. We believe that some of our products, as they are promoted and intended for use, are exempt from treatment as “new drugs” and are not subject to approval by the FDA. The FDA, however, could take a contrary position, and we could be required to seek FDA approval of those products and the marketing of those products. We could also be required to withdraw those products from the market.

     Sales representative activities may also be subject to the Voluntary Compliance Guidance issued for pharmaceutical manufacturers by the Office of Inspector General (“OIG”) of the Department of Health and Human Services. We have established compliance program policies and training programs for our sales force which we

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believe are appropriate. The OIG, however, could take a contrary position, and we could be required to modify our sales representative activities.

Obtaining FDA And Other Regulatory Approvals Is Time Consuming And Expensive

     The process of obtaining FDA and other regulatory approvals is time consuming and expensive. Clinical trials are required and the marketing and manufacturing of pharmaceutical products are subject to rigorous testing procedures. We may not be able to obtain FDA approval to conduct clinical trials or to manufacture or market any of the products we develop, acquire or license on a timely basis or at all. Moreover, the costs to obtain approvals could be considerable, and the failure to obtain or delays in obtaining an approval could significantly harm our business performance and financial results. Even if pre-marketing approval from the FDA is received, the FDA is authorized to impose post-marketing requirements such as:

• testing and surveillance to monitor the product and its continued compliance with regulatory requirements;

• submitting products for inspection and, if any inspection reveals that the product is not in compliance, prohibiting the sale of all products from the same lot;

• suspending manufacturing;

• switching status from prescription to over-the-counter drug;

• recalling products; and

• withdrawing marketing clearance.

     In their regulation of advertising, the FDA and FTC from time to time issue correspondence to pharmaceutical companies alleging that some advertising or promotional practices are false, misleading or deceptive. The FDA has the power to impose a wide array of sanctions on companies for such advertising practices, and the receipt of correspondence from the FDA alleging these practices could result in the following:

• incurring substantial expenses, including fines, penalties, legal fees and costs to comply with the FDA’s requirements;

• changes in the methods of marketing and selling products;

• taking FDA-mandated corrective action, which may include placing advertisements or sending letters to physicians rescinding previous advertisements or promotion; and

• disruption in the distribution of products and loss of sales until compliance with the FDA’s position is obtained.

     In recent years, various legislative proposals have been offered in Congress and in some state legislatures that include major changes in the health care system. These proposals have included price or patient reimbursement constraints on medicines, restrictions on access to certain products, reimportation of products from Canada or other sources and mandatory substitution of generic for branded products. We cannot predict the outcome of such initiatives, and it is difficult to predict the future impact of the broad and expanding legislative and regulatory requirements affecting us.

We Face Significant Competition Within Our Industry

     The pharmaceutical and dermal aesthetics industries are highly competitive. Competition in our industry occurs on a variety of fronts, including:

• developing and bringing new products to market before others;

• developing new technologies to improve existing products;

• developing new products to provide the same benefits as existing products at less cost; and

• developing new products to provide benefits superior to those of existing products.

     Many of our competitors are large, well-established companies in the fields of pharmaceuticals, chemicals, cosmetics and health care. Our competitors include Aventis, Bristol-Myers Squibb, Allergan, Elan, Galderma, GlaxoSmithKline, ICN Pharmaceuticals, Inamed, Johnson & Johnson, Pfizer, Schering-Plough, Wyeth and others.

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Many of these companies have greater resources than we do to devote to marketing, sales, research and development and acquisitions. As a result, they have a greater ability to undertake more extensive research and development, marketing and pricing policy programs. It is possible that our competitors may develop new or improved products to treat the same conditions as our products or make technological advances reducing their cost of production so that they may engage in price competition through aggressive pricing policies to secure a greater market share to our detriment. These competitors also may develop products that make our current or future products obsolete. Any of these events could significantly harm our business and financial results, including reducing our market share and gross margins.

     We sell and distribute both prescription brands and over-the-counter products. Each of these products competes with products produced by others to treat the same conditions. Several of our prescription products compete with generic pharmaceuticals, which claim to offer equivalent benefit at a lower cost. In some cases, insurers and other health care payment organizations try to encourage the use of these less expensive generic brands through their prescription benefits coverage and reimbursement policies. These organizations may make the generic alternative more attractive to the patient by providing different amounts of reimbursement so that the net cost of the generic product to the patient is less than the net cost of our prescription brand product. Aggressive pricing policies by our generic product competitors and the prescription benefits policies of third party payors could cause us to lose market share or force us to reduce our gross margins in response.

ITEM 2: PROPERTIES

     During May 2003, we expanded our office space in Scottsdale, Arizona, to approximately 75,000 square feet under an amended lease agreement that expires in December 2010. The average annual expense under the amended lease agreement is approximately $2.1 million. The lease contains certain rent escalation clauses and, upon expiration, can be renewed for two additional periods of five years each.

     Medicis Canada, Inc., a wholly owned subsidiary, presently leases approximately 7,500 square feet of office and warehouse space in St-Laurent, Quebec, Canada, under a lease agreement that expires in April 2005.

     Rent expense was approximately $2.1 million, $1.5 million and $1.4 million for fiscal 2004, 2003 and 2002, respectively. We believe these properties are adequate for our current and foreseeable purposes and that additional space will be available if needed.

ITEM 3: LEGAL PROCEEDINGS

     On November 9, 2001, prior to its merger with Medicis, Ascent received notice that Triumph-Connecticut Limited Partnership and related parties (“Triumph”) had brought a civil action against it in the Business Session of the Superior Court of the Commonwealth of Massachusetts. In the action, the Triumph group claimed that the execution by Ascent of the merger agreement and the consummation of the merger without the consent of the Triumph group or the payment to the Triumph group of a specified amount breaches the terms of a January 1997 securities purchase agreement, the terms of warrants issued to the Triumph group, an implied covenant of good faith and fair dealing, and certain deceptive trade laws. The Triumph group sought damages in an amount not less than $22.1 million, plus treble damages. A hearing on cross-motions for summary judgment was held on October 16, 2003. On April 9, 2004, the court ruled on the cross-motions in Ascent’s favor. Triumph’s cross-motion for summary judgment was denied and Ascent’s cross-motion for summary judgment was granted on all claims. The court entered its order dismissing the lawsuit on April 13, 2004. Triumph filed a notice of appeal on May 6, 2004. We continue to believe that the claims of the Triumph group are without merit and will vigorously contest the appeal.

     On October 15, 2003, Kiel Laboratories, Inc. (“Kiel”) filed suit against us in the U.S. District Court for the Northern District of Georgia. In that action, Kiel claims that as a result of our acquisition of certain assets from WE Pharmaceuticals, Inc. (“WE”), the Company interfered with an alleged contractual relationship between Kiel and WE, that the Company breached certain alleged contractual obligations, and that the Company violated the federal RICO laws. Kiel has not claimed a specific dollar amount in damages in the pleadings or discovery. The Company

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has denied all of Kiel’s allegations and is vigorously defending the litigation. The action currently is in the discovery phase.

     On June 21, 2004, the United States International Trade Commission (“ITC”) instituted an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended, at the request of Inamed Corporation (“Inamed”). The investigation identifies Medicis Aesthetics, Inc., a wholly owned subsidiary of Medicis, and Q-Med as Respondents in the investigation regarding Inamed’s allegation of infringement of its U.S. Patent No. 4,803,075, dated February 7, 1989, by the dermal filler, RESTYLANE^®. There is no provision for money damages in this proceeding. However, if there is a finding by the ITC that we have engaged in unfair trade practices, the ITC could order us to cease and desist from distributing any RESTYLANE^® that we may have in our possession in the United States. Inamed has filed a parallel infringement action against Medicis and Q-Med in the U.S. District Court of the Southern District of California regarding the same patent. This action has been stayed pending the outcome of the ITC investigation. After a preliminary investigation regarding the above complaints, it is our belief that we have meritorious defenses as to the infringement claims and as to the validity of the Inamed patent.

     We and certain of our subsidiaries are parties to other actions and proceedings incident to our businesses, including litigation regarding our intellectual property, challenges to the enforceability or validity of our intellectual property and claims that our products infringe on the intellectual property rights of others. Although the outcome of these actions is not presently determinable, we believe, at the present time, that the ultimate resolution of these matters will not have a material adverse affect on our business. In our opinion, based upon consultation with legal counsel, as of June 30, 2004, the ultimate outcome with respect to any of these matters, based upon the information available to us, is either covered by insurance and/or established reserves, or in some cases rights of offset and/or indemnification, and/or in the aggregate will not have a material adverse effect on our business, financial condition or results of operations.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable.

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PART II

ITEM 5:  MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Price Range of Common Stock and Dividends Declared

     Medicis’ Class A common stock trades on the New York Stock Exchange under the symbol “MRX”. The following table sets forth the high and low sale prices for our Class A common stock on the New York Stock Exchange for the fiscal periods indicated. Prices have been restated to reflect the 2 for 1 stock split effected in the form of a stock dividend that occurred on January 23, 2004:

					DIVIDENDS
	HIGH		LOW		DECLARED
FISCAL YEAR ENDED JUNE 30, 2004
First Quarter	$	32.00	$	27.27	$	0.025
Second Quarter		36.01		27.81		0.025
Third Quarter		41.50		33.86		0.025
Fourth Quarter		45.26		38.45		0.025
FISCAL YEAR ENDED JUNE 30, 2003
First Quarter	$	23.70	$	16.93	$	—
Second Quarter		25.07		18.98		—
Third Quarter		28.30		22.61		—
Fourth Quarter		30.94		25.14		0.025

     On September 8, 2004, the last reported sale price on the New York Stock Exchange for Medicis’ Class A common stock was $37.62 per share. As of such date, there were approximately 229 holders of record of Class A common stock and one holder of record of Class B common stock.

     During September 2004, all outstanding shares of Medicis’ Class B common stock were in the process of being converted into Class A common stock.

Dividend Policy

     During fiscal 2004, we paid quarterly cash dividends aggregating $5.5 million on our common stock. In addition, on June 10, 2004, we declared a cash dividend of $0.025 per issued and outstanding share of common stock payable on July 30, 2004, to our stockholders of record at the close of business on July 1, 2004. Prior to these dividends, we had not paid a cash dividend on our common stock, and we have not adopted a dividend policy. Any future determinations to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, operating results, capital requirements and other factors that our Board of Directors deems relevant.

     Our 1.5% Contingent Convertible Senior Notes due 2033 require an adjustment to the conversion price if cash dividends of more than $0.025 per share per quarter are paid by us on our outstanding common stock.

Recent Sales of Unregistered Securities

     None.

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Equity Compensation Plan Information

     Information required to be included about our equity compensation plan is incorporated by reference to the material under the caption “Equity Compensation Plan Information” in the proxy statement for our 2004 annual meeting of stockholders.

Repurchases of Common Stock

     In May 2003, our Board of Directors approved a new repurchase program that authorized the repurchase of up to $75 million of our common stock. This program provided for the repurchase of Class A common stock at such time as management determined. As of June 30, 2004, we had not repurchased any shares of our common stock under this program. In August 2004, our Board of Directors approved a new program that replaces the May 2003 program and authorizes the repurchase of up to $150 million of our common stock. The timing and amount of any future repurchases will depend upon market conditions and corporate considerations.

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ITEM 6: SELECTED FINANCIAL DATA

     The following selected consolidated financial data for the five year period ended June 30, 2004 is derived from our audited consolidated financial statements and accompanying notes. The comparability of the years presented is impacted by certain product rights and business acquisitions. All business acquisitions were accounted for under the purchase method and accordingly, the results of operations reflect the financial results of each business acquisition from the date of the acquisition. Certain business acquisitions resulted in the write-off of in-process research and development resulting from an independent valuation. Gross profit does not include amortization of the related intangibles. All share and per share data have been restated to reflect the 2 for 1 stock split effected in the form of a stock dividend that occurred on January 23, 2004.

	FISCAL YEAR ENDED JUNE 30,
	2004			2003			2002			2001			2000
	(in thousands, except per share amounts)
Statements of Operations Data:
Net revenues	$	303,722		$	247,539		$	212,807		$	167,802		$	139,099
Gross profit		257,116			209,279			177,042			137,105			113,187
Operating expenses:
Selling, general and administrative		118,252			91,648			77,314			59,508			45,404
Research and development		16,494	(a)		29,568	(b)		15,132	(c)		25,515	(d)		4,903
In-process research and development		—			—			6,217			—			—
Depreciation and amortization		16,794			10,125			7,928			8,261			7,374
Total operating expenses		151,540			131,341			106,591			93,284			57,681
Operating income		105,576			77,938			70,451			43,821			55,506
Other:
Net interest (expense) income		(759	)		(278	)		8,533			15,504			11,876
Income tax expense		(15,317	)		(26,404	)		(28,960	)		(18,905	)		(24,388	)
Loss on early extinguishment of debt		(58,660	)		—			—			—			—
Net income	$	30,840		$	51,256		$	50,024		$	40,420		$	42,994
Basic net income per share	$	0.55		$	0.94		$	0.83		$	0.67		$	0.74
Diluted net income per share	$	0.52		$	0.91		$	0.80		$	0.64		$	0.70
Cash dividend declared per common share	$	0.10		$	0.025			—			—			—
Basic common shares outstanding		55,618			54,376			60,536			60,268			58,058
Diluted common shares outstanding		59,258			56,422			62,810			63,388			60,998

(a)	Includes $2.4 million paid to Dow Pharmaceutical Sciences, Inc. (“Dow”) for a research and development collaboration
(b)	Includes $14.2 million paid to Dow for a research and development collaboration and $6.0 million paid to aaiPharma, Inc. (“aaiPharma”) for a research and development collaboration
(c)	Includes $7.7 million paid to aaiPharma for a research and development collaboration
(d)	Includes $17.0 million paid to Corixa Corporation for a development, commercialization and licensing agreement

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	JUNE 30,
	2004		2003		2002		2001		2000
	(in thousands)
Balance Sheet Data:
Cash, cash equivalents, restricted cash and short-term investments	$	634,040	$	552,663	$	577,576	$	334,157	$	285,737
Working capital		666,743		576,781		611,259		358,468		312,302
Total assets		1,078,384		932,841		876,273		550,007		496,113
Long-term obligations		—		—		—		—		14,914
Long-term debt		453,067		400,000		400,000		—		—
Stockholders’ equity		555,303		461,121		429,059		503,453		437,439

	FISCAL YEAR ENDED JUNE 30,
	2004			2003			2002			2001			2000
	(in thousands)
Cash Flow Data:
Net cash provided by operating activities	$	127,964		$	84,667		$	73,542		$	71,120		$	41,238
Net cash (used in) provided by investing activities		(166,341	)		(113,709	)		(341,660	)		(97,981	)		13,387
Net cash provided by (used in) financing activities		40,621			(23,343	)		254,938			12,548			9,944

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ITEM 7:  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) summarizes the significant factors affecting our results of operations, liquidity, capital resources and contractual obligations, as well as discusses our critical accounting policies and estimates. You should read the following discussion and analysis together with our consolidated financial statements, including the related notes, which are included in this report on Form 10-K. Certain information contained in the discussion and analysis set forth below and elsewhere in this report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See “Risk Factors that May Affect Future Results” in Item 1 in this Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements in this report. Our MD&A is composed of four major sections; Executive Summary, Results of Operations, Liquidity and Capital Resources and Critical Accounting Policies and Estimates.

EXECUTIVE SUMMARY

     We are a leading specialty pharmaceutical company focusing primarily on helping patients attain a healthy and youthful appearance and self-image through the development and marketing of products in the United States for the treatment of dermatological, aesthetic and podiatric conditions in the United States and Canada. We offer a broad range of products addressing various conditions, including acne, fungal infections, rosacea, hyperpigmentation, photoaging, psoriasis, eczema, skin and skin-structure infections, seborrheic dermatitis and cosmesis (improvement in the texture and appearance of skin).

     Our current product franchises are divided between the Dermatological and Non-dermatological fields. The Dermatological field represents products for the treatment of Acne and Acne-related dermatological conditions and Non-acne dermatological conditions. The Non-dermatological field represents products for the treatment of Asthma (until May 2004) and Urea Cycle Disorder. The Acne and Acne-related dermatological product lines include core brands DYNACIN^®, PLEXION^® and TRIAZ^®. The Non-acne dermatological product lines include core brands LOPROX^®, OMNICEF^® and RESTYLANE^®. The Non-dermatological product lines include BUPHENYL^® and ORAPRED^®, which was one of the Company’s core brands until it was licensed to BioMarin in May 2004.

Key Aspects of Our Business

     We derive a majority of our prescription volume from our core prescription products. We believe that the prescription volume of our core prescription products and sales of our dermal aesthetic product, RESTYLANE^®, which we began selling in the United States on January 6, 2004, will constitute the majority of our sales for the foreseeable future.

     We have built our business by executing a four-part growth strategy. This strategy consists of promoting existing core brands, developing new products and important product line extensions, entering into strategic collaborations, and acquiring complementary products, technologies and businesses.

     As a result of customer buying patterns, a substantial portion of our revenues has been recognized in the last month of each quarter. We schedule our inventory purchases to meet anticipated customer demand. As a result, relatively small delays in the receipt of manufactured products by us could result in revenues being deferred or lost. Our operating expenses are based upon anticipated sales levels, and a high percentage of our operating expenses are relatively fixed in the short term. Consequently, variations in the timing of revenue recognition could cause significant fluctuations in operating results from period to period and may result in unanticipated periodic earnings shortfalls or losses.

     We estimate customer demand for our prescription products primarily through use of third party syndicated data sources which track prescriptions written by health care providers and dispensed by licensed pharmacies. These data are extrapolations from information provided only by certain pharmacies and are estimates of historical demand levels. We observe trends from these data, and, coupled with certain proprietary information, prepare demand

27

forecasts that are the basis for purchase orders for finished and component inventory from our third party manufacturers and suppliers. Our forecasts may fail to accurately anticipate ultimate customer demand for products. Overestimates of demand may result in excessive inventory production; underestimates may result in inadequate supply of our products in channels of distribution.

     We sell our products primarily to major wholesalers and retail pharmacy chains. Consistent with pharmaceutical industry patterns, approximately 80% of our revenues are derived from four major drug wholesale concerns. While we attempt to estimate inventory levels of our products at our major wholesale customers, using historical prescription information and historical purchase patterns, this process is inherently imprecise. Rarely do wholesale customers provide us complete inventory levels at regional distribution centers, or within their national distribution systems. We rely wholly upon our wholesale and drug chain customers to effect the distribution allocation of our products. Based upon historically consistent purchasing patterns of our major wholesale customers, we believe our estimates of trade inventory levels of our products are reasonable. We further believe that inventories of our products among wholesale customers, taken as a whole, are similar to those of other specialty pharmaceutical companies, and that our trade practices, which periodically involve volume discounts and early payment discounts, are typical of the industry.

     We periodically offer promotions to wholesale and chain drugstore customers to encourage dispensing of our products, consistent with prescriptions written by licensed health care providers. Because many of our products compete in multi-source markets, it is important for us to ensure the licensed healthcare providers’ dispensing instructions are fulfilled with our branded products and are not substituted with a generic product or another therapeutic alternative product which may be contrary to the licensed health care providers’ recommended and prescribed Medicis brand. We believe that a critical component of our brand protection program is maintenance of full product availability at drugstore and wholesale customers. We believe such availability strongly reduces the probability of local and regional product substitutions, shortages and backorders, which could result in lost sales. We expect to continue providing favorable terms to wholesale and retail drug chain customers as may be necessary to ensure the fullest possible distribution of our branded products within the pharmaceutical chain of commerce.

     We cannot control or influence greatly the purchasing patterns of our wholesale and retail drug chain customers. These are highly sophisticated customers that purchase products in a manner consistent with their industry practices and, presumably, based upon their projected demand levels. Purchases by any given customer, during any given period, may be above or below actual prescription volumes of any of our products during the same period, resulting in fluctuations of product inventory in the distribution channel.

     The following significant events and transactions occurred during fiscal 2004 and affected our results of operations, our cash flows and our financial condition:

- Launch of RESTYLANE^® in the United States Following Approval by the FDA

- Licensing of ORAPRED^® to BioMarin

- Sale of Products to Taro Pharmaceuticals U.S.A., Inc. (“Taro”)

- Exchange of our Contingent Convertible Senior Notes

Launch of RESTYLANE^® in the United States Following Approval by the FDA

     In March 2003, we acquired from Q-Med the exclusive U.S. and Canadian rights to market, distribute and commercialize the dermal restorative product lines known as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™. We paid $58.2 million upon closing of the transaction, $53.3 million in December 2003 upon FDA approval of RESTYLANE^®, $19.4 million in May 2004 upon certain cumulative commercial milestones being achieved and will pay approximately $29.1 million upon FDA approval of PERLANE^®. RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™ had previously been approved for use in Canada, and on December 12, 2003, the FDA approved RESTYLANE^® for use in the United States. On January 6, 2004, we began commercial sales of RESTYLANE^® in the United States. This was an important event for us as it represented our entrance into the dermal aesthetics market in the U.S., a market that we had invested a significant amount of resources in preparation of entering. In addition to the license fee and milestone payments paid to Q-Med for the exclusive rights to the products, we invested incremental costs associated with the hiring of a dedicated aesthetics

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sales force, additional headquarters personnel to support sales force efforts, including product management, customer service and training personnel, expenses associated with public relations, physician training and continuing medical education, and other administrative expenses. We believe the dermal aesthetics market will be an integral part of our business for the foreseeable future.

     On June 21, 2004, the ITC instituted an investigation pursuant to Section 337 of the Tariff Act of 1930, as amended, at the request of Inamed. The investigation identifies Medicis Aesthetics Inc., a wholly owned subsidiary of Medicis, and Q-Med as Respondents in the investigation regarding Inamed’s allegation of infringement of its U.S. Patent No. 4,803,075, dated February 7, 1989, by the dermal filler, RESTYLANE^®. Inamed has filed a parallel infringement action against Medicis and Q-Med in the U.S. District Court of the Southern District of California regarding the same patent. This action has been stayed pending the outcome of the ITC investigation. After a preliminary investigation regarding the above complaints, it is our belief that we have meritorious defenses as to the infringement claims and as to the validity of the Inamed patent.

Licensing of ORAPRED^® to BioMarin

     On May 18, 2004, we closed an asset purchase agreement and license agreement and executed a securities purchase agreement with BioMarin. The asset purchase agreement involves BioMarin’s purchase of assets related to ORAPRED^®, including assets concerning the Ascent field sales force. ORAPRED^® and related pediatric intellectual property is owned by Ascent, a wholly owned subsidiary of Medicis. The license agreement grants BioMarin the exclusive worldwide rights to ORAPRED^®, including proprietary taste-masking technologies and related development technologies. The securities purchase agreement grants BioMarin the option to purchase all outstanding shares of common stock of Ascent, based on certain conditions. As part of the transaction, the name Ascent Pediatrics, Inc. was changed to Medicis Pediatrics, Inc.

     Under terms of the agreements, BioMarin will make license payments to Ascent of approximately $93 million payable over a five-year period as follows: approximately $10 million as of the date of the transaction; approximately $12.5 million per quarter for four quarters beginning in July 2004; approximately $2.5 million per quarter for the subsequent four quarters beginning in July 2005; approximately $2 million per quarter for the subsequent eight quarters beginning in July 2006; and approximately $1.75 million per quarter for the last four quarters of the five-year period beginning in July 2008. BioMarin will also make payments of $2.5 million per quarter for six quarters beginning in July 2004 for reimbursement of certain contingent payments as discussed in Note 9 to our consolidated financial statements. The license agreement will terminate in July 2009. At that time, based on certain conditions, BioMarin will have the option to purchase all outstanding shares of Ascent for approximately $82 million. The payment will consist of $62 million in cash and $20 million in BioMarin common stock, based on the fair value of the stock at that time.

     As of the closing date of the transaction, BioMarin is responsible for all marketing and promotional efforts regarding the sale of ORAPRED^®. As a result, we no longer advertise or promote any oral liquid prednisolone sodium phosphate solution product or any related line extension. We have the responsibility for the manufacture and delivery of finished goods inventory to BioMarin, and BioMarin will be responsible for paying us for future finished goods inventory delivered by us through June 30, 2005. During the term of the license agreement, we will maintain ownership of the intellectual property and, consequently, will continue to amortize the related intangible assets. Payments received from BioMarin under the license agreement are treated as contract revenue, which is included in net revenues in our consolidated statements of income.

Sale of Products to Taro

     On January 14, 2003, Taro licensed with an option to purchase from us four branded prescription product lines for sale in the U.S. and Puerto Rico. The license agreement was effective on January 14, 2003 and extended through June 1, 2004, after which Taro had the option to purchase the product lines. Medicis received quarterly license payments from Taro during the term of the agreement. Under terms of the agreement, Taro licensed from us the following four brands: TOPICORT^® (desoximetasone), a topical corticosteroid used for inflammatory skin diseases; A/T/S^® (erythromycin), a topical antibiotic used in the treatment of acne; OVIDE^® (malathion), a pediculicide used in the treatment of head lice; and PRIMSOL^® (trimethoprim HCI), an antibiotic oral solution for children with acute

29

otitis media, or middle ear infections. Taro purchased the product lines at the end of the term of the agreement for $12.1 million. The carrying value of the intangible assets related to these products was written off as of the sale date, and a loss of approximately $32,000 was recognized during fiscal 2004 and is included in selling, general and administrative expenses in the accompanying consolidated statements of income. We incurred $350,000 of professional fees related to the transaction.

Exchange of Contingent Convertible Senior Notes

     On August 14, 2003, we exchanged approximately $230.8 million in principal amount of our 2.5% Contingent Convertible Senior Notes Due 2032 (the “Old Notes”) for approximately $283.9 million in principal amount of our 1.5% Contingent Convertible Senior Notes Due 2033 (the “New Notes”). Holders of Old Notes that accepted our exchange offer received $1,230 in principal amount of New Notes for each $1,000 in principal amount of Old Notes. The terms of the New Notes are similar to the terms of the Old Notes, but have a different interest rate, conversion rate and maturity date. Holders of Old Notes that chose not to exchange continue to be subject to the terms of the Old Notes.

     The New Notes bear interest at a rate of 1.5% per annum, which is payable on June 4 and December 4 of each year, beginning December 4, 2003. We will also pay contingent interest at a rate of 0.5% per annum during any six-month period, with the initial six-month period commencing June 4, 2008, if the average trading price of the New Notes reaches certain thresholds. The New Notes mature on June 4, 2033.

     We may redeem some or all of the New Notes at any time on or after June 11, 2008, at a redemption price, payable in cash, of 100% of the principal amount of the New Notes, plus accrued and unpaid interest. Holders of the New Notes may require us to repurchase all or a portion of their New Notes on June 4, 2008, 2013 and 2018, and upon a change in control, as defined in the indenture governing the New Notes, at 100% of the principal amount of the New Notes, plus accrued and unpaid interest to the date of the repurchase, payable in cash.

     The New Notes are convertible, at the holders’ option, prior to the maturity date into shares of our Class A common stock in the following circumstances:

• during any quarter commencing after September 30, 2003, if the closing price of our Class A common stock over a specified number of trading days during the previous quarter, including the last trading day of each quarter, is more than 120% of the conversion price of the New Notes, or $46.51. The Notes are initially convertible at a conversion price of $38.76 per share, which is equal to a conversion rate of approximately 25.7998 shares per $1,000 principal amount of New Notes, subject to adjustment;

• if we have called the New Notes for redemption;

• during the five trading day period immediately following any nine consecutive day trading period in which the trading price of the New Notes per $1,000 principal amount for each day of such period was less than 95% of the product of the closing sale price of our Class A common stock on that day multiplied by the number of shares of our Class A common stock issuable upon conversion of $1,000 principal amount of the New Notes; or

• upon the occurrence of specified corporate transactions.

     The New Notes, which are unsecured, do not contain any restrictions on the incurrence of additional indebtedness or the repurchase of our securities and do not contain any financial covenants. The New Notes require an adjustment to the conversion price if cash dividends of more than $0.025 per quarter (after giving effect to the stock split described in Note 16 to our consolidated financial statements) are paid by us on our outstanding common stock.

     As a result of the exchange, the outstanding principal amounts of the Old Notes and the New Notes were $169.2 million and $283.9 million, respectively. During the fiscal first quarter ended September 30, 2003, we recognized a loss on early extinguishment of debt totaling $58.7 million, consisting of a $53.1 million premium and a $5.6 million write-off of corresponding Old Notes fees. We incurred approximately $5.1 million of fees and other

30

origination costs related to the issuance of the New Notes. We are amortizing these costs over the five-year Put period, which runs through August 2008.

     Unless a conversion contingency is met, the shares underlying the remaining Old Notes and New Notes are not included in the calculation of fully diluted earnings per share. Should a contingency be met, earnings per share would be expected to decrease as a result of the inclusion of the underlying shares in the earnings per share calculation. Volatility in our stock price could cause a contingency to be met in one quarter and not in a subsequent quarter, increasing the volatility of fully diluted earnings per share.

Subsequent Events

     In addition to the events and transactions described above, the following events and transactions occurred subsequent to the date of our fiscal year end:

License of SubQ^TM from Q-Med

     On July 15, 2004, we entered into an exclusive license agreement with Q-Med to market, distribute, sell and commercialize in the United States and Canada Q-Med’s product currently known as SubQ^TM. Q-Med will have the exclusive right to manufacture SubQ^TM for Medicis. SubQ^TM is not approved currently for use in the United States and Canada.

     Under the terms of the agreement, Medicis Aesthetics Holdings Inc., a wholly owned subsidiary of Medicis, will license SubQ^TM for approximately $80 million, due as follows: approximately $30 million upon closing of the transaction, which was recorded as a charge to research and development expense during the first quarter of fiscal 2005; approximately $10 million upon completion of certain clinical milestones; approximately $20 million upon the satisfaction of certain defined regulatory milestones; and approximately $20 million upon U.S. launch of SubQ^TM. We also will make additional milestone payments to Q-Med upon the achievement of certain commercial milestones.

     SubQ^TM is comprised of the same NASHA^TM (non-animal stabilized hyaluronic acid) substance as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES^TM with a larger gel particle size and is understood to have patent protection until at least 2015.

License of Product Rights to Taro

     On July 27, 2004, we entered into an exclusive license and optional purchase agreement with Taro pursuant to which Taro will market, distribute and sell the LUSTRA^® family of products and two development stage products in the United States, Canada and Puerto Rico. The license agreement was effective immediately and extends through July 1, 2007, after which Taro may purchase the product lines.

Repurchases of Common Stock

     In August 2004, our Board of Directors approved a new program that authorizes the repurchase of up to $150 million of our common stock. The timing and amount of any future repurchases will depend upon market conditions and corporate considerations.

Competitive Developments

     On July 18, 2004, Glades Pharmaceuticals, LLC, a wholly owned subsidiary of Stiefel Laboratories, Inc., announced the launch of myracT (minocycline hydrochloride tablets, USP), as a branded pharmaceutical product. MyracT tablets is a prescription product that competes directly with our DYNACIN^® tablet products.

     On August 6, 2004, the FDA approved an ANDA submitted by Altana, Inc. for its ciclopirox topical suspension, a generic version of our LOPROX^® TS product.

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RESULTS OF OPERATIONS

     The following table sets forth certain data as a percentage of net revenues for the periods indicated.

Percentage of Net Revenues

	FISCAL YEAR ENDED JUNE 30,
	2004***			2003**			2002*
Net revenues		100.0	%		100.0	%		100.0	%
Gross profit		84.7			84.5			83.2
Operating expenses		49.9			53.1			50.1
Operating income		34.8			31.5			33.1
Interest (expense) income, net		(0.2	)		(0.1	)		4.0
Loss on early extinguishment of debt		(19.3	)		—			—
Income tax expense		(5.0	)		(10.7	)		(13.6	)
Net income		10.2	%		20.7	%		23.5	%

*	Included in operating expenses is a $6.2 million charge (2.9% of net revenues) for in-process research and development related to the merger with Ascent and a $7.7 million payment (3.6% of net revenues) to aaiPharma for a research and development collaboration.
**	Included in operating expenses is $14.2 million in payments (5.7% of net revenues) to Dow for a research and development collaboration and a $6.0 million payment (2.4% of net revenues) to aaiPharma for a research and development collaboration.
***	Included in operating expenses is a $2.4 million payment (0.8% of net revenues) to Dow for a research and development collaboration.

Fiscal Year Ended June 30, 2004 Compared To Fiscal Year Ended June 30, 2003

Net Revenues

     The following table sets forth the net revenues for the fiscal years ended June 30, 2004 (“fiscal 2004”) and June 30, 2003 (“fiscal 2003”), along with the percentage of net revenues for each of our product categories (amounts in millions):

	Fiscal 2004		Fiscal 2003		$ Change		% Change
Net revenues	$	303.7	$	247.5	$	56.2		22.7	%

	Fiscal 2004			Fiscal 2003			Change
Acne and acne-related dermatological products		30.5	%		33.6	%		(3.1	)%
Non-acne dermatological Products		50.9	%		36.7	%		14.2	%
Non-dermatological products		18.6	%		29.7	%		(11.1	)%
Total net revenues		100.0	%		100.0	%		—

     Our total net revenues increased during fiscal 2004 primarily as a result of growth in sales of the DYNACIN^®, LOPROX^®, RESTYLANE^® and TRIAZ^® products. The Acne and acne-related dermatological product net revenues decreased as a percentage of net revenues, but increased in net dollars by 11.5% primarily due to the introduction of DYNACIN^® in tablet form in May 2003 and the introduction of TRIAZ^® in pad form in July 2003. The Non-acne dermatological product net revenues increased as a percentage of net revenues during fiscal 2004 primarily due to the launch of RESTYLANE^® in the United States in January 2004 and the introduction of LOPROX^® Shampoo in March 2003. The Non-dermatological product net revenues decreased as a percentage of net revenues primarily due to the increase in net revenues in the other products, and decreased net revenues of ORAPRED^®. The Non-dermatological product net revenues decreased 23.4% from fiscal 2003 to fiscal 2004. ORAPRED^® was licensed to BioMarin as of May 18, 2004, and the licensing revenue recognized during fiscal 2004 subsequent to that date was less than the ORAPRED^® product revenue for the comparable period during fiscal 2003.

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Gross Profit

     Gross profit represents our net revenues less our cost of product revenue. Our cost of product revenue includes our acquisition cost for the products we purchase from our third party manufacturers and royalty payments made to third parties. Amortization of intangible assets related to products sold is not included in gross profit. Product mix plays a significant role in our quarterly and annual gross profit as a percentage of net revenues. Different products generate different gross profit margins, and the relative mix of higher gross product profit products and lower gross profit products can affect our total gross profit.

     The following table sets forth our gross profit for fiscal years 2004 and 2003, along with the percentage of net revenues represented by such gross profit (amounts in millions):

	Fiscal 2004			Fiscal 2003			$ Change		% Change
Gross profit	$	257.1		$	209.3		$	47.8		22.9	%
% of net revenues		84.7	%		84.5	%

     The increase in gross profit during fiscal 2004 as compared to fiscal 2003 was due to the increase in our net revenues, while the increase in gross profit as a percentage of net revenues was primarily due to the different mix of products sold during fiscal 2004 as compared to during fiscal 2003.

Selling, General and Administrative Expenses

     The following table sets forth our selling, general and administrative expenses for fiscal years 2004 and 2003, along with the percentage of net revenues represented by such selling, general and administrative expenses (amounts in millions):

	Fiscal 2004			Fiscal 2003			$ Change		% Change
Selling, general and administrative	$	118.3		$	91.6		$	26.7		29.0	%
% of net revenues		38.9	%		37.0	%

     The increase in selling, general and administrative expenses from fiscal 2003 to fiscal 2004 was primarily attributable to incremental costs associated with the establishment of a sales and marketing program for RESTYLANE^®. We have incurred incremental costs associated with the hiring of a dedicated aesthetics sales force, additional headquarters personnel to support sales force efforts, including product management, customer service and training personnel, expenses associated with public relations, physician training and continuing medical education, and other administrative expenses. A pre-market approval application for RESTYLANE^® was approved by the FDA on December 12, 2003, followed by the product launch and first U.S. commercial sales of RESTYLANE^® on January 6, 2004.

Research and Development Expenses

     The following table sets forth our research and development expenses for fiscal years 2004 and 2003 (amounts in millions):

	Fiscal 2004		Fiscal 2003		$ Change			% Change
Research and development	$	16.5	$	29.6	$	(13.1	)		(44.2	)%
Charges included in research and development		2.4		20.2		(17.8	)		(88.0	)%

     Included in research and development expenses for fiscal 2004 was a milestone payment of $2.4 million under a license and development agreement with Dow for a patented dermatological product. Included in fiscal 2003 research and development expense was $14.2 million in milestone payments under a license and development agreement with Dow for a patented dermatologic product, and a $6.0 million milestone payment to aaiPharma under an agreement for the development, commercialization and license of a key dermatologic product. Absent these charges, research and development expenses increased 50.1%, or $4.7 million, to $14.1 million during fiscal 2004 from $9.4 million during fiscal 2003. This increase is due to the timing of various research and development

33

projects. We expect research and development expenses to fluctuate from quarter to quarter based on the timing of the achievement of development milestones under license and development agreements, as well as the timing of other development projects and the funds available to support these projects.

Depreciation and Amortization Expenses

     Depreciation and amortization expenses during fiscal 2004 increased 65.9%, or $6.7 million, to $16.8 million from $10.1 million during fiscal 2003. This increase was primarily due to the amortization of expenses associated with the acquisition of the RESTYLANE^® family of products, which began in March 2003, and the amortization related to the $53.3 million and $19.4 million milestone payments made to Q-Med in December 2003 and May 2004, respectively, which are being amortized over 15 years.

Loss on Early Extinguishment of Debt

     On August 14, 2003, we exchanged $230.8 million in principal amount of our Old Notes for $283.9 million in principal amount of our New Notes. As a result of the exchange, we recognized a loss on early extinguishment of debt totaling $58.7 million, consisting of a $53.1 million premium and a $5.6 million write-off of corresponding Old Notes fees.

Interest Income

     Interest income during fiscal 2004 decreased 18.3%, or $2.2 million, to $10.1 million from $12.3 million during fiscal 2003, primarily due to a decrease in interest rate yields.

Interest Expense

     Interest expense during fiscal 2004 decreased 14.1%, or $1.8 million, to $10.8 million from $12.6 million during fiscal 2003. This decrease was due to the August 2003 exchange of a portion of our Old Notes, which accrue interest at 2.5% per annum, for our New Notes, which accrue interest at 1.5% per annum.

Income Tax Expense

     The following table sets forth our income tax expense and the resulting effective tax rate stated as a percentage of pre-tax income for fiscal years 2004 and 2003 (amounts in millions):

	Fiscal 2004			Fiscal 2003			$ Change			% Change
Income tax expense	$	15.3		$	26.4		$	(11.1	)		(42.0	)%
Effective tax rate		33.2	%		34.0	%

     The decrease in income tax expense and the effective tax rate from fiscal 2003 to fiscal 2004 was primarily due to the decrease in pretax earnings as a result of the loss on the early extinguishment of debt. Excluding the loss on early extinguishment of debt, our adjusted effective tax rate for fiscal 2004 was 35%. The increase in the adjusted effective tax rate to 35% in fiscal 2004 compared to the effective tax rate of 34% in fiscal 2003 is primarily attributable to a decrease in research and development credits associated with the decrease in research and development expenditures. The effective rate is lower than the expected combined federal and state income tax rates due to approximately $5.3 million and $5.9 million of tax-exempt interest income in fiscal 2004 and fiscal 2003, respectively, and contributions to charitable programs that receive favorable tax treatment. Our full year effective tax rate may increase in fiscal 2005 compared to our adjusted effective tax rate in fiscal 2004 due to expected changes in the mix of earnings and the expiration of the U.S. research and development tax credit.

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Fiscal Year Ended June 30, 2003 Compared To Fiscal Year Ended June 30, 2002

Net Revenues

     The following table sets forth the net revenues for fiscal 2003 and the fiscal year ended June 30, 2002 (“fiscal 2002”), along with the percentage of net revenues for each of our product categories (amounts in millions):

	Fiscal 2003		Fiscal 2002		$ Change		% Change
Net revenues	$	247.5	$	212.8	$	34.7		16.3	%

	Fiscal 2003			Fiscal 2002			Change
Acne and acne-related dermatological products		33.6	%		43.4	%		(9.8	)%
Non-acne dermatological products		36.7	%		34.0	%		2.7	%
Non-dermatological products		29.7	%		22.6	%		7.1	%
Total net revenues		100.0	%		100.0	%		—

     Our net revenues increased during fiscal 2003 primarily as a result of growth in sales of the LOPROX^®, OMNICEF^®, ORAPRED^® and BUPHENYL^® products. The Acne and acne-related dermatological product net revenues decreased as a percentage of total net revenues primarily due to a decrease in sales of the PLEXION^® product line. This decrease was primarily due to increased competition as four products entered the market in fiscal 2003. The growth in sales of the LOPROX^® product line is the primary cause of the Non-acne dermatological product net revenues growth as a percentage of total net revenues from fiscal 2002 to fiscal 2003. The growth in sales of ORAPRED^® and BUPHENYL^® products was the primary cause of the Non-dermatological product net revenues growth as a percentage of total net revenues from fiscal 2002 to fiscal 2003.

Gross Profit

     Gross profit represents our net revenues less our cost of product revenue. Our cost of product revenue includes our acquisition cost for the products we purchase from our third party manufacturers and royalty payments made to third parties. Amortization of intangible assets related to products sold is not included in gross profit. Product mix plays a significant role in our quarterly and annual gross profit as a percentage of net revenues. Different products generate different gross profit margins, and the relative mix of higher gross product profit products and lower gross profit products can affect our total gross profit.

     The following table sets forth our gross profit for fiscal years 2003 and 2002, along with the percentage of net revenues represented by such gross profit (amounts in millions):

	Fiscal 2003			Fiscal 2002			$ Change		% Change
Gross profit	$	209.3		$	177.0		$	32.3		18.2	%
% of net revenues		84.5	%		83.2	%

     The increase in gross profit during fiscal 2003 as compared to fiscal 2002 was due to the increase in our net revenues, while the increase in gross profit as a percentage of net revenues was primarily due to a higher percentage of total sales related to our LOPROX^® and ORAPRED^® products, which have higher gross profit percentages than our other products.

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Selling, General and Administrative Expenses

     The following table sets forth our selling, general and administrative expenses for fiscal years 2003 and 2002, along with the percentage of net revenues represented by such selling, general and administrative expenses (amounts in millions):

	Fiscal 2003			Fiscal 2002			$ Change		% Change
Selling, general and administrative	$	91.6		$	77.3		$	14.3		18.5	%
% of net revenues		37.0	%		36.3	%

     The increase in selling, general and administrative expenses during fiscal 2003 from fiscal 2002 was primarily attributable to a full fiscal year of costs associated with our Ascent (pediatrics) sales force, including salaries and travel expenses, and increases in personnel costs related to the hiring of additional full-time equivalent employees, yearly salary escalations for existing employees, operational expenses related to the acquired RESTYLANE^® family of products and an increase in variable costs commensurate with increased sales volume.

Research and Development Expenses

     The following table sets forth our research and development expenses for fiscal years 2003 and 2002 (amounts in millions):

	Fiscal 2003		Fiscal 2002		$ Change		% Change
Research and development	$	29.6	$	15.1	$	14.5		95.4	%
Charges included in research and development		20.2		7.7		12.5		162.2	%

     Included in fiscal 2003 research and development expense is $14.2 million in milestone payments under a license and development agreement with Dow for a patented dermatologic product, and a $6.0 million milestone payment to aaiPharma under an agreement for the development, commercialization and license of a key dermatologic product. Included in fiscal 2002 research and development expense is a $7.7 million payment to aaiPharma under that agreement. Absent these charges, research and development expense increased $2.0 million, to $9.4 million in fiscal 2003 from $7.4 million in fiscal 2002. As a percentage of net revenues, total research and development expenses increased from 7.1% in fiscal 2002 to 12.0% in fiscal 2003. This increase is primarily attributable to the increased milestone payments incurred during 2003 as compared to 2002. We expect research and development expenses to fluctuate from quarter to quarter based on the timing of the achievement of development milestones under license and development agreements, as well as the timing of other development projects and the funds available to support these projects.

In-Process Research and Development Expense

     We recorded a $6.2 million charge to operations for in-process research and development during fiscal 2002 as part of the allocated purchase price related to the merger with Ascent. There were no in-process research and development charges during fiscal 2003. The amount allocated to in-process research and development was based on an independent valuation of Ascent’s completed and in-process technologies. During fiscal 2004 and 2003, we incurred development costs of approximately $0.5 million and $0.6 million, respectively, related to the acquired in-process research and development. We licensed the research and development technologies to BioMarin on May 18, 2004 under the terms of a license agreement, as further described in the “EXECUTIVE SUMMARY” section.

Depreciation and Amortization Expenses

     Depreciation and amortization expenses during fiscal 2003 increased 27.7%, or $2.2 million, to $10.1 million from $7.9 million in fiscal 2002. This increase was primarily due to the amortization of expenses associated with the acquisition of the RESTYLANE^® family of products, which began in March 2003 and is being amortized over 15 years.

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Interest Income

     Interest income during fiscal 2003 increased 24.1%, or $2.4 million, to $12.3 million from $9.9 million during fiscal 2002, primarily due to an increase in cash available for investment from the issuance of our Old Notes during June 2002 and an increase in cash flows from operations.

Interest Expense

     Interest expense during fiscal 2003 increased $11.2 million, to $12.6 million from $1.4 million during fiscal 2002, primarily due to the issuance of our Old Notes during June 2002. Interest payable on these Old Notes accrues at 2.5% per annum. In addition, amortization of deferred financing costs related to the Old Notes is recognized as interest expense over the Put period of the Old Notes. Total interest expense recognized during fiscal 2003 related to these Old Notes, including the amortization of deferred financing costs, was approximately $12.5 million.

Income Tax Expense

     The following table sets forth our income tax expense and the resulting effective tax rate stated as a percentage of pre-tax income for fiscal years 2003 and 2002 (amounts in millions):

	Fiscal 2003			Fiscal 2002			$ Change			% Change
Income tax expense	$	26.4		$	29.0		$	(2.6	)		(8.8	)%
Effective tax rate		34.0	%		36.7	%

     The decrease in the effective tax rate was primarily due to increased tax credits generated by the $20.2 million in research and development milestone payments made during fiscal 2003, and the $6.2 million charge that we recorded in fiscal 2002 for in-process research and development related to the merger with Ascent, which was non-deductible for tax purposes in fiscal 2002. In addition, the effective rate is lower than expected federal and state income tax rates due to approximately $5.9 million and $5.7 million of tax-exempt interest income in fiscal 2003 and 2002, respectively, and contributions to charitable programs that receive favorable tax treatment.

LIQUIDITY AND CAPITAL RESOURCES

Overview

     The following table highlights selected cash flow components for fiscal 2004 and fiscal 2003, and selected balance sheet components as of June 30, 2004 and June 30, 2003 (amounts in millions):

	Fiscal 2004			Fiscal 2003			$ Change			% Change
Cash provided by (used in):
Operating activities	$	128.0		$	84.7		$	43.3			51.1	%
Investing activities		(166.3	)		(113.7	)		(52.6	)		(46.3	)%
Financing activities		40.6			(23.3	)		(63.9	)		(274.1	)%

	June 30, 2004		June 30, 2003		$ Change			% Change
Cash, cash equivalents, restricted cash and short-term investments	$	634.0	$	552.7	$	81.3			14.7	%
Working capital		666.7		576.8		89.9			15.6	%
2.5% contingent convertible senior notes due 2032		169.2		400.0		(230.8	)		(57.7	)%
1.5% contingent convertible senior notes due 2033		283.9		—		283.9			100.0	%

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Working Capital

     Working capital as of June 30, 2004 and June 30, 2003 consisted of the following (amounts in millions):

	June 30, 2004		June 30, 2003		$ Change			% Change
Cash, cash equivalents, restricted cash and short-term investments	$	634.0	$	552.7	$	81.3			14.7	%
Accounts receivable, net		47.9		51.7		(3.8	)		(7.4	)%
Inventories, net		19.5		14.0		5.5			39.5	%
Deferred tax assets, net		14.1		10.5		3.6			35.0	%
Other current assets		18.3		16.8		1.5			8.7	%
Total current assets		733.8		645.7		88.1			13.7	%
Accounts payable		13.9		18.6		(4.7	)		(25.1	)%
Short-term contract obligation		17.9		18.3		(0.4	)		(0.2	)%
Income taxes payable		0.7		0.5		0.2			48.0	%
Other current liabilities		34.6		31.5		3.1			9.9	%
Total current liabilities		67.1		68.9		(1.8	)		(0.3	)%
Working capital	$	666.7	$	576.8	$	89.9			15.6	%

     We had cash, cash equivalents, restricted cash and short-term investments of $634.0 million and working capital of $666.7 million at June 30, 2004, as compared to $552.7 million and $576.8 million, respectively, at June 30, 2003. As of June 30, 2004, we did not have any restricted cash or restricted short-term investments, as the escrow account related to our acquisition of product rights from Q-Med was liquidated and paid to Q-Med upon the FDA’s approval of RESTYLANE^®.

     Working capital increased from June 30, 2003 to June 30, 2004 primarily due the increase in cash, cash equivalents, restricted cash and short-term investments, which was primarily due to our net earnings generated during fiscal 2004, adjusted for the $58.7 million non-cash loss on the early extinguishment of debt, depreciation and amortization, and $20.4 million of tax benefits from stock option exercises during fiscal 2004.

     Management believes existing cash and short-term investments, together with funds generated from operations, should be sufficient to meet operating requirements for the foreseeable future. Our cash and short-term investments are available for strategic investments, mergers and acquisitions, other potential large-scale needs and to fund our share repurchase program.

Operating Activities

     Net cash provided by operating activities during fiscal 2004 increased 51.1%, or $43.3 million, to $128.0 million from $84.7 million during fiscal 2003. Our operating cash flow for fiscal 2004 was generated principally by our net earnings, adjusted for the $58.7 million non-cash loss on the early extinguishment of debt and other non-cash charges including depreciation and amortization, as well as $20.4 million of tax benefits from stock option exercises.

Investing Activities

     Net cash used in investing activities during fiscal 2004 increased $52.6 million, to $166.3 million from $113.7 million during fiscal 2003. Net cash used in investing activities during fiscal 2004 included $84.1 million in payments for the purchase of product rights, including $72.7 million in milestone payments to Q-Med.

     On December 12, 2003, the FDA approved RESTYLANE^® for use in the United States, and a payment of $53.3 million was made to Q-Med upon the occurrence of this milestone. In May 2004, we paid $19.4 million to Q-Med as a result of certain cumulative commercial milestones being achieved. We will pay Q-Med approximately $29.1 million upon FDA approval of PERLANE^®.

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Financing Activities

     Net cash provided by financing activities during fiscal 2004 was $40.6 million compared to net cash used in financing activities of $23.3 million during fiscal 2003. The change is primarily attributable to the purchase of $36.0 million of treasury stock during fiscal 2003 while no cash was used to purchase treasury stock during fiscal 2004, as well as $51.4 million of proceeds from the exercise of stock options received during fiscal 2004, as compared to $12.8 million received during fiscal 2003.

Contingent Convertible Senior Notes and Other Long-Term Commitments

     On August 14, 2003, we exchanged $230.8 million in principal amount of our Old Notes for $283.9 million in principal amount of our New Notes. Holders of Old Notes that accepted the Company’s exchange offer received $1,230 in principal amount of New Notes for each $1,000 in principal amount of Old Notes. The terms of the New Notes are similar to the terms of the Old Notes, but have a different interest rate, conversion rate and maturity date. Holders of Old Notes that chose to not exchange will continue to be subject to the terms of the Old Notes. See Note 13 of Notes to Consolidated Financial Statements for further discussion.

     The New Notes and the Old Notes are unsecured and do not contain any restrictions on the incurrence of additional indebtedness or the repurchase of our securities, and do not contain any financial covenants. The Old Notes do not contain any restrictions on the payment of dividends. The New Notes require an adjustment to the conversion price if cash dividends of more than $0.025 per quarter (after giving effect to the 2 for 1 stock split in January 2004) are paid by the Company on its outstanding common stock.

     Except for the Old Notes, the New Notes and deferred tax liabilities, we have no long-term liabilities and had only $67.1 million of current liabilities at June 30, 2004. Our other commitments and planned expenditures consist principally of payments we will make in connection with strategic collaborations and research and development expenditures, and we will continue to invest in sales and marketing infrastructure.

Repurchases of Common Stock

     In May 2003, our Board of Directors approved a new repurchase program that authorized the repurchase of up to $75 million of our common stock. This program provided for the repurchase of Class A common stock at such times as management determined. As of June 30, 2004, we had not repurchased any shares of our common stock under this program. In August 2004, our Board of Directors approved a new program that replaces the May 2003 program and authorizes the repurchase of up to $150 million of our common stock. The timing and amount of any future repurchases will depend upon market conditions and corporate considerations.

Dividends

     During fiscal 2004, we paid quarterly cash dividends aggregating $5.5 million on our common stock. In addition, on June 10, 2004, we declared a cash dividend of $0.025 per issued and outstanding share of common stock payable on July 30, 2004 to our stockholders of record at the close of business on July 1, 2004. Prior to these dividends, we had not paid a cash dividend on our common stock, and we have not adopted a dividend policy. Any future determinations to pay cash dividends will be at the discretion of our Board of Directors and will be dependent upon our financial condition, operating results, capital requirements and other factors that our Board of Directors deems relevant.

Line of Credit

     We have a revolving line of credit facility of up to $25.0 million from Wells Fargo Bank, N.A. The facility may be drawn upon by us, at our discretion, and is collateralized by our principal assets. The outstanding balance of the credit facility bears interest at a floating rate of 150 basis points in excess of the 30-day London Interbank Offered Rate and expires in November 2004. The agreement requires us to comply with certain covenants, including covenants relating to our financial condition and results of operation. We have not drawn on this credit facility.

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Off-Balance Sheet Arrangements

     We do not have any transactions, arrangements and other relationships with unconsolidated entities that are reasonably likely to affect our liquidity or capital resources. We have no special purpose or limited purpose entities that provided off-balance sheet financing, liquidity or market or credit risk support, engage in leasing, hedging, research and development services, or other relationships that expose us to liability that is not reflected on the face of the financial statements. See Note 14 of the financial statements regarding our lease commitments and other commitments.

Contractual Obligations

     The following table summarizes our significant contractual obligations at June 30, 2004, and the effect such obligations are expected to have on our liquidity and cash flows in future periods. This table excludes amounts already recorded on our balance sheet as current liabilities at June 30, 2004 or certain other purchase obligations as discussed below (in thousands):

	Payments Due By Period
			Less Than						More Than
	Total		1 Year		1-3 Years		3-5 Years		5 Years
Long-term debt	$	453,067	$	—	$	—	$	—	$	453,067
Operating leases		13,683		2,050		4,168		6,399		1,066
Other purchase obligations and commitments		867		173		347		347		—
Total contractual obligations	$	467,617	$	2,223	$	4,515	$	6,746	$	454,133

     Other purchase obligations and commitments include payments due under research and development and consulting contracts.

     Purchase orders for raw materials, finished goods and other goods and services are not included in the above table. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements. For the purpose of this table, contractual obligations for purchase of goods or services are defined as agreements that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase orders are based on our current manufacturing needs and are fulfilled by our vendors with relatively short timetables. We do not have significant agreements for the purchase of raw materials or finished goods specifying minimum quantities or set prices that exceed our short-term expected requirements. We also enter into contracts for outsourced services; however, the obligations under these contracts were not significant and the contracts generally contain clauses allowing for cancellation without significant penalty.

     The expected timing of payment of the obligations discussed above is estimated based on current information. Timing of payments and actual amounts paid may be different depending on the time of receipt of goods or services or changes to agreed-upon amounts for some obligations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. On an ongoing basis, we evaluate our estimates related to sales allowances, chargebacks, rebates, returns and other pricing adjustments, depreciation and amortization and other contingencies and litigation. We base our estimates on

40

historical experience and various other factors related to each circumstance. Actual results could differ from those estimates based upon future events, which could include, among other risks, changes in the regulations governing the manner in which we sell our products, changes in the health care environment and managed care consumption patterns. Our significant accounting policies are described in Note 1 to the consolidated financial statements included in this report. We believe the following critical accounting policies affect our most significant estimates and assumptions used in the preparation of our consolidated financial statements and are important in understanding our financial condition and results of operations.

Revenue Recognition

     Revenue from product sales is recognized when the merchandise is shipped to an unrelated third party pursuant to Staff Accounting Bulletin No. 104 (SAB 104), “Revenue Recognition in Financial Statements.” Accordingly, revenue is recognized when all four of the following criteria are met: (i) persuasive evidence that an arrangement exists; (ii) delivery of the products has occurred; (iii) the selling price is both fixed and determinable; and (iv) collectibility is reasonably assured. Our customers consist primarily of large pharmaceutical wholesalers who sell directly into the retail channel. Provisions for early payment discounts, and estimates for chargebacks, managed care and Medicaid rebates, damaged product returns, exchanges for expired product are established as a reduction of product sales revenues at the time such revenues are recognized. These revenue reductions are established by us as our best estimate at the time of sale based on historical experience adjusted to reflect known changes in the factors that impact such reserves. These revenue reductions are generally reflected either as a direct reduction to accounts receivable through an allowance, or as an addition to accrued expenses if the payment is due to a party other than the wholesale or retail customer.

     We enter into licensing arrangements with other parties whereby we receive contract revenue based on the terms of the agreement. The timing of revenue recognition is dependent on the level of our continuing involvement in the manufacture and delivery of licensed products. If we have continuing involvement, the revenue is deferred and recognized on a straight-line basis over the period of continuing involvement. In addition, if our licensing arrangements require no continuing involvement and payments are merely based on the passage of time, we will assess such payments for revenue recognition under the collectibility criteria of SAB 104.

     We do not provide any forms of price protection to our wholesale customers and permit product returns only if the product is damaged or if it is returned within six to 12 months of expiration and the customer is committed to accepting replacement product in exchange. Our customers consist principally of financially viable wholesalers; so, revenue is recorded upon sale to the wholesaler, net of estimated provisions.

     If the levels of chargebacks, managed care and Medicaid rebates, damaged product returns and exchanges for expired products fluctuate significantly and/or if our estimates do not adequately reserve for these reductions of net product revenues, our reported net product revenues could be negatively affected.

     Accounts receivable are presented net of allowances related to the above provisions of approximately $13.1 million and $12.7 million at June 30, 2004 and June 30, 2003, respectively.

Goodwill and Other Identifiable Intangible Assets

     We have in the past made acquisitions of products and businesses that include goodwill, license agreements, product rights, and other identifiable intangible assets. We assess the impairment of goodwill and other identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors we consider important which could trigger an impairment review include the following: (i) significant underperformance relative to expected historical or projected future operating results; (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (iii) significant negative industry or economic trends.

     When we determine that the carrying value of goodwill and other identifiable intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, we first will perform an assessment of the asset’s recoverability based on expected undiscounted future net cash flow and, if the amount is

41

less than the asset’s value, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, we do not amortize goodwill. In lieu of amortization, we are required to perform an impairment review of goodwill on an annual basis. If we determine through the impairment process that goodwill has been impaired, we would record the impairment charge in our statement of income.

     As a result of our acquisitions, we included approximately $55.4 million and $55.3 million of goodwill on our consolidated balance sheets as of June 30, 2004 and June 30, 2003, respectively.

     As a result of our acquisitions of product rights and other identifiable intangible assets, we have included approximately $275.7 million and $218.8 million as net intangible assets on our consolidated balance sheets as of June 30, 2004 and June 30, 2003, respectively. Estimated amortization expense for intangible assets as of June 30, 2004 for each of the five succeeding fiscal years is approximately $4.4 million.

Income Taxes

     Income taxes are determined using an annual effective tax rate, which is generally less than the U.S. Federal statutory rate, primarily because of tax-exempt interest, charitable contribution deductions and research and experimentation tax credits available in the United States. Our effective tax rate may be subject to fluctuations during the fiscal year as new information is obtained which may affect the assumptions we use to estimate our annual effective tax rate, including factors such as our mix of pre-tax earnings in the various tax jurisdictions in which we operate, valuation allowances against deferred tax assets, reserves for tax audit issues and settlements, utilization of research and experimentation tax credits and changes in tax laws in jurisdictions where we conduct operations. We recognize deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. We record valuation allowances against our deferred tax assets to reduce the net carrying value to an amount that management believes is more likely than not to be realized.

     Deferred income taxes are presented net of a valuation allowance of approximately $17.5 million as of June 30, 2004 and June 30, 2003.

Managed Care and Medicaid Reserves

     We establish and maintain reserves for amounts payable by us to Managed Care Organizations and state Medicaid programs for the reimbursement of portions of the retail price of prescriptions filled that are covered by the respective programs. The amounts estimated to be paid relating to products sold are recognized as revenue reductions and as additions to accrued expenses at the time of sale based on our best estimate of the expected prescription fill rate to these managed care and state Medicaid patients, using historical experience adjusted to reflect known changes in the factors that impact such reserves.

     If the levels of managed care and Medicaid rebates fluctuate significantly and/or if our estimates do not adequately reserve for these reductions of net product revenues, our reported net product revenues could be negatively affected.

     Accrued liabilities include reserves of approximately $11.7 million and $11.1 million at June 30, 2004 and June 30, 2003, respectively, for estimated managed care and Medicaid rebates.

Research and Development Costs and Accounting for Strategic Collaborations

     All research and development costs, including payments related to products under development and research consulting agreements, are expensed as incurred. We may continue to make up-front, non-refundable payments to third parties for new technologies and for research and development work that has been completed. These up-front payments may be expensed at the time of payment depending on the nature of the payment made.

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     Our policy on accounting for costs of strategic collaborations determines the timing of our recognition of certain development costs. In addition, this policy determines whether the cost is classified as development expense or capitalized as an asset. We are required to form judgments with respect to the commercial status of such products in determining whether development costs meet the criteria for immediate expense or capitalization. For example, when we acquire certain products for which there is already an ANDA or NDA available, and there is net realizable value based on projected sales for these products, we capitalize the amount paid as an intangible asset. In addition, if we acquire product rights that are in the development phase and as to which we have no assurance that the third party is required to perform additional research efforts, we expense such payments.

     During fiscal 2004 and fiscal 2003, we incurred and expensed approximately $2.4 million and $20.2 million, respectively, of up-front or development milestone payments related to research and development collaborations.

EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,” which addresses consolidation by business enterprises of variable interest entities (“VIEs”) either: (1) that do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support, or (2) in which the equity investors lack an essential characteristic of a controlling financial interest. In December 2003, the FASB completed deliberations of proposed modifications to FIN 46 (“Revised Interpretations”) resulting in multiple effective dates based on the nature as well as the creation date of the VIE. VIEs created after January 31, 2003, but prior to January 1, 2004, may be accounted for either based on the original interpretation or the Revised Interpretations. For VIEs created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period ending after December 15, 2003. Certain disclosures are effective immediately. VIEs created after January 1, 2004 must be accounted for under the Revised Interpretations. We currently have no contractual relationship or other business relationship with a variable interest entity, and, therefore, the adoption of FIN No. 46 did not have any effect on our consolidated financial position, results of operations or cash flows.

     In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” which is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS No. 133, clarifies when a derivative contains a financing component, amends the definition of an “underlying” to conform it to the language used in FASB Interpretation No. 45, “Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” and amends certain other existing pronouncements. We do not have any derivative financial instruments. The adoption of SFAS No. 149 did not have any impact on our consolidated balance sheets or statements of operations, shareholders’ equity and cash flows.

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This Statement requires that certain instruments that were previously classified as equity on a company’s statement of financial position now be classified as liabilities. The Statement is effective for financial instruments entered into or modified after May 31, 2003, and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. We have no instruments impacted by the adoption of this statement, and, therefore, the adoption of SFAS No. 150 did not have any effect on our consolidated financial position, results of operations or cash flows.

     In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share.” EITF 03-6 provides guidance about how to determine whether a security should be considered a “participating” security for purposes of computing earnings per share and how earnings or losses should be allocated to a participating security when using the two-class method for computing basic earnings per share. The provisions of EITF 03-6 are effective for reporting periods beginning after March 31, 2004, and must be applied by restating previously reported earnings per share amounts. We have no securities considered to be “participating” securities and therefore the adoption did not

43

have any effect on our consolidated financial statements.

     At the July 2004 meeting, the EITF began discussing Issue 04-8, “Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share”, and the accounting for contingently convertible debt instruments, commonly referred to as CoCos. CoCos combine the features of contingently issuable shares with a convertible debt instrument. These instruments generally become convertible into common stock only if one or more specified events occurs, such as the underlying common stock achieving a specified price target. Under current interpretations of FASB Statement No. 128, Earnings per Share, issuers of CoCos exclude the potential common shares underlying the CoCo from the calculation of diluted earnings per share until the market price or other contingency is met. When the contingency is met, generally the “if-converted” method is used to calculate the dilutive impact of the instrument. Under the “if-converted” method, the instrument is considered converted, with the resulting number of shares included in the denominator of the earnings per share calculation and the interest expense (net of tax) added back to the numerator of the earnings per share calculation. While a traditional convertible debt instrument may dilute earnings per share right away (application of the “if-converted” method is required even if the conversion option is out of the money), current accounting practice for CoCos avoids this dilution until a specified contingency is met (the disclosure requirements associated with these instruments were recently clarified by the FASB in FSP 129-1, “Disclosure Requirements under FASB Statement No. 129, Disclosure of Information about Capital Structure, Relating to Contingently Convertible Securities”). This aspect of the accounting for CoCos is a significant aspect of their attractiveness to issuers. The EITF reached a tentative conclusion that the contingently issuable shares guidance in Statement 128 does not apply to convertible debt. As a result, the dilutive effect of contingently convertible debt should be included in the calculation of diluted earnings per share immediately upon issuance of the instrument (generally using the “if-converted” method). This represents a significant change in practice and will affect hundreds of issuers. The Task Force tentatively concluded that its conclusion would be applied by retroactively restating earnings per share. The tentative conclusion will be posted to the FASB’s website for public comment. As the accounting rules related to this issue have yet to be determined, the impact has not been reflected in our consolidated financial statements.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     We are exposed to interest rate fluctuations on our short-term investments that are comprised of U.S. corporate securities and other debt securities that we hold on an available-for-sale basis. Changes in interest rates do not affect interest expense incurred on our Contingent Convertible Senior Notes as the interest rate is fixed. We have not entered into derivative financial instruments.

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     The following table provides information about our financial instruments that are sensitive to changes in interest rates. For our investment portfolio, the table presents principal cash flows and related weighted-average yield rates by expected maturity dates. Additionally, we have assumed our available-for-sale securities are similar enough to aggregate for presentation purposes.

Interest Rate Sensitivity
Principal Amount by Expected Maturity as of June 30, 2004
(amounts in thousands)

	Financial instruments mature during fiscal year ended June 30,
	2005			2006			2007			2008			2009		Thereafter
Available-for-sale securities	$	112,703		$	181,574		$	64,180		$	12,911		$	—	$	216,051
Weighted-average yield rate		1.9	%		1.8	%		1.9	%		1.3	%		—		1.5	%
Contingent convertible senior notes due 2032	$	—		$	—		$	—		$	—		$	—	$	169,163
Interest rate		—			—			—			—			—		2.5	%
Contingent convertible senior notes due 2033	$	—		$	—		$	—		$	—		$	—	$	283,910
Interest rate		—			—			—			—			—		1.5	%

     We have minimal operations outside of the United States and, accordingly, we have not been susceptible to significant risk from changes in foreign currencies.

     During the normal course of business we could be subjected to a variety of market risks, examples of which include, but are not limited to, interest rate movements and foreign currency fluctuations, as we discussed above, and collectibility of accounts receivable. We continuously assess these risks and have established policies and procedures to protect against the adverse effects of these and other potential exposures. Although we do not anticipate any material losses in these risk areas, no assurance can be made that material losses will not be incurred in these areas in the future.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Our financial statements and related financial statement schedule at June 30, 2004 and June 30, 2003 and for each of the three years in the period ended June 30, 2004 and the Independent Registered Public Accounting Firm’s Report thereon are contained on pages F-1 through F-30 and S-1 of this report on Form 10-K.

ITEM 9:  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

ITEM 9A: CONTROLS AND PROCEDURES

     Medicis maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed by Medicis under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to Medicis’ management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. Our Chief Executive Officer and Chief Financial Officer evaluated, with the participation of other members of management, the effectiveness of Medicis’ disclosure controls and procedures (as defined in Exchange Act Rule 15d-15(e)), as of the end of the period covered by this Annual Report on Form 10-K. Based on this

45

evaluation, Medicis’ management concluded that the Company’s disclosure controls and procedures were effective. There were no significant changes in our internal controls over financial reporting identified in connection with this evaluation that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, Medicis’ internal controls over financial reporting.

ITEM 9B: OTHER INFORMATION

     None.

PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The Company has adopted a written code of ethics, “Medicis Pharmaceutical Corporation Code of Business Conduct and Ethics,” which is applicable to all directors, officers and employees of the Company, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller and other executive officers identified pursuant to this Item 10 who perform similar functions (collectively, the “Selected Officers”). In accordance with the rules and regulations of the SEC, a copy of the code is available on the Company’s website. The Company will disclose any changes in or waivers from its code of ethics applicable to any Selected Officer on its website at http://www.medicis.com or by filing a Form 8-K.

ITEM 11: EXECUTIVE COMPENSATION

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The information called for by each of Items 10, 11, 12, 13 and 14 is incorporated by reference to Medicis’ definitive proxy statement for the 2004 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A.

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PART IV

ITEM 15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as a part of this Report

			Page
(1	)	Financial Statements:
		Index to consolidated financial statements		F-1
		Report of Ernst & Young LLP, Independent Registered Public Accounting Firm		F-2
		Consolidated balance sheets at June 30, 2004 and 2003		F-3
		Consolidated statements of income for the years ended June 30, 2004, 2003 and 2002		F-5
		Consolidated statements of stockholders’ equity for the years ended June 30, 2004, 2003 and 2002		F-6
		Consolidated statements of cash flows for the years ended June 30, 2004, 2003 and 2002		F-8
		Notes to consolidated financial statements		F-9
(2	)	Financial Statement Schedule:
		Schedule II - Valuation and Qualifying Accounts		S-1
		This financial statement schedule should be read in conjunction with the consolidated financial statements. Financial statement schedules not included in this Annual Report on Form 10-K have been omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.
(3	)	Exhibits filed as part of this Report:

Exhibit No.		Description
2.1	-	Agreement of Merger by and between Medicis Pharmaceutical Corporation, a Delaware corporation, Medicis Acquisition Corporation, a Delaware corporation, and GenDerm Corporation, a Delaware corporation, dated November 28, 1997 (11)
2.1 (a)	-	Agreement of Plan of Merger, dated as of October 1, 2001, by and among Medicis Pharmaceutical Corporation, MPC Merger Corp. and Ascent Pediatrics, Inc. (17)
3.1	-	Certificate of Incorporation of the Company, as amended (filed herewith)
3.3 (a)	-	Amended and Restated By-Laws of the Company (13)
4.1	-	Rights Agreement, dated August 17, 1995, between the Company and American Stock Transfer & Trust Company, as Rights Agent (4)
4.1 (b)	-	Amendment No. 2 to Rights Agreement, dated March 17, 1997, between the Company and Norwest Bank Minnesota, N.A. (9)
4.1 (c)	-	Amendment No. 3 to Rights Agreement, dated May 31, 2002, between the Company and Wells Fargo Bank Minnesota, N.A., as successor-in-interest to American Stock Transfer & Trust Company (18)
4.1 (d)	-	Indenture, dated as of August 19, 2003, by and between Medicis Pharmaceutical Corporation, as issuer, and Deutsche Bank Trust Company Americas, as trustee (filed herewith)
4.1 (e)	-	Indenture, dated as of June 4, 2002, by and between Medicis Pharmaceutical Corporation, as issuer, and Deutsche Bank Trust Company Americas, as trustee. (19)
4.2	-	Registration Rights Agreement, dated as of June 4, 2002, by and between Medicis Pharmaceutical Corporation and Deutsche Bank Securities Inc. (19)
4.3	-	Form of specimen certificate representing Class A common stock (1)
10.1	-	Asset Purchase Agreement among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc., BioMarin Pharmaceutical Inc., and BioMarin Pediatrics Inc., dated April 20, 2004 (filed herewith)
10.2	-	Securities Purchase Agreement among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc., BioMarin Pharmaceutical Inc., and BioMarin Pediatrics Inc., dated May 18, 2004 (filed herewith)
10.3	-	License Agreement among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc.,

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Exhibit No.		Description
		and BioMarin Pediatrics Inc., dated May 18, 2004 (filed herewith)
10.8	-	Medicis Pharmaceutical Corporation 1995 Stock Option Plan (incorporated by reference to Exhibit C to the definitive Proxy Statement for the 1995 Annual Meeting of Shareholders previously filed with the SEC, File No. 0-18443)
10.9	-	Employment Agreement between the Company and Jonah Shacknai, dated July 24, 1996 (8)
10.9 (a)	-	Amendment to Employment Agreement by and between the Company and Jonah Shacknai, dated April 1, 1999 (15)
10.9 (b)	-	Amendment to Employment Agreement by and between the Company and Jonah Shacknai, dated February 21, 2001 (15)
10.20	-	Medicis Pharmaceutical Corporation 2002 Stock Option Plan (20)
10.59	-	Supply Agreement, dated October 21, 1992, between Schein and the Company (2)
10.70	-	Amendment to Manufacturing and Supply Agreement, dated March 2, 1993, between Schein and the Company (3)
10.72(a)	-	Credit and Security Agreement, dated August 3, 1995, between the Company and Norwest Business Credit, Inc. (5)
10.72(b)	-	First Amendment to Credit and Security Agreement, dated May 29, 1996, between the Company and Norwest Bank Arizona, N.A. (8)
10.72(c)	-	Second Amendment to Credit and Security Agreement, dated November 22, 1996, by and between the Company and Norwest Bank Arizona, N.A. as successor-in-interest to Norwest Business Credit, Inc. (10)
10.72(d)	-	Third Amendment to Credit and Security Agreement, dated November 22, 1998, by and between the Company and Norwest Bank Arizona, N.A., as successor-in-interest to Norwest Business Credit, Inc. (12)
10.72(e)		Fourth Amendment to Credit and Security Agreement, dated November 22, 2000, by and between the Company and Wells Fargo Bank Arizona, N.A., formerly known as Norwest Bank Arizona, N.A., as successor-in-interest to Norwest Business Credit, Inc. (16)
10.72(f)	-	Fifth Amendment to Credit and Security Agreement, dated November 22, 2002, by and between the Company and Wells Fargo Bank Arizona, N.A., formerly known as Norwest Bank Arizona, N.A., as successor-in-interest to Norwest Business Credit, Inc. (filed herewith)
10.73(a)	-	Patent Collateral Assignment and Security Agreement, dated August 3, 1995, by the Company to Norwest Business Credit, Inc. (6)
10.73(b)	-	First Amendment to Patent Collateral Assignment and Security Agreement, dated May 29, 1996, by the Company to Norwest Bank Arizona, N.A. (8)
10.73(c)	-	Amended and Restated Patent Collateral Assignment and Security Agreement, dated November 22, 1998, by the Company to Norwest Bank Arizona, N.A. (12)
10.74(a)	-	Trademark Collateral Assignment and Security Agreement, dated August 3, 1995, by the Company to Norwest Business Credit, Inc. (7)
10.74(b)	-	First Amendment to Trademark Collateral Assignment and Security Agreement, dated May 29, 1996, by the Company to Norwest Bank Arizona, N.A. (8)
10.74(c)	-	Amended and Restated Trademark, Tradename, and Service Mark Collateral Assignment and Security Agreement, dated November 22, 1998, by the Company to Norwest Bank Arizona, N.A. (12)
10.75	-	Assignment and Assumption of Loan Documents, dated May 29, 1996, from Norwest Business Credit, Inc., to and by Norwest Bank Arizona, N.A. (8)
10.76	-	Multiple Advance Note, dated May 29, 1996, from the Company to Norwest Bank Arizona, N.A. (8)
10.89	-	Asset Purchase Agreement dated November 15, 1998, by and among the Company and Hoechst Marion Roussel, Inc., Hoechst Marion Roussel Deutschland GMHB and Hoechst Marion Roussel, S.A. (12)
10.90	-	License and Option Agreement dated November 15, 1998, by and among the Company and Hoechst Marion Roussel, Inc., Hoechst Marion Roussel Deutschland GMBH and Hoechst Marion Roussel, S.A. (12)
10.91	-	Loprox Lotion Supply Agreement dated November 15, 1998, by and between the Company and Hoechst Marion Roussel, Inc. (12)
10.92	-	Supply Agreement dated November 15, 1998, by and between the Company and Hoechst Marion Roussel Deutschland GMBH (12)

48

Exhibit No.		Description
10.93	-	Asset Purchase Agreement effective January 31, 1999, between the Company and Bioglan Pharma Plc (14)
10.94	-	Stock Purchase Agreement by and among the Company, Ucyclyd Pharma, Inc. and Syed E. Abidi, William Brusilow, Susan E. Brusilow and Norbert L. Wiech, dated April 19, 1999 (14)
10.95	-	Asset Purchase Agreement by and between the Company and Bioglan Pharma Plc, dated June 29, 1999 (14)
10.96	-	Asset Purchase Agreement by and among The Exorex Company, LLC, Bioglan Pharma Plc, the Company and IMX Pharmaceuticals, Inc., dated June 29, 1999 (16)
10.97	-	Medicis Pharmaceutical Corporation Executive Retention Plan (14)
10.98		Asset Purchase Agreement between Warner Chilcott, plc and the Company, dated September 14, 1999(14)
10.99	-	Share Purchase Agreement between Q-Med International B.V. and Startskottet 21914 AB (under proposed change of name to Medicis Sweden Holdings AB), dated February 10, 2003(21)
10.99(a)	-	Amendment No. 1 to Share Purchase Agreement between Q-Med International B.V. and Startskottet 21914 AB (under proposed change of name to Medicis Sweden Holdings AB), dated March 7, 2003(21)
10.100	-	Supply Agreement between Q-Med AB and Medicis Pharmaceutical Corporation, dated March 7, 2003(21)
10.101	-	Amended and Restated Intellectual Property Agreement between Q-Med AB and HA North American Sales AB, dated March 7, 2003(21)
10.102	-	Supply Agreement between Medicis Aesthetics Holdings Inc., a wholly owned subsidiary of Medicis Pharmaceutical Corporation, and Q-Med AB, dated July 15, 2004 (filed herewith) Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
10.103	-	Intellectual Property License Agreement between Q-Med AB and Medicis Aesthetics Holdings Inc., dated July 15, 2004 (filed herewith) Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
12	-	Computation of Ratios of Earnings to Fixed Charges (filed herewith)
21.1	-	Subsidiaries (filed herewith)
23.1	-	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith)
24.1	-	Power of Attorney See signature page(s)
31.1	-	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith)
31.2	-	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith)
32.1	-	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2	-	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
99.1	-	Exclusive Remedy Agreement, dated as of October 1, 2001, by and among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc., FS Private Investments LLC, Furman Selz Investors II L.P., FS Employee Investors LLC, FS Ascent Investments LLC and FS Parallel Fund L.P., BancBoston Ventures Inc., Flynn Partners, Raymond F. Baddour, Sc.D., Robert E. Baldini, Medical Science Partners L.P. and Emmett Clemente, Ph.D. (17)
99.1 (a)	-	Charter of the Nominating and Governance Committee of the Board of Directors of Medicis Pharmaceutical Corporation(22)
99.2	-	Note Agreement, dated as of October 1, 2001, by and among Ascent Pediatrics, Inc., Medicis Pharmaceutical Corporation, Furman Selz Investors II L.P., FS Employee Investors LLC, FS Ascent Investments LLC, FS Parallel Fund L.P., BancBoston Ventures Inc. and Flynn Partners (17)
99.2 (a)	-	Medicis Pharmaceutical Corporation Corporate Governance Guidelines(22)
99.3	-	Voting Agreement, dated as of October 1, 2001, by and among Medicis Pharmaceutical Corporation, MPC Merger Corp., FS Private Investments LLC, Furman Selz Investors II

49

Exhibit No.	Description
	L.P., FS Employee Investors LLC, FS Ascent Investments LLC and FS Parallel Fund L.P. (17)

(1)	Incorporated by reference to the exhibit with the same number in the Registration Statement on Form S-1 of the Registrant, File No. 33-32918, filed with the SEC on January 16, 1990
(2)	Incorporated by reference to the exhibit with the same number in Registration Statement on Form S-1 of the Company, File No. 33-54276, filed with the SEC on June 11, 1993
(3)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1993, File No. 0-18443, filed with the SEC on October 13, 1993
(4)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995, File No. 0-18443, previously filed with the SEC (the “1994 Form 10-K”)
(5)	Incorporated by reference to exhibit number 4.2 in the 1995 Form 10-K
(6)	Incorporated by reference to exhibit number 4.4 in the 1995 Form 10-K
(7)	Incorporated by reference to exhibit number 4.5 in the 1995 Form 10-K
(8)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1996, File No. 0-18443, previously filed with the SEC
(9)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 0-18443, previously filed with the SEC
(10)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, File No. 0-18443, previously filed with the SEC
(11)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on December 15, 1997
(12)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, File No. 0-18443, previously filed with the SEC
(13)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File No. 0-18443, previously filed with the SEC
(14)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999, File No. 0-18443, previously filed with the SEC
(15)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, File No. 0-18443, previously filed with the SEC
(16)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 0-18443, previously filed with the SEC
(17)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on October 2, 2001
(18)	Incorporated by reference to the exhibit with the same number in the Company’s registration statement on Form 8-A12B/A filed with the SEC on June 4, 2002

50

(19)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on June 6, 2002
(20)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 10-K for the fiscal year ended June 30, 2002, File No. 0-18443, previously filed with the SEC
(21)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on March 10, 2003
(22)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2003, File No. 0-18443, previously filed with the SEC

(b)	The exhibits to this Form 10-K follow the Company’s Financial Statement Schedule included in this Form 10-K.
(c)	The Financial Statement Schedule to this Form 10-K appears on page S-1 of this Form 10-K.

51

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: September 10, 2004

MEDICIS PHARMACEUTICAL CORPORATION
By:	/s/ JONAH SHACKNAI
	Jonah Shacknai
	Chairman of the Board and Chief Executive Officer

POWER OF ATTORNEY

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jonah Shacknai and Mark A. Prygocki, Sr., or either of them, as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K and any documents related to this report and filed pursuant to the Securities and Exchange Act of 1934, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

SIGNATURE	TITLE	DATE
/s/ JONAH SHACKNAI Jonah Shacknai	Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer)	September 10, 2004
/s/ MARK A. PRYGOCKI, SR. Mark A. Prygocki, Sr.	Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer (Principal Financial and Accounting Officer)	September 10, 2004
/s/ ARTHUR G. ALTSCHUL, JR. Arthur G. Altschul, Jr.	Director	September 10, 2004
/s/ SPENCER DAVIDSON Spencer Davidson	Director	September 10, 2004
/s/ STUART DIAMOND Stuart Diamond	Director	September 10, 2004
/s/ PETER S. KNIGHT, ESQ. Peter S. Knight, Esq.	Director	September 10, 2004
/s/ MICHAEL A. PIETRANGELO Michael A. Pietrangelo	Director	September 10, 2004
/s/ PHILIP S. SCHEIN, M.D. Philip S. Schein, M.D.	Director	September 10, 2004
/s/ LOTTIE SHACKELFORD Lottie Shackelford	Director	September 10, 2004

52

MEDICIS PHARMACEUTICAL CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	PAGE
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets as of June 30, 2004 and 2003		F-3
Consolidated Statements of Income for the fiscal years ended June 30, 2004, 2003 and 2002		F-5
Consolidated Statements of Stockholders’ Equity for the fiscal years ended June 30, 2004, 2003 and 2002		F-6
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2004, 2003 and 2002		F-8
Notes to Consolidated Financial Statements		F-9
Schedule II – Valuation and Qualifying Accounts		S-1

53

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of Medicis Pharmaceutical Corporation

     We have audited the accompanying consolidated balance sheets of Medicis Pharmaceutical Corporation and subsidiaries as of June 30, 2004 and 2003, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2004. Our audits also included the financial statement schedule listed in Item 15(a)(2). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based upon our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Medicis Pharmaceutical Corporation and subsidiaries at June 30, 2004 and 2003, and the consolidated results of their operations and their cash flows for each of the three years in the period ended June 30, 2004, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP

Phoenix, Arizona
August 13, 2004

54

MEDICIS PHARMACEUTICAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	JUNE 30,
	2004		2003
Assets
Current assets:
Cash and cash equivalents	$	46,621	$	44,346
Restricted cash and short-term investments		—		53,837
Short-term investments		587,419		454,480
Accounts receivable, less allowances: 2004: $13,066; 2003: $12,716		47,858		51,661
Inventories, net		19,540		14,005
Deferred tax assets, net		14,104		10,450
Other current assets		18,321		16,849
Total current assets		733,863		645,628
Property and equipment, net		5,842		3,094
Intangible assets:
Intangible assets related to product line acquisitions and business combinations		312,416		245,989
Other intangible assets		15,288		13,099
		327,704		259,088
Less: accumulated amortization		51,961		40,254
Net intangible assets		275,743		218,834
Goodwill		55,401		55,286
Deferred financing costs, net		7,535		9,991
Other non-current assets		—		8
	$	1,078,384	$	932,841

See accompanying notes to consolidated financial statements.`

55

MEDICIS PHARMACEUTICAL CORPORATION

CONSOLIDATED BALANCE SHEETS, Continued

(in thousands, except share amounts)

	JUNE 30,
	2004			2003
Liabilities
Current liabilities:
Accounts payable	$	13,912		$	18,568
Short-term contract obligation		17,891			18,306
Income taxes payable		712			481
Other current liabilities		34,605			31,492
Total current liabilities		67,120			68,847
Long-term liabilities:
Contingent convertible senior notes		453,067			400,000
Deferred tax liability, net		2,894			2,873
Commitments and Contingencies
Stockholders’ Equity
Preferred stock, $0.01 par value; shares authorized: 5,000,000; no shares issued		—			—
Class A common stock, $0.014 par value; shares authorized:
150,000,000; issued and outstanding: 65,419,460 and 62,509,682 at June 30, 2004 and 2003, respectively		916			876
Class B common stock, $0.014 par value; shares authorized: 1,000,000; issued and outstanding: 758,032 at June 30, 2004 and 2003		10			10
Additional paid-in capital		517,468			445,653
Accumulated other comprehensive income		(1,020	)		2,400
Deferred compensation		(1,212	)		(1,727	)
Accumulated earnings		230,049			204,817
Less: Treasury stock, 8,681,468 shares at cost at June 30, 2004 and 2003, respectively		(190,908	)		(190,908	)
Total stockholders’ equity		555,303			461,121
	$	1,078,384		$	932,841

See accompanying notes to consolidated financial statements.

F-4

MEDICIS PHARMACEUTICAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

	YEAR ENDED JUNE 30,
	2004			2003			2002
Net revenues	$	303,722		$	247,539		$	212,807
Operating costs and expenses:
Cost of product revenue		46,606			38,260			35,765
Selling, general and administrative		118,253			91,648			77,314
Research and development		16,494			29,568			15,132
Depreciation and amortization		16,794			10,125			7,928
In-process research and development		—			—			6,217
Operating costs and expenses		198,147			169,601			142,356
Operating income		105,575			77,938			70,451
Interest income		10,050			12,302			9,909
Interest expense		(10,808	)		(12,580	)		(1,376	)
Loss on early extinguishment of debt		(58,660	)		—			—
Income before income tax expense		46,157			77,660			78,984
Income tax expense		(15,317	)		(26,404	)		(28,960	)
Net income	$	30,840		$	51,256		$	50,024
Basic net income per share	$	0.55		$	0.94		$	0.83
Diluted net income per share	$	0.52		$	0.91		$	0.80
Cash dividend declared per common share	$	0.10		$	0.025		$	—
Basic common shares outstanding		55,618			54,376			60,536
Diluted common shares outstanding		59,258			56,422			62,810

See accompanying notes to consolidated financial statements.

F-5

MEDICIS PHARMACEUTICAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

	Class A				Class B
	Common Stock				Common Stock
	Shares		Amount		Shares			Amount
Balance at June 30, 2001		60,240	$	844		846		$	12
Comprehensive income:
Net income		—		—		—			—
Net unrealized gains on available-for-sale securities		—		—		—			—
Net unrealized losses on foreign currency translation		—		—		—			—
Comprehensive income:
Conversion of Class B common stock to Class A common stock		88		2		(88	)		(2	)
Restricted shares issued for deferred compensation		—		—		—			—
Amortization of deferred compensation		—		—		—			—
Exercise of stock options		1,224		16		—			—
Tax effect of stock options exercised		—		—		—			—
Purchase of treasury stock		—		—		—			—
Balance at June 30, 2002		61,552		862		758			10
Comprehensive income:
Net income		—		—		—			—
Net unrealized gains on available-for-sale securities		—		—		—			—
Net unrealized gains on foreign currency translation		—		—		—			—
Comprehensive income:
Dividends declared		—		—		—			—
Restricted shares issued for deferred compensation, net of cancellations		—		—		—			—
Amortization of deferred compensation, net of award reacquisitions		—		—		—			—
Exercise of stock options		958		14		—			—
Tax effect of stock options exercised		—		—		—			—
Purchase of treasury stock		—		—		—			—
Balance at June 30, 2003		62,510		876		758			10
Comprehensive income:
Net income		—		—		—			—
Net unrealized losses on available-for-sale securities		—		—		—			—
Net unrealized gains on foreign currency translation		—		—		—			—
Comprehensive income:
Conversion of contingent convertible senior notes		—		—		—			—
Dividends declared		—		—		—			—
Amortization of deferred compensation, net of award reacquisitions		—		—		—			—
Exercise of stock options		2,909		40		—			—
Tax effect of stock options exercised		—		—		—			—
Balance at June 30, 2004		65,419	$	916		758		$	10

See accompanying notes to consolidated financial statements.

F-6

[Additional columns below]

[Continued from above table, first column(s) repeated]

				Accumulated
	Additional			Other									Treasury
	Paid-In			Comprehensive			Deferred			Accumulated			Stock
	Capital			Income (Loss)			Compensation			Earnings			Shares			Amount			Total
Balance at June 30, 2001	$	407,014		$	611		$	—		$	104,899			(600	)	$	(9,927	)	$	503,453
Comprehensive income:
Net income		—			—			—			50,024			—			—			50,024
Net unrealized gains on available-for-sale securities		—			354			—			—			—			—			354
Net unrealized losses on foreign currency translation		—			(175	)		—			—			—			—			(175	)
Comprehensive income																				50,203
Conversion of Class B common stock to Class A common stock		—			—			—			—			—			—			—
Restricted shares issued for deferred compensation Amortization of deferred compensation		756			—			(2,578	)		—			110						—
Exercise of stock options		—			—			484			—			—			—			484
Tax effect of stock options exercised		14,364			—			—			—			—			—			14,380
		7,381			—			—			—			—			—			7,381
Purchase of treasury stock		—			—			—			—			(6,334	)		(146,842	)		(146,842	)
Balance at June 30, 2002		429,515			790			(2,094	)		154,923			(6,824	)		(154,947	)		429,059
Comprehensive income:
Net income		—			—			—			51,256			—			—			51,256
Net unrealized gains on available-for-sale securities		—			1,396			—			—			—			—			1,396
Net unrealized gains on foreign currency translation		—			214			—			—			—			—			214
Comprehensive income																				52,866
Dividends declared		—			—			—			(1,362	)		—			—			(1,362	)
Restricted shares issued for deferred compensation, net of cancellations		(2	)					2			—			—			—			—
Amortization of deferred compensation, net of award reacquisitions		—			—			365			—			—			—			365
Exercise of stock options		12,746			—			—			—			—			—			12,760
Tax effect of stock options exercised		3,394			—			—			—			—			—			3,394
Purchase of treasury stock		—			—			—			—			(1,858	)		(35,961	)		(35,961	)
Balance at June 30, 2003		445,653			2,400			(1,727	)		204,817			(8,682	)		(190,908	)		461,121
Comprehensive income:
Net income		—			—			—			30,840			—			—			30,840
Net unrealized losses on available-for-sale securities		—			(3,452	)		—			—			—			—			(3,452	)
Net unrealized gains on foreign currency translation		—			32			—			—			—			—			32
Comprehensive income																				27,420
Conversion of contingent convertible senior notes		6			—			—			—			—			—			6
Dividends declared Amortization of deferred compensation, net of award		—			—			—			(5,608	)		—			—			(5,608	)
reacquisitions		—			—			515			—			—			—			515
Exercise of stock options		51,393			—			—			—			—			—			51,433
Tax effect of stock options exercised		20,416			—			—			—			—			—			20,416
Balance at June 30, 2004	$	517,468		$	(1020	)	$	(1,212	)	$	230,049			(8,682	)	$	(190,908	)	$	555,303

F-7

MEDICIS PHARMACEUTICAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	YEAR ENDED JUNE 30,
	2004			2003			2002
Operating Activities:
Net income	$	30,840		$	51,256		$	50,024
Adjustments to reconcile net income to net cash provided by operating activities:
In-process research and development		—			—			6,217
Depreciation and amortization		18,938			12,766			8,138
Gain on sale of property and equipment		(4	)		—			—
Loss on sale of product rights		32			—			—
Gain on sale of available-for-sale investments		(599	)		(380	)		(1,141	)
Amortization of deferred compensation		515			365			484
Deferred income tax expense (benefit)		(3,634	)		8,879			679
Tax benefit from exercise of stock options		20,416			3,394			7,381
Provision for doubtful accounts and returns		1,050			5,321			2,345
Accretion of premium on investments		7,284			3,657			3,200
Accretion of discount on contract obligation		—			—			340
Loss on early extinguishment of debt		58,660			—			—
Changes in operating assets and liabilities (net of acquired amounts):
Accounts receivable		2,753			(11,318	)		(6,604	)
Inventories		(5,535	)		(2,050	)		(2,246	)
Other current assets		(1,472	)		(378	)		(1,707	)
Accounts payable		(4,655	)		4,553			(256	)
Income taxes payable		232			(979	)		1,197
Other current liabilities		3,143			9,581			5,491
Net cash provided by operating activities		127,964			84,667			73,542
Investing Activities:
Purchase of property and equipment		(4,594	)		(1,367	)		(1,299	)
Proceeds from sale of property and equipment		131			—			—
Ascent merger, net of cash acquired		—			—			(62,437	)
Payment of direct merger costs		(633	)		(1,511	)		(1,794	)
Payment for purchase of product rights		(84,116	)		(81,727	)		(18,184	)
Proceeds from sale of product rights		12,100			—			—
Purchase of available-for-sale investments		(888,152	)		(712,040	)		(663,489	)
Sale of available-for-sale investments		622,006			566,080			289,388
Maturity of available-for-sale investments		123,072			138,975			116,122
Decrease (increase) in restricted cash		53,837			(22,153	)		—
Change in other assets		8			34			33
Net cash used in investing activities Activities		(166,341	)		(113,709	)		(341,660	)
Financing Activities:
Proceeds from issuance of Contingent Convertible Senior Notes		—			—			400,000
Payment of deferred financing costs		(5,276	)		(142	)		(12,600	)
Payment of dividends		(5,536	)		—			—
Purchase of treasury stock		—			(35,961	)		(146,842	)
Proceeds from the exercise of stock options		51,433			12,760			14,380
Net cash provided by (used in) financing activities		40,621			(23,343	)		254,938
Effect of exchange rate on cash and cash equivalents		31			214			(175	)
Net increase (decrease) in cash and cash equivalents		2,275			(52,171	)		(13,355	)
Cash and cash equivalents at beginning of year		44,346			96,517			109,872
Cash and cash equivalents at end of year	$	46,621		$	44,346		$	96,517

See accompanying notes to consolidated financial statements.

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MEDICIS PHARMACEUTICAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2004

NOTE 1. NATURE OF BUSINESS

     Medicis Pharmaceutical Corporation is a leading specialty pharmaceutical company focusing primarily on helping patients attain a healthy and youthful appearance and self-image through the development and marketing of products in the United States for the treatment of dermatological, aesthetic and podiatric conditions in the United States and Canada. The Company offers a broad range of products addressing various conditions including acne, fungal infections, rosacea, hyperpigmentation, photoaging, psoriasis, eczema, skin and skin-structure infections, seborrheic dermatitis and cosmesis (improvement in the texture and appearance of skin). In March 2003, Medicis expanded into the dermal aesthetic market through its acquisition of the exclusive U.S. and Canadian rights to market, distribute and commercialize the dermal restorative product lines known as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™ from Q-Med AB, a Swedish biotechnology/medical device company and its affiliates, collectively Q-Med. RESTYLANE^® has been approved by the Food and Drug Administration (the “FDA”) for use in the United States. RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™ have been approved for use in Canada. See Note 7 for further discussion. In addition to the company’s expansion into the dermal aesthetics market, Medicis had previously expanded into the pediatric market in November 2001 through its merger with Ascent Pediatrics, Inc. (“Ascent”). Ascent marketed products to U.S.-based pediatricians, including an oral treatment for children with asthma and other inflammatory respiratory conditions (ORAPRED^®). On May 18, 2004, the Company closed an asset purchase agreement and license agreement and executed a securities purchase agreement with BioMarin Pharmaceutical Inc. (“BioMarin”). The asset purchase agreement involves BioMarin’s purchase of assets related to ORAPRED^®, including assets concerning the Ascent field sales force. The license agreement granted BioMarin the exclusive worldwide rights to ORAPRED^®, including proprietary taste-masking technologies and related development technologies. The securities purchase agreement granted BioMarin the option to purchase all outstanding shares of common stock of Ascent, based on certain conditions. As a result, the Company no longer markets products to U.S.-based pediatricians. See Note 6 for further discussion.

     The consolidated financial statements include the accounts of Medicis Pharmaceutical Corporation and its wholly owned subsidiaries (“Medicis” or the “Company”). The Company does not have any subsidiaries in which it does not own 100% of the outstanding stock. All of the Company’s subsidiaries are included in the consolidated financial statements. All significant intercompany accounts and transactions have been eliminated in consolidation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

     At June 30, 2004, cash and cash equivalents included highly liquid investments invested in money market accounts consisting of government securities and high-grade commercial paper. These investments are stated at cost, which approximates fair value. The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents.

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Restricted Cash and Investments

     Cash and investments that are restricted for use, for legal or other contractual reasons, are segregated and classified as restricted cash and investments.

Investments

     The Company accounts for investments under Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities.” The Company’s debt securities are classified as available-for-sale. Available-for-sale securities are carried at fair value with the unrealized gains and losses reported in stockholders’ equity. The amortized cost of debt securities in this category is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in interest income. Realized gains and losses and interest and dividends on securities are included in interest income. The cost of securities sold is based upon the specific identification method.

Inventories

     The Company utilizes third parties to manufacture and package inventories held for sale, takes title to certain inventories once manufactured, and warehouses such goods until packaged for final distribution and sale. Inventories consist of salable products held at the Company’s warehouses, as well as raw materials and components at the manufacturers’ facilities, and are valued at the lower of cost or market using the first-in, first-out method. The Company provides valuation reserves for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions.

     Inventories are as follows (amounts in thousands):

	JUNE 30,
	2004			2003
Raw materials	$	8,785		$	5,976
Finished goods		11,105			8,727
Valuation reserve		(350	)		(698	)
Total inventories	$	19,540		$	14,005

Property and Equipment

     Property and equipment are stated at cost. Depreciation is calculated on a straight-line basis over the estimated useful lives of property and equipment (three to five years). Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining lease term. Property and equipment consist of the following (amounts in thousands):

	JUNE 30,
	2004			2003
Furniture, fixtures and equipment	$	7,268		$	4,129
Leasehold improvements		2,018			812
		9,286			4,941
Less: accumulated depreciation		(3,444	)		(1,847	)
	$	5,842		$	3,094

Goodwill and Other Identifiable Intangible Assets

     The Company has in the past made acquisitions of products and businesses that include goodwill, license agreements, product rights, and other identifiable intangible assets. The Company assesses the impairment of

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goodwill and other identifiable intangibles whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Some factors the Company considers important which could trigger an impairment review include the following: (i) significant underperformance relative to expected historical or projected future operating results; (ii) significant changes in the manner of our use of the acquired assets or the strategy for our overall business; and (iii) significant negative industry or economic trends.

     When the Company determines that the carrying value of goodwill and other identifiable intangibles may not be recoverable based upon the existence of one or more of the above indicators of impairment, the Company first will perform an assessment of the asset’s recoverability based on expected undiscounted future net cash flow, and if the amount is less than the asset’s value, the Company will measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” the Company does not amortize goodwill. In lieu of amortization, the Company is required to perform an impairment review of goodwill on an annual basis. If the Company determines through the impairment process that goodwill has been impaired, the Company will record the impairment charge in the statement of income.

     The Company amortizes acquired identifiable intangible assets over their expected useful lives, which range between five and 40 years. Estimated amortization expense for intangible assets as of June 30, 2004 for each of the five succeeding fiscal years is approximately $4.4 million.

Deferred Financing Costs

     Deferred financing costs represent fees and other costs incurred in connection with the June 2002 issuance of the 2.5% Contingent Convertible Senior Notes Due 2032 and the August 2003 issuance of the 1.5% Contingent Convertible Senior Notes Due 2033. These costs are being amortized on a basis that approximates the effective interest method over the five-year period that ends on the initial Put date of the Notes. Accumulated amortization amounted to approximately $3.1 million as of June 30, 2004.

Managed Care and Medicaid Reserves

     The Company establishes and maintains reserves for amounts payable to Managed Care Organizations and state Medicaid programs for the reimbursement of a portion of the retail price of prescriptions filled that are covered by the respective plans. The amounts estimated to be paid relating to products sold are recognized as revenue reductions and as additions to accrued expenses at the time of sale based on the Company’s best estimate of the expected prescription fill rate to these Managed Care and state Medicaid patients using historical experience adjusted to reflect known changes in the factors that impact such reserves.

Other Current Liabilities

     Other current liabilities are as follows (amounts in thousands):

	JUNE 30,
	2004		2003
Accrued incentives	$	8,069	$	6,054
Deferred revenue		3,545		—
Managed care and Medicaid reserves		11,671		11,082
Other accrued expenses		11,320		14,356
	$	34,605	$	31,492

Revenue Recognition

     Revenue from product sales is recognized when the merchandise is shipped to an unrelated third party pursuant to Staff Accounting Bulletin No. 104 (SAB 104), “Revenue Recognition in Financial Statements.” Accordingly, revenue is recognized when all four of the following criteria are met: (i) persuasive evidence that an

F-11

arrangement exists; (ii) delivery of the products has occurred; (iii) the selling price is both fixed and determinable; and (iv) collectibility is reasonably assured. The Company’s customers consist primarily of large pharmaceutical wholesalers who sell directly into the retail channel. Provisions for sales discounts, and estimates for chargebacks, rebates, damaged product returns, and exchanges for expired product are established as a reduction of product sales revenues at the time such revenues are recognized. These revenue reductions are established by the Company’s management as its best estimate at the time of sale based on historical experience adjusted to reflect known changes in the factors that impact such reserves. These revenue reductions are generally reflected either as a direct reduction to accounts receivable through an allowance, or as an addition to accrued expenses if the provision is due to a party other than the wholesale or retail customer.

     The Company enters into licensing arrangements with other parties whereby the Company receives contract revenue based on the terms of the agreement. The timing of revenue recognition is dependent on the level of the Company’s continuing involvement in the manufacture and delivery of licensed products. If the Company has continuing involvement, the revenue is deferred and recognized on a straight-line basis over the period of continuing involvement. In addition, if the licensing arrangements require no continuing involvement and payments are merely based on the passage of time, the Company will assess such payments for revenue recognition under the collectibility criteria of SAB 104.

     The Company does not provide any forms of price protection to its wholesale customers and permits product returns only if the product is damaged or if it is returned with 6-12 months of expiration and the customer is committed to accept replacement product in exchange. The Company’s customers consist principally of financially viable wholesalers so revenue is recorded upon sale to the wholesaler, net of estimated provisions.

Advertising

     The Company expenses advertising as incurred. Advertising expenses for the fiscal years ended June 30, 2004 (“fiscal 2004”), June 30, 2003 (“fiscal 2003”) and June 30, 2002 (“fiscal 2002”) were approximately $22.5 million, $20.1 million and $17.4 million, respectively. Advertising expenses include samples of the Company’s products given to physicians for marketing to their patients.

Stock-Based Compensation

     As of June 30, 2004, the Company has five stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related Interpretations. Other than restricted stock, no stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

F-12

     The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), to stock-based employee compensation (amounts in thousands, except per share amounts):

	2004		2003		2002
Net income, as reported	$	30,840	$	51,256	$	50,024
Deduct: Total stock-based employee compensation expense determined under fair value methods of all awards, net of related tax effects		17,034		13,020		14,259
Pro forma net income	$	13,806	$	38,236	$	35,765
Earnings per share:
Basic, as reported	$	0.55	$	0.94	$	0.83
Basic, pro forma	$	0.25	$	0.70	$	0.59
Diluted, as reported	$	0.52	$	0.91	$	0.80
Diluted, pro forma	$	0.23	$	0.68	$	0.57

     For purposes of pro forma disclosures, the estimated fair value of stock-based compensation plans and other options is amortized to expense primarily over the vesting period. See Note 19 for further discussion of the Company’s stock-based employee compensation.

Shipping and Handling Costs

     Substantially all costs of shipping and handling of products to customers are included in selling, general and administrative expense. Shipping and handling costs for fiscal 2004, 2003 and 2002 were approximately $3.1 million, $3.5 million and $3.7 million, respectively.

Research and Development Costs and Accounting for Strategic Collaborations

     All research and development costs, including payments related to products under development, and research consulting agreements, are expensed as incurred. The Company makes up-front, non-refundable payments to third parties for new technologies and for research and development work that has been completed. These up-front payments may be expensed at the time of payment depending on the nature of the payment made.

     The Company’s policy on accounting for costs of strategic collaborations determines the timing of the recognition of certain development costs. In addition, this policy determines whether the cost is classified as development expense or capitalized as an asset. Management is required to form judgments with respect to the commercial status of such products in determining whether development costs meet the criteria for immediate expense or capitalization.

Income Taxes

     Income taxes are determined using an annual effective tax rate, which is generally less than the U.S. Federal statutory rate, primarily because of tax-exempt interest, charitable contribution deductions and research and experimentation tax credits available in the United States. The Company’s effective tax rate may be subject to fluctuations during the fiscal year as new information is obtained which may affect the assumptions it uses to estimate its annual effective tax rate, including factors such as its mix of pre-tax earnings in the various tax jurisdictions in which it operates, valuation allowances against deferred tax assets, reserves for tax audit issues and settlements, utilization of research and experimentation tax credits and changes in tax laws in jurisdictions where the Company conducts operations. The Company recognizes deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of its assets and liabilities. The Company records valuation

F-13

allowances against its deferred tax assets to reduce the net carrying value to an amount that management believes is more likely than not to be realized.

Earnings Per Share

     Basic and diluted earnings per common share are calculated in accordance with the requirements of Statement of Financial Accounting Standards No. 128, “Earnings Per Share.” The contingently convertible debt has no impact on diluted earnings per share until all conditions necessary for issuance have been satisfied.

     During the quarters ended June 30, 2004, March 31, 2004 and December 31, 2003, the Old Notes met the criteria for the right of conversion into shares of the Company’s Class A common stock. This right of conversion of the Holders of Old Notes was triggered by the stock closing above $31.96 on 20 of the last 30 trading days and the last trading day of the quarters ending June 30, 2004, March 31, 2004 and December 31, 2003. During these periods, the underlying shares related to the Old Notes were included in fully diluted earnings per share if such inclusion was not anti-dilutive.

Use of Estimates and Risks and Uncertainties

     The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates based upon future events, which could include, among other risks, changes in the regulations governing the manner in which the Company sells its products, changes in the health care environment and the reliance on contract manufacturing services.

     The Company purchases its inventory from third party manufacturers, many of whom are the sole source of products for the Company. The failure of such manufacturers to provide an uninterrupted supply of products could adversely impact the Company’s ability to sell such products.

Fair Value of Financial Instruments

     The carrying amount of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities reported in the consolidated balance sheets approximates fair value because of the immediate or short-term maturity of these financial instruments. The fair market value of the Company’s long-term debt is estimated based on market quotations at year-end. The fair market value approximates $580.6 million at June 30, 2004.

Reclassifications

     Certain prior year amounts have been reclassified to conform with the current year presentation.

Recently Issued Accounting Pronouncements

     In January 2003, the FASB issued FASB Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,” which addresses consolidation by business enterprises of variable interest entities (“VIEs”) either: (1) that do not have sufficient equity investment at risk to permit the entity to finance its activities without additional subordinated financial support, or (2) in which the equity investors lack an essential characteristic of a controlling financial interest. In December 2003, the FASB completed deliberations of proposed modifications to FIN 46 (“Revised Interpretations”), resulting in multiple effective dates based on the nature as well as the creation date of the VIE. VIEs created after January 31, 2003, but prior to January 1, 2004, may be accounted for either based on the original interpretation or the Revised Interpretations. For VIEs created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period ending after December 15, 2003. Certain disclosures are effective immediately. VIEs created after January 1, 2004 must be accounted for under the Revised Interpretations. The Company currently has no contractual relationship or other business relationship with a variable interest entity, and, therefore, the adoption of FIN No. 46 did not have any

F-14

effect on the consolidated financial position, results of operations or cash flows.

     In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities,” which is generally effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003. SFAS No. 149 clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS No. 133, clarifies when a derivative contains a financing component, amends the definition of an “underlying” to conform it to the language used in FASB Interpretation No. 45, “Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” and amends certain other existing pronouncements. The Company does not have any derivative financial instruments. The adoption of SFAS No. 149 did not have any impact on the Company’s consolidated balance sheets or statements of income, shareholders’ equity and cash flows.

     In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity.” This Statement requires that certain instruments that were previously classified as equity on a company’s statement of financial position now be classified as liabilities. The Statement is effective for financial instruments entered into or modified after May 31, 2003, and to all other instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. The Company has no instruments impacted by the adoption of this statement and, therefore, the adoption of SFAS No. 150 did not have any effect on the consolidated financial position, results of operations or cash flows.

     In March 2004, the Emerging Issues Task Force (“EITF”) reached a consensus on EITF 03-6, “Participating Securities and the Two-Class Method under FASB Statement No. 128, Earnings per Share.” EITF 03-6 provides guidance about how to determine whether a security should be considered a “participating” security for purposes of computing earnings per share and how earnings or losses should be allocated to a participating security when using the two-class method for computing basic earnings per share. The provisions of EITF 03-6 are effective for reporting periods beginning after March 31, 2004, and must be applied by restating previously reported earnings per share amounts. We have no securities considered to be “participating” securities and, therefore, the adoption did not have any effect on the consolidated financial statements.

     At the July 2004 meeting, the EITF began discussing Issue 04-8, “Accounting Issues Related to Certain Features of Contingently Convertible Debt and the Effect on Diluted Earnings per Share,” and the accounting for contingently convertible debt instruments, commonly referred to as CoCos. CoCos combine the features of contingently issuable shares with a convertible debt instrument. These instruments generally become convertible into common stock only if one or more specified events occurs, such as the underlying common stock achieving a specified price target. Under current interpretations of FASB Statement No. 128, Earnings per Share, issuers of CoCos exclude the potential common shares underlying the CoCo from the calculation of diluted earnings per share until the market price or other contingency is met. When the contingency is met, generally the “if-converted” method is used to calculate the dilutive impact of the instrument. Under the “if-converted” method, the instrument is considered converted, with the resulting number of shares included in the denominator of the earnings per share calculation and the interest expense (net of tax) added back to the numerator of the earnings per share calculation. While a traditional convertible debt instrument may dilute earnings per share right away (application of the “if-converted” method is required even if the conversion option is out of the money), current accounting practice for CoCos avoids this dilution until a specified contingency is met (the disclosure requirements associated with these instruments were recently clarified by the FASB in FSP 129-1, “Disclosure Requirements under FASB Statement No. 129, Disclosure of Information about Capital Structure, Relating to Contingently Convertible Securities”). This aspect of the accounting for CoCos is a significant aspect of their attractiveness to issuers. The EITF reached a tentative conclusion that the contingently issuable shares guidance in Statement 128 does not apply to convertible debt. As a result, the dilutive effect of contingently convertible debt should be included in the calculation of diluted earnings per share immediately upon issuance of the instrument (generally using the “if-converted” method). This represents a significant change in practice and will affect hundreds of issuers. The Task Force tentatively concluded that its conclusion would be applied by retroactively restating earnings per share. The tentative conclusion will be posted to the FASB ‘s website for public comment. As the accounting rules related to this Issue has yet to be determined the impact has not been reflected in the consolidated financial statements.

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NOTE 3. CHANGE IN ESTIMATE

     In the first quarter of fiscal 2002, the Company changed the estimated useful life for certain intangible assets from 20-25 years to 40 years. These changes in estimate are based on management’s determination that the products related to these intangible assets appear to have longer useful lives than originally estimated. There is no cumulative effect for this change. The effect of this change on net income for fiscal 2002 was to increase net income by approximately $958,000 or $0.02 per diluted common share.

NOTE 4: SEGMENT AND PRODUCT INFORMATION

     The Company operates in one significant business segment: Pharmaceuticals. The Company’s current pharmaceutical franchises are divided between the Dermatological and Non-Dermatological fields. The Dermatological field represents products for the treatment of Acne and Acne-related dermatological conditions and Non-acne dermatological conditions. The Non-Dermatological field represents products for the treatment of Asthma (until May 2004) and Urea Cycle Disorder. The Acne and Acne-related dermatological product lines include core brands DYNACIN^®, PLEXION^® and TRIAZ^®. The Non-acne dermatological product lines include core brands LOPROX^®, OMNICEF^®, and RESTYLANE^®. The Non-Dermatological product lines include BUPHENYL^® and ORAPRED^®, which was one of the Company’s core brands until it was licensed to BioMarin in May 2004.

     The Company’s pharmaceutical products, with the exception of BUPHENYL^®, are promoted to dermatologists, podiatrists or plastic surgeons. Prior to the Company’s licensing of ORAPRED^® to BioMarin in May 2004, the Company also promoted to pediatricians. Such products are often prescribed by physicians outside these specialties; including family practitioners, general practitioners, primary-care physicians and OB/GYNs, as well as hospitals, government agencies and others. All products, with the exception of BUPHENYL^®, are sold primarily to wholesalers and retail chain drug stores. BUPHENYL^® is primarily sold directly to hospitals and pharmacies. During the last three fiscal years, four wholesalers accounted for the following portions of the Company’s net revenues:

	Fiscal 2004			Fiscal 2003			Fiscal 2002
McKesson		36.9	%		20.2	%		19.4	%
Cardinal		23.8	%		25.4	%		22.4	%
Quality King		*			17.0	%		26.7	%
AmerisourceBergen		*			15.5	%		11.1	%

* less than 10%

     McKesson is the sole distributor for the Company’s RESTYLANE^® product, which was launched in January 2004.

     The percentage of net revenues for each of the product categories is as follows:

	FISCAL YEAR ENDED JUNE 30,
	2004			2003			2002
Acne and acne-related dermatological products		30	%		33	%		43	%
Non-acne dermatological products		51			37			34
Non-dermatological products		19			30			23
Total net revenues		100	%		100	%		100	%

NOTE 5. STRATEGIC COLLABORATIONS

     On December 22, 2003, the Company announced that Corixa Corporation (“Corixa”) and Medicis agreed to terminate further development of Corixa’s immunotherapeutic product, PVAC™ treatment. Medicis and Corixa concluded that data from the recently completed clinical trial of PVAC™ treatment in mild to moderate psoriasis patients did not support further development of the product. Medicis has no further financial obligation to Corixa.

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     On September 26, 2002, Medicis entered into an exclusive license and development agreement with Dow Pharmaceutical Sciences, Inc. (“Dow”) for the development and commercialization of a patented dermatologic product. Under terms of the agreement, Medicis made an initial payment of $5.4 million and a development milestone payment of $8.8 million to Dow during fiscal 2003, and a development milestone payment of $2.4 million to Dow during fiscal 2004. In accordance with the agreement between the parties, Medicis is required to make potential additional payments upon the certification that certain development milestones have occurred. The initial $5.4 million payment and the $8.8 million development milestone payment were recorded as charges to research and development expense during fiscal 2003, and the $2.4 million development milestone payment was recorded as a charge to research and development expense during fiscal 2004.

     On September 4, 2002, the Company purchased the Abbreviated New Drug Application (“ANDA”) for a pediatric prescription product from a third-party pharmaceutical company for $9.0 million. Under terms of the agreement, the Company may be required to make future contingent payments based on the achievement of certain milestones. The contingent payments, if the milestones are achieved, would be payable at the six (6)-, twelve (12)-, and eighteen (18)-month anniversaries of the closing of the agreement. During fiscal 2003, a milestone was achieved and a $4.0 million contingent payment was paid to the third-party pharmaceutical company. During fiscal 2004, the second and third milestones were achieved and $3.5 and $4.5 million, respectively, were paid to the third-party pharmaceutical company. The Company accounted for the initial payment and the subsequent contingent payments as an acquisition of an intangible asset and commenced amortizing the asset over 15 years beginning in the second quarter of fiscal 2003. This ANDA is included as part of the BioMarin transaction discussed in Note 6.

     On June 26, 2002, Medicis entered into an exclusive strategic alliance with aaiPharma, Inc. (“aaiPharma”) for the development, commercialization and license of a key dermatologic product. Medicis made an initial payment of $7.7 million to aaiPharma during fiscal 2002, made a development milestone payment of $6.0 million to aaiPharma during fiscal 2003, and has potential additional payments to be made upon the successful completion of various development milestones. The $7.7 million initial payment and the $6.0 million development milestone payment were recorded as charges to research and development expense during fiscal 2002 and fiscal 2003, respectively.

NOTE 6. LICENSE OF ORAPRED^® TO BIOMARIN

     On May 18, 2004, the Company closed an asset purchase agreement and license agreement and executed a securities purchase agreement with BioMarin. The asset purchase agreement involves BioMarin’s purchase of assets related to ORAPRED^®, including assets concerning the Ascent field sales force. ORAPRED^® and related pediatric intellectual property is owned by Ascent, a wholly owned subsidiary of Medicis. The license agreement granted BioMarin the exclusive worldwide rights to ORAPRED^®, including proprietary taste-masking technologies and related development technologies. The securities purchase agreement granted BioMarin the option to purchase all outstanding shares of common stock of Ascent, based on certain conditions. As part of the transaction, the name of Ascent Pediatrics, Inc. was changed to Medicis Pediatrics, Inc.

     Under terms of the agreements, BioMarin will make license payments to Ascent of approximately $93 million payable over a five-year period as follows: approximately $10 million as of the date of the transaction; approximately $12.5 million per quarter for four quarters beginning in July 2004; approximately $2.5 million per quarter for the subsequent four quarters beginning in July 2005; approximately $2 million per quarter for the subsequent eight quarters beginning in July 2006; and approximately $1.75 million per quarter for the last four quarters of the five-year period beginning in July 2008. BioMarin will also make payments of $2.5 million per quarter for six quarters beginning in July 2004 for reimbursement of certain contingent payments as discussed in Note 9. The license agreement will terminate in July 2009. At that time, based on certain conditions, BioMarin will have the option to purchase all outstanding shares of Ascent for approximately $82 million. The payment will consist of $62 million in cash and $20 million in BioMarin common stock, based on the fair value of the stock at that time. The Company is responsible for the manufacture and delivery of finished goods inventory to BioMarin, and BioMarin will be responsible for paying the Company for future finished goods inventory delivered through June 30, 2005. As a result, the Company is required to recognize the first $60 million of license payments ratably through June 30, 2005The Company has deferred approximately $3.5 million in revenue under the agreement as of June 30,

F-17

2004. The license payments received after June 30, 2005 will be recognized as revenue when all four criteria of SAB 104 have been met.

     As of the closing date of the transaction, BioMarin is responsible for all marketing and promotional efforts regarding the sale of ORAPRED^®. As a result, Medicis no longer advertises and promotes any oral liquid prednisolone sodium phosphate solution product or any related line extension. Medicis has the responsibility for the manufacture and delivery of finished goods inventory to BioMarin, and BioMarin is responsible for paying Medicis for future finished goods inventory delivered by Medicis through June 30, 2005. During the term of the license agreement, Medicis will maintain ownership of the intellectual property and, consequently, will continue to amortize the related intangible assets. Payments received from BioMarin under the license agreement will be treated as contract revenue, which is included in net revenues in the consolidated statements of income.

NOTE 7. ACQUISITION OF DERMAL AESTHETIC ENHANCEMENT PRODUCTS FROM THE Q-MED GROUP

     On March 10, 2003, Medicis acquired all outstanding shares of HA North American Sales AB from Q-Med, a Swedish biotechnology/medical device company. HA North American Sales AB holds a license for the exclusive U.S. and Canadian rights to market, distribute and commercialize the dermal restorative product lines known as RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™. RESTYLANE^® has been approved by the Food and Drug Administration (the “FDA”) for use in the United States. RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™ have been approved for use in Canada. Under terms of the agreements, a wholly owned subsidiary of Medicis acquired all outstanding shares of HA North American Sales AB for total consideration of approximately $160.0 million, payable upon the successful completion of certain milestones or events. Medicis paid $58.2 million upon closing of the transaction, $53.3 million in December 2003 upon FDA approval of RESTYLANE^®, $19.4 million in May 2004 upon certain cumulative commercial milestones being achieved and will pay approximately $29.1 million upon FDA approval of PERLANE^®. Payments and costs related to this acquisition are capitalized as an intangible asset and are amortized over 15 years beginning in March 2003.

NOTE 8. LICENSE AND SALE OF PRODUCTS TO TARO PHARMACEUTICAL INDUSTRIES, LTD.

     On January 14, 2003, Taro Pharmaceutical Industries, Ltd. (“Taro”) licensed with an option to purchase from Medicis four branded prescription product lines for sale in the U.S. and Puerto Rico. The license agreement was effective on January 14, 2003 and extended through June 1, 2004, after which Taro had the option to purchase the product lines. Medicis received quarterly license payments from Taro during the term of the agreement. Under terms of the agreement, Taro licensed from Medicis the following four brands: TOPICORT^® (desoximetasone), a topical corticosteroid used for inflammatory skin diseases; A/T/S^® (erythromycin), a topical antibiotic used in the treatment of acne; OVIDE^® (malathion), a pediculicide used in the treatment of head lice; and PRIMSOL^® (trimethoprim HCI), an antibiotic oral solution for children with acute otitis media, or middle ear infections. Taro purchased the product lines at the end of the term of the agreement for $12.1 million. The carrying value of the intangible assets related to these products was written off as of the sale date, and a loss of approximately $32,000 was recognized during fiscal 2004 and is included in selling, general and administrative expenses in the accompanying consolidated statements of income. The Company additionally incurred $350,000 of professional fees related to the transaction.

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NOTE 9. MERGER OF ASCENT PEDIATRICS, INC.

     On November 15, 2001, the Company completed its merger with Ascent, purchasing all of the outstanding capital stock and retiring the indebtedness of Ascent for consideration of approximately $60.0 million in cash plus up to an additional $10.0 million per year for each of the first five years following closing based upon reaching certain sales threshold milestones on the Ascent products for each twelve month period ended November 15, 2006. The fixed purchase price of $60.0 million was allocated as follows (amounts in thousands):

Intangible assets – core technology	$	2,049
Intangible assets – trademarks		2,868
Intangible assets – customer list		165
Deferred tax assets		29,701
Goodwill		24,952
In-process research and development		6,217
Net assets acquired		748

     Net assets acquired of $748,000 consist of current assets and net fixed assets of $5.2 million and $148,000, respectively, offset by current liabilities of $4.6 million. Current assets consisted primarily of cash, accounts receivable, inventories and prepaid assets. Net fixed assets consisted primarily of computers. Current liabilities consisted primarily of accounts payable, accrued payroll and accrued commissions. The contingent portions of the purchase price will be added to goodwill when and if threshold milestones have been achieved or at such time that a payment is deemed to be probable. The Company additionally incurred approximately $6.7 million of costs related to the transaction, consisting of approximately $3.4 million of professional services, including finder fees, $0.9 million of severance costs and $2.4 million of other costs. These costs were treated as additional direct costs of acquisition and capitalized.

     The value assigned to in-process research and development was determined by management based on an independent valuation analysis performed by a firm other than our independent auditors. As of the valuation date, there were two projects that were considered to be in-process. The values of the projects were determined based on analyses of estimated cash flows to be generated by the products that are expected to result from the in-process projects. These cash flows were estimated by forecasting total revenues expected from these products, then deducting appropriate operating expenses, cash flow adjustments and contributory asset returns to establish a forecast of net return on the in-process technology. These net returns were substantially reduced to take into account the time value of money and the risks associated with the inherent difficulties and uncertainties in the FDA approval process. The above analysis resulted in $6.2 million of value assigned to acquired in-process research and development, which was expensed on the acquisition date in accordance with U.S. generally accepted accounting principles. Medicis’ management believes the assumptions used in valuing in-process research and development are reasonable, but are inherently uncertain, and no assurance can be given that the assumptions made will occur.

     The contingent portions of the purchase price may be required to be paid for each of the first five years following closing based upon reaching certain sales threshold milestones on the Ascent products for each twelve-month period ended November 15, 2006, subject to certain deductions and set-offs. From time to time, the Company assesses the probability and likelihood of payment in the coming respective November period based on current sales trends. There can be no assurance that such payment will ultimately be made nor is the accrual of a liability an indication of current sales levels. A total of approximately $17.9 million is included in short-term contract obligation in the Company’s consolidated balance sheets as of June 30, 2004, representing the first two years’ Contingent Payments. Pursuant to the merger agreement, payment of the contingent portion of the purchase price will be withheld pending the final outcome of the litigation discussed in Note 14. As part of the transaction with BioMarin in May 2004, Medicis will remain responsible for the Contingent Payments under the Ascent merger agreement. See Note 6 for further discussion.

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NOTE 10. RESTRICTED CASH AND SHORT-TERM INVESTMENTS

     In connection with the acquisition of the products from Q-Med (see Note 7), the Company was required to establish an escrow account related to the $53.3 million the Company would pay to Q-Med upon FDA approval of the RESTYLANE^® product. The Company initially funded the restricted cash account through transfers of existing short-term investments into the escrow account. In December 2003, the restriction on the account was released as the FDA approved the RESTYLANE^® product for use in the United States. The account was liquidated and $53.3 million was paid to Q-Med. The Company did not have any restricted cash or short-term investments as of June 30, 2004.

NOTE 11. SHORT-TERM INVESTMENTS

     The Company’s short-term investments are intended to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations and delivers an appropriate yield in relationship to the Company’s investment guidelines and market conditions.

     The following is a summary of available-for-sale securities (amounts in thousands):

	JUNE 30, 2004
			Gross		Gross		Gross
			Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. corporate securities	$	123,848	$	224	$	360	$	123,712
Other debt securities		465,070		164		1,527		463,707
Total securities	$	588,918	$	388	$	1,887	$	587,419

	JUNE 30, 2003
			Gross		Gross		Gross
			Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. corporate securities	$	118,001	$	1,227	$	11	$	119,217
Other debt securities		333,112		2,203		52		335,263
Total securities	$	451,113	$	3,430	$	63	$	454,480

     During the years ended June 30, 2004 and 2003, the gross realized gains on sales of available-for-sale securities totaled $1,360,154 and $396,289, respectively, and the gross realized losses totaled $236,427 and $2,645 respectively. Such amounts of gains and losses are determined based on the specific identification method. The net adjustment to unrealized gains during fiscal 2004 and fiscal 2003 on available-for-sale securities included in stockholders’ equity totaled $(3,451,343) and $1,395,678, respectively. The amortized cost and estimated fair value of the available-for-sale securities at June 30, 2004, by maturity, are shown below (amounts in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties, and the Company views its available-for-sale securities as available for current operations.

	JUNE 30, 2004
			Estimated
	Cost		Fair Value
Available-for-sale
Due in one year or less	$	112,650	$	112,703
Due after one year through five years		260,033		258,665
Due after five years through 10 years		15,569		15,562
Due after 10 years		200,666		200,489
	$	588,918	$	587,419

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NOTE 12. DEBT

     The Company has a revolving line of credit facility of up to $25.0 million from Wells Fargo Bank, N.A. The facility may be drawn upon by the Company, at its discretion, and is collateralized by principal assets of the Company. The outstanding balance of the credit facility bears interest at a floating rate of 150 basis points in excess of the 30-day London Interbank Offered Rate and expires in November 2004. The agreement requires the Company to comply with certain covenants, including covenants relating to the Company’s financial condition and results of operation. The Company has not drawn on this credit facility.

NOTE 13. CONTINGENT CONVERTIBLE SENIOR NOTES

     On June 4, 2002 and June 10, 2002, the Company sold $400.0 million aggregate principal amount of its 2.5% Contingent Convertible Senior Notes Due 2032 (the “Old Notes”) in private transactions. As discussed below, approximately $230.8 million in principal amount of the Old Notes was exchanged for New Notes on August 14, 2003. The Old Notes bear interest at a rate of 2.5% per annum, which is payable on June 4 and December 4 of each year, beginning on December 4, 2002. The Company also will pay contingent interest at a rate equal to 0.5% per annum during any six-month period, with the initial six-month period commencing June 4, 2007, if the average trading price of the Old Notes reaches certain thresholds. The Old Notes will mature on June 4, 2032.

     The Company may redeem some or all of the Old Notes at any time on or after June 11, 2007, at a redemption price, payable in cash, of 100% of the principal amount of the Old Notes, plus accrued and unpaid interest, including contingent interest, if any. Holders of the Old Notes may require the Company to repurchase all or a portion of their Old Notes on June 4, 2007, 2012 and 2017; and upon a change in control, as defined in the indenture governing the Old Notes, at 100% of the principal amount of the Old Notes, plus accrued and unpaid interest to the date of the repurchase, payable in cash.

     The Old Notes are convertible, at the holders’ option, prior to the maturity date into shares of the Company’s Class A common stock in the following circumstances:

• during any quarter commencing after June 30, 2002, if the closing price of the Company’s Class A common stock over a specified number of trading days during the previous quarter, including the last trading day of such quarter, is more than 110% of the conversion price of the Old Notes, or $31.96. The Old Notes are initially convertible at a conversion price of $29.05 per share, which is equal to a conversion rate of approximately 34.4234 shares per $1,000 principal amount of Old Notes, subject to adjustment;

• if the Company has called the Old Notes for redemption;

• during the five trading day period immediately following any nine consecutive day trading period in which the trading price of the Old Notes per $1,000 principal amount for each day of such period was less than 95% of the product of the closing sale price of the Company’s Class A common stock on that day multiplied by the number of shares of the Company’s Class A common stock issuable upon conversion of $1,000 principal amount of the Old Notes; or

• upon the occurrence of specified corporate transactions.

     The Old Notes, which are unsecured, do not contain any restrictions on the payment of dividends, the incurrence of additional indebtedness or the repurchase of the Company’s securities and do not contain any financial covenants.

     The Company incurred $12.6 million of fees and other origination costs related to the issuance of the Old Notes. The Company is amortizing these costs over the five-year Put period, which runs through May 2007.

     On August 14, 2003, the Company exchanged approximately $230.8 million in principal amount of its Old Notes for approximately $283.9 million in principal amount of its 1.5% Contingent Convertible Senior Notes Due 2033 (the “New Notes”). Holders of Old Notes that accepted the Company’s exchange offer received $1,230 in principal amount of New Notes for each $1,000 in principal amount of Old Notes. The terms of the New Notes are

F-21

similar to the terms of the Old Notes, but have a different interest rate, conversion rate and maturity date. Holders of Old Notes that chose not to exchange continue to be subject to the terms of the Old Notes.

     The New Notes bear interest at a rate of 1.5% per annum, which is payable on June 4 and December 4 of each year, beginning December 4, 2003. The Company will also pay contingent interest at a rate of 0.5% per annum during any six-month period, with the initial six-month period commencing June 4, 2008, if the average trading price of the New Notes reaches certain thresholds. The New Notes mature on June 4, 2033.

     The Company may redeem some or all of the New Notes at any time on or after June 11, 2008, at a redemption price, payable in cash, of 100% of the principal amount of the New Notes, plus accrued and unpaid interest, including contingent interest, if any. Holders of the New Notes may require the Company to repurchase all or a portion of their New Notes on June 4, 2008, 2013 and 2018, and upon a change in control, as defined in the indenture governing the New Notes, at 100% of the principal amount of the New Notes, plus accrued and unpaid interest to the date of the repurchase, payable in cash.

     The New Notes are convertible, at the holders’ option, prior to the maturity date into shares of the Company’s Class A common stock in the following circumstances:

• during any quarter commencing after September 30, 2003, if the closing price of the Company’s Class A common stock over a specified number of trading days during the previous quarter, including the last trading day of such quarter, is more than 120% of the conversion price of the New Notes, or $46.51. The Notes are initially convertible at a conversion price of $38.76 per share, which is equal to a conversion rate of approximately 25.7998 shares per $1,000 principal amount of New Notes, subject to adjustment;

• if the Company has called the New Notes for redemption;

• during the five trading day period immediately following any nine consecutive day trading period in which the trading price of the New Notes per $1,000 principal amount for each day of such period was less than 95% of the product of the closing sale price of the Company’s Class A common stock on that day multiplied by the number of shares of the Company’s Class A common stock issuable upon conversion of $1,000 principal amount of the New Notes; or

• upon the occurrence of specified corporate transactions.

     The New Notes, which are unsecured, do not contain any restrictions on the incurrence of additional indebtedness or the repurchase of the Company’s securities and do not contain any financial covenants. The New Notes require an adjustment to the conversion price if cash dividends of more than $0.025 per quarter (after giving effect to the stock split described in Note 1) are paid by the Company on its outstanding common stock.

     As a result of the exchange, the outstanding principal amounts of the Old Notes and the New Notes were $169.2 million and $283.9 million, respectively. Both the New Notes and Old Notes are reported in aggregate on the Company’s consolidated balance sheets. During the fiscal first quarter ended September 30, 2003, the Company recognized a loss on early extinguishment of debt totaling $58.7 million, consisting of a $53.1 million premium and a $5.6 million write-off of corresponding Old Notes fees. The Company incurred approximately $5.1 million of fees and other origination costs related to the issuance of the New Notes. The Company is amortizing these costs over the five-year Put period, which runs through August 2008.

     During the quarters ended June 30, 2004, March 31, 2004 and December 31, 2003, the Old Notes met the criteria for the right of conversion into shares of the Company’s Class A common stock. This right of conversion of the Holders of Old Notes was triggered by the stock closing above $31.96 on 20 of the last 30 trading days and the last trading day of the quarters ending June 30, 2004, March 31, 2004 and December 31, 2003. The Holders of Old Notes have this conversion right only until September 30, 2004. At such time and at the end of all future quarters, the conversion rights will be reassessed in accordance with the bond indenture agreement to determine if the conversion trigger rights have been achieved. During the three months ended March 31, 2004, outstanding principal amounts of $6,000 of Old Notes were converted into shares of the Company’s Class A common stock. As of September 10, 2004, no other Old Notes had been converted.

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NOTE 14. COMMITMENTS AND CONTINGENCIES

Occupancy Arrangements

     The Company presently occupies approximately 75,000 square feet of office space, at an average annual expense of approximately $2.1 million, under an amended lease agreement that expires in December 2010. The lease contains certain rent escalation clauses and, upon expiration, can be renewed for two additional periods of five years each. Rent expense was approximately $2.1 million, $1.5 million and $1.4 million in fiscal 2004, 2003 and 2002, respectively. The Company relocated to its present office space in Scottsdale, Arizona, in February 2000. Medicis Canada, Inc., a wholly owned subsidiary, presently leases approximately 7,500 square feet of office and warehouse space in St-Laurent, Quebec, Canada, under a lease agreement that expires in April 2005.

     At June 30, 2004, approximate future lease payments under the operating lease are as follows (amounts in thousands):

YEAR ENDING JUNE 30,
2005	$	2,050
2006		2,107
2007		2,061
2008		2,133
2009		2,133
Thereafter		3,199
	$	13,683

Research and Development and Consulting Contracts

     The Company has various consulting agreements with certain scientists in exchange for the assignment of certain rights and consulting services. At June 30, 2004, the Company had approximately $867,300 of commitments (solely attributable to the Chairman of the Central Research Committee of the Company) payable over the remaining five years under an agreement that is cancelable by either party under certain conditions.

Litigation

     The Company and certain of its subsidiaries are parties to other actions and proceedings incident to their businesses, including litigation regarding its intellectual property, challenges to the enforceability or validity of its intellectual property and claims that its products infringe on the intellectual property rights of others. Although the outcome of these actions is not presently determinable, the Company believes, at the present time, that the ultimate resolution of these matters will not have a material adverse effect on its business. In the Company’s opinion, based upon consultation with legal counsel, as of June 30, 2004, the ultimate outcome with respect to any of these matters, based on the information available to the Company, is either covered by insurance and/or established reserves, or in some cases rights of offset and/or indemnification, and/or in the aggregate will not have a material adverse effect on the Company’s business, financial condition or results of operations.

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NOTE 15. INCOME TAXES

     The provision for income taxes consists of the following (in thousands):

	JUNE 30,
	2004			2003		2002
Current
Federal	$	15,831		$	17,123	$	25,966
State		861			1,305		1,693
Foreign		109			14		368
		16,801			18,442		28,027
Deferred
Federal		(1,404	)		7,532		893
State		(80	)		430		40
		(1,484	)		7,962		933
Total	$	15,317		$	26,404	$	28,960

     Current income tax expense does not reflect benefit of $20.4 million, $3.4 million and $7.4 million for the fiscal years ended June 30, 2004, 2003, and 2002, respectively, related to the exercise of employee stock options recorded directly to “Additional paid-in-capital” in the Company’s consolidated statements of stockholders’ equity.

     The reconciliations of the U.S. federal statutory rate to the combined effective tax rate are as follows:

	JUNE 30,
	2004			2003			2002
Statutory federal income tax rate		35	%		35.0	%		35.0	%
State tax rate, net of federal benefit		1.1			1.5			1.5
Tax-exempt interest		(4.2	)		(2.1	)		(2.7	)
Non-deductible in-process research and development expense		0.0			0.0			2.9
Other		1.3			(0.4	)		0.0
		33.2	%		34.0	%		36.7	%

     Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

	JUNE 30,
	2004					2003
	Current		Long-term			Current			Long-term
Deferred tax assets:
Net operating loss carryforwards	$	—	$	25,691		$	—		$	26,253
Reserves and liabilities		13,549		—			11,742			—
Unrealized losses on securities		555		—			—			—
Research and development credits		—		1,920						1,246
Valuation allowance		—		(17,492	)		—			(17,492	)
		14,104		10,119			11,742			10,007
Deferred tax liabilities:
Unrealized gains on securities		—		—			(1,292	)		—
Bond interest		—		(9,068	)		—			(11,266	)
Excess of net book value over tax basis of intangible assets		—		(3,945	)		—			(1,614	)
Net deferred tax assets (liabilities)	$	14,104	$	(2,894	)	$	10,450		$	(2,873	)

F-24

     At June 30, 2004, the Company has a federal net operating loss carryforward of approximately $73.4 million that begins expiring in varying amounts in the years 2008 through 2021 if not previously utilized. The net operating loss carryforward was acquired in connection with the Company’s merger with Ascent during fiscal 2002. As a result of the merger and related ownership change for Ascent, the annual utilization of the net operating loss carryforward is limited under Internal Revenue Code Section 382. Based upon this limitation, the Company estimates that approximately $27.0 million of the $73.4 million net operating loss carryforward will be realized. Accordingly, a valuation reserve has been recorded for the remaining net operating loss carryforward that is not expected to be realized.

     At June 30, 2004, the Company has a research and experimentation credit carryforward of approximately $1.9 million that begins expiring in varying amounts in the years 2008 through 2024 if not previously utilized. Approximately $1.3 million of the research and experimentation credit carryforward was acquired in connection with the Company’s merger with Ascent during fiscal 2002 and is subject to the limitation under Internal Revenue Code Section 383. As a result of this limitation, the Company does not expect to realize any of the research and experimentation credits acquired from Ascent. Accordingly, a valuation reserve of $1.3 million has been established for the acquired research and experimentation credits.

     As a result of the limitations described above, the Company has recorded a deferred tax asset valuation allowance of $17.5 million related to the net operating loss and research and experimentation credit carryforwards acquired in the merger with Ascent. Subsequent realization of loss and credit carryforwards in excess of the amounts estimated to be realized as of June 30, 2004 will be applied to reduce the valuation allowance and goodwill recorded in connection with the merger with Ascent.

     During fiscal 2004, The Internal Revenue Service issued Notice 2003-65, providing taxpayers additional guidance regarding the computations under Internal Revenue Code Section 382. The application of Notice 2003-65 to Ascent’s net operating losses has resulted in an increase in the Company’s estimate of the amount of Ascent’s net operating losses it will utilize from $16.7 million to $28.6 million. As a result, the Company reclassified approximately $4.1 million from goodwill to deferred tax assets and the related valuation allowance to reflect the increased estimate of the income tax benefit it will realize from utilization of Ascent’s net operating loss carryforwards. The June 30, 2003 goodwill, deferred tax asset and valuation allowance amounts have also been reclassified to conform to the June 30, 2004 presentation.

     During fiscal 2004, the Company recorded a deferred tax asset of approximately $555,000 relating to unrealized losses on available-for-sale securities presented in other comprehensive income in stockholders’ equity. During fiscal 2003, the Company recorded a deferred tax liability of approximately $1.3 million relating to unrealized gains on available-for-sale securities.

     During fiscal 2004, the Company received net refunds of $3.7 million. During fiscal 2003 and 2002, the Company made tax payments of $16.7 million and $20.2 million, respectively.

     The Company operates in multiple tax jurisdictions and could be subject to audit in these jurisdictions. These audits can involve complex issues that may require an extended period of time to resolve and may cover multiple years. The Company believes an adequate provision for taxes has been made for all years subject to audit.

NOTE 16. STOCK TRANSACTIONS

     Class A common stock has one vote per share, and Class B common stock has 10 votes per share. Each share of Class B common stock may be converted into one share of Class A common stock at the option of the holder or, in some circumstances, may automatically be converted upon a vote of the Board of Directors and the Class B common stock shareholders.

     On January 2, 2004, the Company announced a 2 for 1 stock split in the form of a stock dividend payable on January 23, 2004 to stockholders of record at the close of business on January 12, 2004. All share and per share data have been restated to reflect the stock split effected in the form of a stock dividend.

F-25

     During fiscal 2003, Medicis purchased 1,856,600 shares of its Class A common stock in the open market at an average price of $19.37 per share. These stock purchases were made in accordance with a stock repurchase program that was approved by the Company’s Board of Directors in May 1999. This program provides for the repurchase of up to $75 million of Class A common stock at such times as management may determine. During fiscal 2002, the Company purchased 204,000 shares of Class A common stock at an average price of $21.29 in the open market under the stock repurchase program. The Company had repurchased a total of approximately $50.2 million toward the $75 million as of June 30, 2003. In May 2003, the Company’s Board of Directors approved a new program that authorizes the repurchase of up to $75 million of its common stock, which replaces the May 1999 program. As of June 30, 2004, the Company had not repurchased any shares of its common stock under this new program.

     In June 2002, the Company purchased approximately 6.4 million shares of Class A common stock at an average price of $23.24. This purchase was made in conjunction with the Company’s sale of its $400.0 million Contingent Convertible Senior Notes, where the Company agreed to purchase shares of its Class A common stock sold short by purchasers of the Notes concurrently with the sale of the Notes. This purchase was approved by the Company’s Board of Directors separately from the stock repurchase program as it occurred as part of the funding of the Notes. The price per share of the purchase of Class A common stock was equal to the closing sale price of the stock on the trading day on which the Note offering was priced.

     In February 2002, the Company issued 87,892 shares of Class A common stock upon the conversion of 87,892 shares of Class B common stock by a shareholder who was not an officer, director or 5% or greater shareholder of Medicis. The conversion was pursuant to the terms of the Class B common stock and did not result in the receipt of additional cash consideration by Medicis. The shares of Class B common stock converted in the transaction were originally issued to the shareholder in October 1988. The original issuance and the conversion were made in reliance upon exemptions from the registration requirements of the Securities Act of 1933 afforded to transactions not involving a public offering. As a consequence of this conversion, the number of outstanding shares of Class B common stock decreased from 845,924 shares to 758,032 shares at June 30, 2002.

NOTE 17. DEFERRED COMPENSATION

     In July 2001, Medicis granted 110,000 restricted shares of Class A common stock to certain employees. The Company recorded deferred compensation of $2,577,850, representing the market price of the shares at the date of grant. The amount of deferred compensation is presented as a reduction of stockholders’ equity and is being amortized ratably over the service period of the employees receiving the grants. The shares begin vesting two years after the grant date, and become fully vested five years after the grant date. In November 2002, 20,000 shares were reacquired by the Company due to an employee departure, and the Company reversed approximately $111,000 of previously amortized compensation expense due to the reacquisition. That employee returned to the Company in March 2003, and Medicis granted that employee 20,000 new restricted shares of Class A common stock. The Company recorded deferred compensation of $466,000, representing the market price of the shares at the date of grant.

     Amortization of deferred compensation was approximately $515,000 and $365,000 for fiscal year 2004 and 2003, respectively, and has been included in selling, general and administrative expenses in the accompanying consolidated statements of income. The Company expects to record compensation expense related to deferred compensation of approximately $129,000 per quarter through September 30, 2006, and approximately $23,000 per quarter thereafter through March 31, 2008. Expense with respect to the grants could be reduced and/or reversed to the extent employees receiving the grants leave the Company prior to vesting in the award.

NOTE 18. DIVIDENDS DECLARED ON COMMON STOCK

     During fiscal 2004, the Company paid quarterly cash dividends aggregating $5.5 million on its common stock. In addition, on June 10, 2004, the Company declared a cash dividend of $0.025 per issued and outstanding share of common stock payable on July 30, 2004 to stockholders of record at the close of business on July 1, 2004. The $1.4 million dividend was recorded as a reduction of accumulated earnings and is included in other current

F-26

liabilities in the accompanying consolidated balance sheets as of June 30, 2004. Prior to these dividends, the Company had not paid a cash dividend on our common stock. The Company has not adopted a dividend policy.

NOTE 19. STOCK OPTION PLANS

     As of June 30, 2004, the Company has five active Stock Option Plans (the 2002, 1998, 1996, 1995 and 1992 Plans or, collectively, the “Plans”). As of June 30, 2004, the 2002, 1998, 1996, 1995 and 1992 Plans had the following options outstanding: 4,422,225; 5,633,911; 666,272; 751,988; and 549,548, respectively. Except for the 2002 Stock Option Plan, which only includes non-qualified incentive options, the Plans allow the Company to designate options as qualified incentive or non-qualified on an as-needed basis. Qualified and non-qualified stock options vest over a period determined at the time the options are granted, ranging from one to five years, and generally have a maximum term of ten years. Options are granted at the fair market value on the grant date. Options outstanding at June 30, 2004, vary in price from $6.06 to $36.06, with a weighted average exercise price of $23.82 as is set forth in the following chart:

			Weighted		Weighted				Weighted
			Average		Average				Average
Range of	Number		Contractual		Exercise		Number		Exercise
Exercise Prices	Outstanding		Life		Price		Exercisable		Price
$6.06 - $13.69		1,373,238		4.76	$	11.07		937,778	$	11.09
$13.72 - $18.33		2,590,882		7.68	$	18.04		401,324	$	16.59
$18.57 - $24.99		488,838		7.71	$	22.68		288,785	$	22.70
$25.03 - $26.95		2,119,550		7.10	$	26.87		427,694	$	26.86
$26.98 - $27.63		2,180,066		6.10	$	27.63		1,197,226	$	27.63
$27.70 - $29.13		199,460		8.35	$	28.29		36,230	$	28.13
$29.20 - $29.20		2,511,300		9.08	$	29.20		1,380	$	29.20
$29.25 - $35.38		549,210		7.97	$	30.58		201,630	$	30.90
$35.88 - $35.88		4,800		9.50	$	35.88		0	$	0.00
$36.06 - $36.06		6,000		9.51	$	36.06		0	$	0.00

     A summary of stock options granted within the Plans and related information for the years ended June 30, 2004, 2003 and 2002 is as follows:

										Weighted
										Average
	Qualified			Non-Qualified			Total			Price
Balance at June 30, 2001		3,793,398			5,941,852			9,735,250		$	18.04
Granted		1,099,604			2,029,368			3,128,972		$	26.87
Exercised		(562,766	)		(659,244	)		(1,222,010	)	$	11.77
Terminated/expired		(373,854	)		(132,752	)		(506,606	)	$	20.85
Balance at June 30, 2002		3,956,382			7,179,224			11,135,606		$	21.08
Granted		12,340			3,476,376			3,488,716		$	19.11
Exercised		(451,596	)		(505,234	)		(956,830	)	$	13.33
Terminated/expired		(310,664	)		(575,236	)		(885,900	)	$	22.32
Balance at June 30, 2003		3,206,462			9,575,130			12,781,592		$	21.11
Granted		10,272			3,403,248			3,413,520		$	29.32
Exercised		(1,383,395	)		(1,526,179	)		(2,909,574	)	$	17.68
Terminated/expired		(275,772	)		(985,822	)		(1,261,594	)	$	25.41
Balance at June 30, 2004		1,557,567			10,466,377			12,023,944		$	23.82

F-27

     Options exercisable under the Plans at June 30, 2004 were 3,492,047 with an average exercisable price of $21.61.

     Pro forma information regarding net income and net income per share, as disclosed in Note 1, has been determined as if the Company had accounted for its employee stock-based compensation plans and other stock options under the fair method of SFAS No. 123. The fair value of these options was estimated at the date of grant using a Black-Scholes option pricing model with the following assumptions:

	2004			2003			2002
Expected dividend yield		0.3	%		0.3	%		0.0	%
Expected stock price volatility		0.5			0.5			0.4
Risk-free interest rate		3.3	%		2.5	%		3.0	%
Expected life options	5 Years			5 Years			5 Years

     The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which, unlike options granted by the Company, have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s stock options have characteristics significantly different from options traded on an exchange, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options. The weighted average fair value of options granted during fiscal 2004, 2003 and 2002 was $10.17, $9.10 and $8.94 per share, respectively.

NOTE 20. NET INCOME PER SHARE

     The following table sets forth the computation of basic and diluted net income per share (in thousands, except per share amounts):

	JUNE 30,
	2004		2003		2002
Numerator
Net income	$	30,840	$	51,256	$	50,024
Weighted average common shares outstanding.		55,618		54,376		60,536
Effect of dilutive securities:
Stock options and restricted stock		3,640		2,046		2,274
Weighted average common and common equivalent shares outstanding		59,258		56,422		62,810
Basic net income per share	$	0.55	$	0.94	$	0.83
Diluted net income per share	$	0.52	$	0.91	$	0.80

     Diluted net income per share must be calculated using the “if-converted” method if the outstanding Old Notes and/or New Notes meet the criteria for conversion. If the criteria for conversion is met, diluted net income per share is calculated by adjusting net income for tax-effected net interest and issue costs on the Old Notes and/or New Notes, divided by the weighted average number of common shares outstanding assuming dilution. Diluted net income per share for fiscal 2004 does not reflect the “if-converted” method, even though the criteria for conversion for the Old Notes were met during fiscal 2004, as such calculation would be anti-dilutive. Diluted net income per share for fiscal 2003 does not reflect the “if-converted” method as the criteria for conversion had not been met.

     The diluted net income per share computation for 2004 and 2003 excludes 5,393 and 3,098,163 shares of stock, respectively, which represented outstanding stock options whose exercise prices were greater than the average market price of the common shares during the respective fiscal years and were anti-dilutive. Diluted net income per share as of June 30, 2004 also excludes 5,823,103 and 7,324,820 shares of common stock, respectively, issuable upon conversion of the Old Notes and New Notes based upon those shares’ underlying common stock price of

F-28

$29.05 and $38.76, respectively. Diluted net income per share as of June 30, 2003 also excludes 13,769,362 shares of common stock issuable upon conversion of the contingent convertible senior notes based upon those shares’ underlying common stock price of $29.05.

NOTE 21. FINANCIAL INSTRUMENTS — CONCENTRATIONS OF CREDIT RISK

     Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and accounts receivable.

     The Company maintains cash, cash equivalents and short-term investments primarily with two financial institutions that invest funds in short-term, interest-bearing, investment-grade, marketable securities. The Company performs periodic evaluations of the relative credit standing of these financial institutions.

     At June 30, 2004 and 2003, three customers comprised approximately 88.8% and 72.3%, respectively, of accounts receivable. The Company does not require collateral from its customers, but performs periodic credit evaluations of its customers’ financial condition. Management does not believe a significant credit risk existed at June 30, 2004.

NOTE 22. DEFINED CONTRIBUTION PLAN

     The Company has a defined contribution plan (the “Contribution Plan”) that is intended to qualify under Section 401(k) of the Internal Revenue Code. All employees, except those who have not attained the age of 21, are eligible to participate in the Contribution Plan. Participants may contribute, through payroll deductions, up to 20.0% of their basic compensation, not to exceed Internal Revenue Code limitations. Although the Contribution Plan provides for profit sharing contributions by the Company, the Company had not made any such contributions since its inception until April 2002. Beginning in April 2002, the Company began matching employee contributions at 50% of the first 3% of basic compensation contributed by the participants. During fiscal 2004, 2003 and 2002, the Company recognized expense related to matching contributions under the Contribution Plan of $340,000, $307,000 and $70,000, respectively.

NOTE 23. SUBSEQUENT EVENTS

License of SubQ^™ from Q-Med

     On July 15, 2004, we entered into an exclusive license agreement with Q-Med to market, distribute, sell and commercialize in the United States and Canada Q-Med’s product currently known as SubQ™. Q-Med will have the exclusive right to manufacture SubQ™ for Medicis. SubQ™ is not approved currently for use in the United States and Canada.

     Under the terms of the agreement, Medicis Aesthetics Holdings Inc., a wholly owned subsidiary of Medicis, will license SubQ™ for approximately $80 million, due as follows: approximately $30 million upon closing of the transaction, which was recorded as a charge to research and development expense during the first quarter of fiscal 2005; approximately $10 million upon completion of certain clinical milestones; approximately $20 million upon the satisfaction of certain defined regulatory milestones; and approximately $20 million upon U.S. launch of SubQ™. We also will make additional milestone payments to Q-Med upon the achievement of certain commercial milestones.

     Like RESTYLANE^®, PERLANE^® and RESTYLANE FINE LINES™, SubQ™ is comprised of the same NASHA™ (non-animal stabilized hyaluronic acid) substance with a larger gel particle size and is understood to have patent protection until at least 2015.

License of Product Rights to Taro

     On July 27, 2004, the Company entered into an exclusive license and optional purchase agreement with Taro pursuant to which Taro will market, distribute and sell the LUSTRA^® family of products and two development stage products in the United States, Canada and Puerto Rico. The license agreement was effective immediately and

F-29

extends through July 1, 2007, after which Taro may purchase the product lines.

Repurchases of Common Stock

     In August 2004, the Company’s Board of Directors approved a new program that authorizes the repurchase of up to $150 million of its common stock, which replaces the May 2003 program.

Exchange of Class B Common Stock for Class A Common Stock

     During September 2004, all 758,032 shares of the Company’s Class B common stock were in the process of being exchanged for 758,032 shares of the Company’s Class A common stock. The Company’s consolidated financial statements as of June 30, 2004 do not reflect this change, as it would be immaterial for the current year presentation.

NOTE 24. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

     The table below lists the quarterly financial information for fiscal 2004 and 2003. All figures are in thousands, except per share amounts, and certain amounts do not total the annual amounts due to rounding, or, in the case of diluted net (loss) income per share, the application of the “if converted” method for dilution in particular quarters.

	YEAR ENDED JUNE 30, 2004
	(FOR THE QUARTERS ENDED)
	SEPTEMBER 30, 2003			DECEMBER 31, 2003		MARCH 31, 2004		JUNE 30, 2004
Net revenues	$	63,295		$	70,633	$	81,839	$	87,954
Gross profit		53,114			59,396		68,721		75,885
Loss on early extinguishment of debt		(58,660	)		—		—		—
Net (loss) income		(27,164	)		13,627		20,671		23,705
Basic net (loss) income per share	$	(0.50	)	$	0.25	$	0.37	$	0.42
Diluted net (loss) income per share	$	(0.50	)	$	0.23	$	0.33	$	0.37

	YEAR ENDED JUNE 30, 2003
	(FOR THE QUARTERS ENDED)
	SEPTEMBER 30, 2002		DECEMBER 31, 2002		MARCH 31, 2003		JUNE 30, 2003
Net revenues	$	58,745	$	59,514	$	62,575	$	66,705
Gross profit		49,587		50,207		53,461		56,024
Net income		11,879		15,301		10,224		13,851
Basic net income per share	$	0.22	$	0.28	$	0.19	$	0.25
Diluted net income per share	$	0.21	$	0.27	$	0.18	$	0.24

     Gross profit does not include amortization of the related intangibles.

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SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

	Balance at		Charged to
	beginning of		costs and		Charged to other					Balance at end of
Description	year		expenses		accounts		Deductions			year
Year Ended June 30, 2004
Deducted from Asset Accounts:
Accounts Receivable:
Allowances	$	12,716	$	83,834		—	$	(83,484	)	$	13,066
Year Ended June 30, 2003
Deducted from Asset Accounts:
Accounts Receivable:
Allowances	$	7,395	$	61,034		—	$	(55,713	)	$	12,716
Year Ended June 30, 2002
Deducted from Asset Accounts:
Accounts Receivable:
Allowances	$	5,050	$	36,644		—	$	(34,299	)	$	7,395

S-1

EXHIBIT INDEX

Exhibit No.		Description
2.1	-	Agreement of Merger by and between Medicis Pharmaceutical Corporation, a Delaware corporation, Medicis Acquisition Corporation, a Delaware corporation, and GenDerm Corporation, a Delaware corporation, dated November 28, 1997 (11)
2.1 (a)	-	Agreement of Plan of Merger, dated as of October 1, 2001, by and among Medicis Pharmaceutical Corporation, MPC Merger Corp. and Ascent Pediatrics, Inc. (17)
3.1	-	Certificate of Incorporation of the Company, as amended (filed herewith)
3.3 (a)	-	Amended and Restated By-Laws of the Company (13)
4.1	-	Rights Agreement, dated August 17, 1995, between the Company and American Stock Transfer & Trust Company, as Rights Agent (4)
4.1 (b)	-	Amendment No. 2 to Rights Agreement, dated March 17, 1997, between the Company and Norwest Bank Minnesota, N.A. (9)
4.1 (c)	-	Amendment No. 3 to Rights Agreement, dated May 31, 2002, between the Company and Wells Fargo Bank Minnesota, N.A., as successor-in-interest to American Stock Transfer & Trust Company (18)
4.1 (d)	-	Indenture, dated as of August 19, 2003, by and between Medicis Pharmaceutical Corporation, as issuer, and Deutsche Bank Trust Company Americas, as trustee (filed herewith)
4.1 (e)	-	Indenture, dated as of June 4, 2002, by and between Medicis Pharmaceutical Corporation, as issuer, and Deutsche Bank Trust Company Americas, as trustee. (19)
4.2	-	Registration Rights Agreement, dated as of June 4, 2002, by and between Medicis Pharmaceutical Corporation and Deutsche Bank Securities Inc. (19)
4.3	-	Form of specimen certificate representing Class A common stock (1)
10.1	-	Asset Purchase Agreement among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc., BioMarin Pharmaceutical Inc., and BioMarin Pediatrics Inc., dated April 20, 2004 (filed herewith)
10.2	-	Securities Purchase Agreement among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc., BioMarin Pharmaceutical Inc., and BioMarin Pediatrics Inc., dated May 18, 2004 (filed herewith)
10.3	-	License Agreement among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc.,

Exhibit No.		Description
		and BioMarin Pediatrics Inc., dated May 18, 2004 (filed herewith)
10.8	-	Medicis Pharmaceutical Corporation 1995 Stock Option Plan (incorporated by reference to Exhibit C to the definitive Proxy Statement for the 1995 Annual Meeting of Shareholders previously filed with the SEC, File No. 0-18443)
10.9	-	Employment Agreement between the Company and Jonah Shacknai, dated July 24, 1996 (8)
10.9 (a)	-	Amendment to Employment Agreement by and between the Company and Jonah Shacknai, dated April 1, 1999 (15)
10.9 (b)	-	Amendment to Employment Agreement by and between the Company and Jonah Shacknai, dated February 21, 2001 (15)
10.20	-	Medicis Pharmaceutical Corporation 2002 Stock Option Plan (20)
10.59	-	Supply Agreement, dated October 21, 1992, between Schein and the Company (2)
10.70	-	Amendment to Manufacturing and Supply Agreement, dated March 2, 1993, between Schein and the Company (3)
10.72(a)	-	Credit and Security Agreement, dated August 3, 1995, between the Company and Norwest Business Credit, Inc. (5)
10.72(b)	-	First Amendment to Credit and Security Agreement, dated May 29, 1996, between the Company and Norwest Bank Arizona, N.A. (8)
10.72(c)	-	Second Amendment to Credit and Security Agreement, dated November 22, 1996, by and between the Company and Norwest Bank Arizona, N.A. as successor-in-interest to Norwest Business Credit, Inc. (10)
10.72(d)	-	Third Amendment to Credit and Security Agreement, dated November 22, 1998, by and between the Company and Norwest Bank Arizona, N.A., as successor-in-interest to Norwest Business Credit, Inc. (12)
10.72(e)	-	Fourth Amendment to Credit and Security Agreement, dated November 22, 2000, by and between the Company and Wells Fargo Bank Arizona, N.A., formerly known as Norwest Bank Arizona, N.A., as successor-in-interest to Norwest Business Credit, Inc. (16)
10.72(f)	-	Fifth Amendment to Credit and Security Agreement, dated November 22, 2002, by and between the Company and Wells Fargo Bank Arizona, N.A., formerly known as Norwest Bank Arizona, N.A., as successor-in-interest to Norwest Business Credit, Inc. (filed herewith)
10.73(a)	-	Patent Collateral Assignment and Security Agreement, dated August 3, 1995, by the Company to Norwest Business Credit, Inc. (6)
10.73(b)	-	First Amendment to Patent Collateral Assignment and Security Agreement, dated May 29, 1996, by the Company to Norwest Bank Arizona, N.A. (8)
10.73(c)	-	Amended and Restated Patent Collateral Assignment and Security Agreement, dated November 22, 1998, by the Company to Norwest Bank Arizona, N.A. (12)
10.74(a)	-	Trademark Collateral Assignment and Security Agreement, dated August 3, 1995, by the Company to Norwest Business Credit, Inc. (7)
10.74(b)	-	First Amendment to Trademark Collateral Assignment and Security Agreement, dated May 29, 1996, by the Company to Norwest Bank Arizona, N.A. (8)
10.74(c)	-	Amended and Restated Trademark, Tradename, and Service Mark Collateral Assignment and Security Agreement, dated November 22, 1998, by the Company to Norwest Bank Arizona, N.A. (12)
10.75	-	Assignment and Assumption of Loan Documents, dated May 29, 1996, from Norwest Business Credit, Inc., to and by Norwest Bank Arizona, N.A. (8)
10.76	-	Multiple Advance Note, dated May 29, 1996, from the Company to Norwest Bank Arizona, N.A. (8)
10.89	-	Asset Purchase Agreement dated November 15, 1998, by and among the Company and Hoechst Marion Roussel, Inc., Hoechst Marion Roussel Deutschland GMHB and Hoechst Marion Roussel, S.A. (12)
10.90	-	License and Option Agreement dated November 15, 1998, by and among the Company and Hoechst Marion Roussel, Inc., Hoechst Marion Roussel Deutschland GMBH and Hoechst Marion Roussel, S.A. (12)
10.91	-	Loprox Lotion Supply Agreement dated November 15, 1998, by and between the Company and Hoechst Marion Roussel, Inc. (12)
10.92	-	Supply Agreement dated November 15, 1998, by and between the Company and Hoechst Marion Roussel Deutschland GMBH (12)

Exhibit No.		Description
10.93	-	Asset Purchase Agreement effective January 31, 1999, between the Company and Bioglan Pharma Plc (14)
10.94	-	Stock Purchase Agreement by and among the Company, Ucyclyd Pharma, Inc. and Syed E. Abidi, William Brusilow, Susan E. Brusilow and Norbert L. Wiech, dated April 19, 1999 (14)
10.95	-	Asset Purchase Agreement by and between the Company and Bioglan Pharma Plc, dated June 29, 1999 (14)
10.96	-	Asset Purchase Agreement by and among The Exorex Company, LLC, Bioglan Pharma Plc, the Company and IMX Pharmaceuticals, Inc., dated June 29, 1999 (16)
10.97	-	Medicis Pharmaceutical Corporation Executive Retention Plan (14)
10.98	-	Asset Purchase Agreement between Warner Chilcott, plc and the Company, dated September 14, 1999(14)
10.99	-	Share Purchase Agreement between Q-Med International B.V. and Startskottet 21914 AB (under proposed change of name to Medicis Sweden Holdings AB), dated February 10, 2003(21)
10.99(a)	-	Amendment No. 1 to Share Purchase Agreement between Q-Med International B.V. and Startskottet 21914 AB (under proposed change of name to Medicis Sweden Holdings AB), dated March 7, 2003(21)
10.100	-	Supply Agreement between Q-Med AB and Medicis Pharmaceutical Corporation, dated March 7, 2003(21)
10.101	-	Amended and Restated Intellectual Property Agreement between Q-Med AB and HA North American Sales AB, dated March 7, 2003(21)
10.102	-	Supply Agreement between Medicis Aesthetics Holdings Inc., a wholly owned subsidiary of Medicis Pharmaceutical Corporation, and Q-Med AB, dated July 15, 2004 (filed herewith) Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
10.103	-	Intellectual Property License Agreement between Q-Med AB and Medicis Aesthetics Holdings Inc., dated July 15, 2004 (filed herewith) Portions of this exhibit (indicated by asterisks) have been omitted pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934.
12	-	Computation of Ratios of Earnings to Fixed Charges (filed herewith)
21.1	-	Subsidiaries (filed herewith)
23.1	-	Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith)
24.1	-	Power of Attorney See signature page(s)
31.1	-	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith)
31.2	-	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith)
32.1	-	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.2	-	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith)
99.1	-	Exclusive Remedy Agreement, dated as of October 1, 2001, by and among Medicis Pharmaceutical Corporation, Ascent Pediatrics, Inc., FS Private Investments LLC, Furman Selz Investors II L.P., FS Employee Investors LLC, FS Ascent Investments LLC and FS Parallel Fund L.P., BancBoston Ventures Inc., Flynn Partners, Raymond F. Baddour, Sc.D., Robert E. Baldini, Medical Science Partners L.P. and Emmett Clemente, Ph.D. (17)
99.1 (a)	-	Charter of the Nominating and Governance Committee of the Board of Directors of Medicis Pharmaceutical Corporation(2)
99.2	-	Note Agreement, dated as of October 1, 2001, by and among Ascent Pediatrics, Inc., Medicis Pharmaceutical Corporation, Furman Selz Investors II L.P., FS Employee Investors LLC, FS Ascent Investments LLC, FS Parallel Fund L.P., BancBoston Ventures Inc. and Flynn Partners (17)
99.2 (a)	-	Medicis Pharmaceutical Corporation Corporate Governance Guidelines(22)
99.3	-	Voting Agreement, dated as of October 1, 2001, by and among Medicis Pharmaceutical Corporation, MPC Merger Corp., FS Private Investments LLC, Furman Selz Investors II

          L.P., FS Employee Investors LLC, FS Ascent Investments LLC and FS Parallel Fund L.P. ⁽¹⁷⁾

(1)	Incorporated by reference to the exhibit with the same number in the Registration Statement on Form S-1 of the Registrant, File No. 33-32918, filed with the SEC on January 16, 1990
(2)	Incorporated by reference to the exhibit with the same number in Registration Statement on Form S-1 of the Company, File No. 33-54276, filed with the SEC on June 11, 1993
(3)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1993, File No. 0-18443, filed with the SEC on October 13, 1993
(4)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1995, File No. 0-18443, previously filed with the SEC (the “1994 Form 10-K”)
(5)	Incorporated by reference to exhibit number 4.2 in the 1995 Form 10-K
(6)	Incorporated by reference to exhibit number 4.4 in the 1995 Form 10-K
(7)	Incorporated by reference to exhibit number 4.5 in the 1995 Form 10-K
(8)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1996, File No. 0-18443, previously filed with the SEC
(9)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1997, File No. 0-18443, previously filed with the SEC
(10)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1996, File No. 0-18443, previously filed with the SEC
(11)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on December 15, 1997
(12)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 1998, File No. 0-18443, previously filed with the SEC
(13)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, File No. 0-18443, previously filed with the SEC
(14)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 1999, File No. 0-18443, previously filed with the SEC
(15)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2001, File No. 0-18443, previously filed with the SEC
(16)	Incorporated by reference to the exhibit with the same number in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2001, File No. 0-18443, previously filed with the SEC
(17)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on October 2, 2001
(18)	Incorporated by reference to the exhibit with the same number in the Company’s registration statement on Form 8-A12B/A filed with the SEC on June 4, 2002

(19)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on June 6, 2002
(20)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 10-K for the fiscal year ended June 30, 2002, File No. 0-18443, previously filed with the SEC
(21)	Incorporated by reference to the exhibit with the same number in the Company’s Current Report on Form 8-K filed with the SEC on March 10, 2003
(22)	Incorporated by reference to the exhibit with the same number in the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2003, File No. 0-18443,previously filed with the SEC

EX-3.1

                                                                     EXHIBIT 3.1

                                                                          PAGE 1

                                    DELAWARE

                                The First State

      I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED ARE TRUE AND CORRECT COPIES OF ALL DOCUMENTS FILED
FROM AND INCLUDING THE RESTATED CERTIFICATE OF "MEDICIS PHARMACEUTICAL
CORPORATION" AS RECEIVED AND FILED IN THIS OFFICE.

      THE FOLLOWING DOCUMENTS HAVE BEEN CERTIFIED:

      RESTATED CERTIFICATE, FILED THE EIGHTEENTH DAY OF DECEMBER, A.D. 2003, AT
2:27 O'CLOCK P.M.

                      [SEAL]           Harriet Smith Windsor, Secretary of State
                                       -----------------------------------------
                                       Harriet Smith Windsor, Secretary of State
2168131 8100X                          AUTHENTICATION: 3116829

040362524                                                  DATE:05-18-04


               AMENDED AND RESTATED CERTIFICATE, OF INCORPORATION
                                       OF
                       MEDICIS PHARMACEUTICAL CORPORATION

Medicis Pharmaceutical Corporation, a corporation organized and existing under
the General Corporation Law of the State of Delaware (the "Corporation") does
hereby certify:

1.    That the name of the corporation is Medicis Pharmaceutical Corporation.

2.    That the Corporation filed its original Certificate of Incorporation with
      the Secretary of the State of Delaware on July 29,1988.

3.    That the Certificate of Incorporation has been previously amended, as
      follows:

            a.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of Delaware
                  on October 3, 1988.

            b.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of Delaware
                  on December 20, 1989.

            c.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of Delaware
                  on January 12, 1990.

            d.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of Delaware
                  on January 29, 1992.

            e.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of
                  Delaware on December 15, 1992.

            f.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of Delaware
                  on October 23, 1995.

            g.    A Certificate of Amendment of the Certificate of Incorporation
                  was filed with the Secretary of State of the State of Delaware
                  on November 25, 1996.

4.    That, at a meeting of the Board of Director held on September 18, 2003,
      this Restated Certificate of Incorporation was duly approved for
      submission to the Corporation's shareholders for their approval.

5.    That, at a meeting of the shareholders of the Corporation on November 19,
      2003, this Restated Certificate of Incorporation was duly adopted and
      approved by the Corporation's shareholders.

6.    That this Restated Certificate of Incorporation was adopted in accordance
      with Section 245 of the General Corporation Law of the State of Delaware.



7.    That the Certificate of Incorporation of the Corporation, as hereby
      restated, is as follows:

                                    ARTICLE I

The name of the corporation is Medicis Pharmaceutical Corporation (the
"Corporation").

                                   ARTICLE II

The address of the registered agent of the Corporation in the State of Delaware
is 1209 Orange Street, City of Wilmington, County of New Castle. Delaware 19801.
The name of the registered agent of the Corporation at such address is The
Corporation Trust Company.

                                   ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of
Delaware, and the Corporation shall have all powers necessary to engage in such
acts or activities, including, but not limited to, the powers enumerated in the
General Corporation Law of Delaware or any amendment thereto.

                                   ARTICLE IV

SECTION 1. AUTHORIZED SHARES.

The total number of Shares of all classes that the Corporation is authorized to
issue is 156,000,000, consisting of 150,000,000 shares of Class A Common Stock,
par value $.014 per share ("Class A Common Stock"); 1,000,000 shares of Class B
Common Stock, par value $.014 per share ("Class D Common Stock"); and 5,000,000
Preferred Stock, par value $.01 per share ("Preferred Stock").

SECTION 2. CLASS A COMMON STOCK AND CLASS B COMMON STOCK.

(A) General. The designations, preferences, limitations and relative rights of
the Class A Common Stock and the Class B Common Stock shall be in all respects
identical, except as stated in this Certificate of Incorporation or as otherwise
required by law.

(B) Voting Rights.

      (1) At each meeting of stockholders of the Corporation and upon each
      proposal presented at such meeting, every holder of Class A Common Stock
      shall be entitled to one vote in person or by proxy for each share of
      Class A Common Stock standing in his or her name on the stock transfer
      records of the Corporation, and every holder of Class B Common Stock shall
      be entitled to ten votes in person or by proxy for each share of Class B
      Common Stock standing in his or her name on the stock transfer records of
      the Corporation.

      (2) Except as provided in this Paragraph (B) or Paragraph (C) of this
      Section 2 or as may be otherwise required by law, the holders of Class A
      Common Stock and Class B Common Stock shall vote together as a single
      class with respect to all matters.



      (3) Except as may be otherwise required by law or stated in any Preferred
      Stock Designation (as defined in Section 3 of this Article IV), the
      holders of Class A Common Stock and Class B Common Stock shall have the
      exclusive right to vote for the election of directors and for all other
      purposes, each holder of the Class A Common Stock and Class B Common Stock
      being entitled to vote as provided in this Paragraph (B) of this Section
      2.

(C) Dividends and Distributions. Subject to the rights of the holders of
Preferred Stock, and subject to any other provisions of this Certificate of
Incorporation, as it may be amended from time to time, holders of Class A Common
Stock and Class B Common Stock shall be entitled to receive such dividends and
other distributions in cash, in property or in shares of the Corporation as may
be declared thereon by the Board of Directors from time to time out of assets or
funds of the Corporation legally available therefor; provided, however, that no
cash, property or share dividend or distribution may be declared or paid on the
outstanding shares of either the Class A Common Stock or the Class B Common
Stock unless an identical per share dividend or distribution is simultaneously
declared and paid on the outstanding shares of the other such class of common
stock; provided, further, however, that a dividend of shares may be declared
and paid in Class A Common Stock to holders of Class A Common Stock and in
Class B Common Stock to holders of Class B Common Stock if the number of shares
paid per share to holders of Class A Common Stock and to holders of Class B
Common Stock shall be the same. If the Corporation shall in any manner
subdivide, combine or reclassify the outstanding shares of Class A Common Stock
or Class B Common Stock, the outstanding shares of the other such class shall be
subdivided, combined or reclassified proportionally in the same manner and on
the same basis as the outstanding shares of Class A Common Stock or Class B
Common Stock, as the case may be, have been subdivided, combined or
reclassified. A dividend in shares of Class A Common Stock may be paid to the
holders of shares of any other class of the Corporation.

(D) Limited Issuances of Class B Common Stock. Unless and until the Certificate
of Incorporation is amended to permit other issuances of the Class B Common
Stock, the Corporation shall not issue additional shares of Class B Common Stock
other than the (i) 125,322 shares of Class B Common Stock authorized and
outstanding as of the date of this Certificate of Incorporation; and (ii) the
62,660 shares of Class B Common Stock reserved for issuance upon the automatic
conversion of the Corporation's Series B Automatically Convertible Preferred
Stock; except for shares of Class B Common Stock issued to holders of
outstanding shares of Class B Common Stock in connection with stock splits,
stock dividends, recapitalizations, subdivisions and other similar
distributions. All authorized but unissued shares of Class B Common Stock
(including treasury shares created upon the conversion of Class B Common Stock
to Class A Common Stock or otherwise) are specifically reserved for issuance in
such instances.

(E) Liquidation Rights. Upon liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, and after the holders, if any, of
the Preferred Stock, of each series shall have been paid in full the amounts to
which they respectively shall be entitled, or a sum sufficient for such payment
in full shall have been set aside, the remaining net assets of the Corporation
shall be distributed pro rata on a share for share basis to the holders of the
Class A Common Stock and Class B Common Stock, to the exclusion of the holder of
the Preferred Stock.



(F) No Conversion of Class A Common Stock. The shares of Class A Common Stock
are not convertible into or exchangeable for shares of Class B Common Stock or
any other shares or securities of the Corporation.

(G) Conversion of Class B Common Stock.

      (1) Optional Conversion. Each record holder of Class B Common Stock is
      entitled, at any time or from time to time, to convert any or all of the
      shares of such holder's Class B Common Stock into shares of Class A Common
      Stock at the ratio of one share of Class A Common Stock for each share of
      Class B Common Stock.

      (2) Optional Conversion Procedures.

            (a) Each conversion of shares pursuant to Paragraph (G)(1) of this
            Section 2 hereof shall be effected by the surrender of the
            certificate or certificates representing the shares to be converted
            at the principal office of the Corporation at any time during normal
            business hours, together with a written notice by the holder stating
            the number of shares that such holder desires to convert. Such
            conversion shall be deemed to have been effected as of the close of
            business on the date on which such certificate or certificates have
            been surrendered, and at such time, the rights of any such holder
            with respect to the converted shares of such holder will cease and
            the person or persons in whose name or names the certificate or
            certificates for shares are to be issued upon such conversion will
            be deemed to have become the holder or holders of record of such
            shares represented thereby.

            (b) Promptly after such surrender, the Corporation will issue and
            deliver in accordance with the surrendering holder's instructions
            the certificate or certificates for the Class A Common Stock
            issuable upon such conversion and a certificate representing any
            Class B Common Stock which was represented by the certificate or
            certificates delivered to the Corporation in connection with such
            convention, but which was not converted.

      (3) Automatic Conversion. Each share of Class B Common Stock will convert
      automatically into one share of Class A Common Stock upon the sale or
      any other transfer thereof (including, without limitation, conveyance into
      a trust and transfer by the operation of any will or the laws of descent
      and distribution), except upon a sale or any other transfer to a person
      who immediately prior to such sale or transfer is a holder of a share or
      shares of Class B Common Stock.

      (4) Mandatory Conversion. In addition to the foregoing optional right of
      conversion, in the event that the Board of Directors of the Corporation
      duly adopts a resolution providing therefor and subject to the approval of
      the holders of 3 majority of the then-outstanding shares of Class B Common
      Stock voting together as a single class at a meeting of the stockholders
      or at a meeting of the holders of the Class B Common Stock called for such
      purpose (or by written consent in lieu of a stockholders meeting, to the
      extent permitted by the applicable law of the State of Delaware), all
      outstanding shares of Class B Common stock shall be converted, at the time
      specified in the resolutions so adopted by the Board of Directors of the
      Corporation and the holders of the then-outstanding Class B Common Stock,
      respectively, or, if no time is specified, upon the approval of the
      holders of a majority


      of the then-outstanding Class B Common Stock, into shares of Class A
      Common Stock at the ratio of one share of Class A Common Stock for each
      share of Class B Common Stock. Following conversion of the Class B Common
      Stock into Class A Common Stock pursuant to this Paragraph (G)(3), each
      certificate representing Class B Common Stock shall for all purposes
      represent an equal number of shares of Class A Common Stock, provided that
      any certificate representing Class B Common Stock may be surrendered at
      the principal office of the Corporation together with a written request
      that the Corporation issue a certificate or certificates for the Class A
      Common Stock issuable upon such conversion and the Corporation shall
      thereupon issue such new certificate or certificates in accordance with
      such written request.

      (5) Issuance Costs. The issuance of certificates upon conversion of shares
      pursuant hereto will be made without charge to the holder or holders of
      such shares for any issuance tax (except stock transfer tax) in respect
      thereof or other costs incurred by the Corporation in connection
      therewith.

      (6) Reservation of Shares. Solely for the purpose of issuance upon
      conversion of such shares as herein provided, the Corporation shall at all
      times reserve and keep available out of its authorized but unissued shares
      of Class A Common Stock such, number of shares of Class A Common Stock as
      are then issuable upon the conversion of all outstanding shares of Class B
      Common Stock.

SECTION 3. PREFERRED STOCK.

(A) The Board of Directors of the Corporation is authorized, subject to any
limitations prescribed by law, to provide for the issuance of the shares of
Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware (hereinafter referred to as a "Preferred
Stock Designation") to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences
and rights of the shares of each such series and any qualifications, limitations
or restrictions thereof.

(B) Series A Junior Participating Preferred Stock. Pursuant to the authority
granted to and vested in the Board of Directors under Section 3(A) of this
Certificate of Incorporation, there has been created as of August 17, 1995, a
series of preferred stock, par value $.01 per share, denominated Series A Junior
Participating Preferred Stock, in such number, and with such rights,
preferences, privileges and limitations as are set forth in the Certificate of
Designation attached hereto and incorporated herein as Exhibit "A".

(C) Series B Automatically Convertible Preferred Stock. Pursuant to the
authority granted to and vested in the Board of Directors under Section 3(A) of
this Certificate of Incorporation, there has been created as of July 22, 1996, a
series of preferred stock, par value $.01 per share, denominated Series B
Automatically Convertible Preferred Stock, consisting of 62,660 shares and with
the following relative rights, preferences, privileges and limitations:

      Section 1. The relative rights, preferences, privileges and limitations of
      Series B Preferred Stock shall be identical in all respects to that of the
      Corporation's Class B Common Stock and shall in no way vary from the
      rights, preferences, privileges of limitations of the Class B



      Common Stock, except that each share of Series B Preferred Stock shall be
      automatically (and without any further action by or on behalf of the
      Corporation or the holder thereof) converted into one (1) share of Class B
      Common Stock immediately upon approval by the Corporation's shareholders
      of an amendment to the Corporation's Certificate of Incorporation
      increasing the number of authorized shares of Class B Common Stock by a
      number equal to or greater than the number of outstanding and issued
      shares of Series B Preferred Stock.

      Section 2. Shares of Series B Preferred Stock shall be convertible into
      Class A Common Stock on the same terms and conditions (including automatic
      conversion upon transfer) applicable to the conversion of Class B Common
      Stock into Class A Common Stock.

SECTION 4. ISSUANCES OF CLASS A COMMON STOCK, CLASS B COMMON STOCK AND PREFERRED
STOCK.

Subject to the provisions of the laws of the State of Delaware, the Corporation
may issue its Class A Common Stock, Class B Common Stock and Preferred Stock
from time to time for such consideration (not less than the par value thereof)
as may be fixed by the Board of Directors, which is expressly authorized to fix
the same in its discretion, Shares so issued for which the consideration has
been paid or delivered to the Corporation shall be deemed to be fully paid stock
and shall not be liable for any further call or assessment thereon, and the
holders of such shares shall not be liable for any further payments in respect
to such shares.

                                    ARTICLE V

A director of the Corporation shall not be personally liable to the Corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director has derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the Corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. Any repeal or modification of this Article V by
the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.

                                   ARTICLE VI

SECTION 1. RIGHT TO INDEMNIFICATION.

Each person who was or is made a party or is threatened to be made a party to or
is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a "Proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the legal representative,
is or was a officer or employee of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation or of a



partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such Proceeding is
alleged action in an official capacity as a director, officer, employee or (if
serving for another corporation at the request of the Corporation) agent or in
any other capacity while serving as a director, officer, employee or (if serving
for another corporation at the request of the Corporation) agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys fees,
judgments, fines, ERISA excise taxes or penalties and amounts to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to be a director, officer, employee or (if serving for another corporation at
the request of the Corporation) agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however, that except as
provided in Section 2 hereof with respect to Proceedings seeking to enforce
rights to indemnification, the Corporation shall indemnify any such person
seeking indemnification in connection with a Proceeding (or pat thereof)
initiated by such person only if such Proceeding (or part thereof) was
authorized by the Board of Directors of the Corporation. The right to
indemnification conferred in this Section 1 shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such Proceeding in advance of its final disposition; provided,
however, that, if the Delaware General Corporation Law requires, the payment of
such expenses incurred by a director or officer in his or her capacity as a
director or Officer (and not in any other capacity in which service was, or is
rendered by such person while a director or officer, including, without
limitation, service to an employee benefit plan) in advance of the final
disposition of a Proceeding shall be made only upon delivery to the Corporation
of an undertaking, by or on behalf of such director or officer, to repay all
amounts so advanced if it shall ultimately be determined that such director or
officer is not entitled to be indemnified under this Article VI or otherwise.

SECTION 2. PAYMENT OF INDEMNIFICATION.

If a claim under Section 1 of this Article VI is not paid in full by the
Corporation within 90 days after a written claim has been received by the
Corporation, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall also be entitled to be paid the expenses of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce & claim for expenses incurred in defending any
Proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the Delaware General Corporation
Law, nor an actual determination by the Corporation (including its Board of
Directors, independent legal counsel or stockholders) that the claimant has not
met such applicable standard of conduct, shall be a



defense to the action or create a presumption that the claimant has not met the
applicable standard of conduct.

SECTION 3. INDEMNIFICATION NOT EXCLUSIVE

The right to indemnification and the payment of expenses incurred in defending a
Proceeding in advance of its final disposition conferred in this Article VI
shall not be exclusive of any other right which any person may have or hereafter
acquire under any statute, provision of this Certificate of Incorporation,
By-law, agreement, vote of stockholders or disinterested directors or otherwise.

SECTION 4. INSTANCE.

The Corporation may maintain insurance, at its expense to protect itself and any
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the Delaware
General Corporation Law.

                                   ARTICLE VII

The name and mailing address of the Incorporator are: Jonah Shacknai, c/o The
Corporation Trust Company, 1209 Orange Street, City of Wilmington, County of New
Castle, Delaware 19801.

                                  ARTICLE VIII

The business and affairs of the Corporation shall be managed by the Board of
Directors, and the directors need not be elected by ballot unless required by
the By-laws of the Corporation. The directors of the Corporation shall be
divided into three classes, the number of directors fixed by the By-laws of the
Corporation being divided equally so far as possible among the three classes;
provided, however, in no event shall the number of directors be less than three.
The term of office of one class of the directors elected at the 1995 annual
meeting of stockholders shall expire all the next succeeding annual meeting of
stockholders, the term of office of one class of the directors elected at the
1995 annual meeting of stockholders shall expire at the second succeeding annual
meeting of stockholders and the term of office of one class of the directors
elected at the 1995 annual meeting of stockholders shall expire at the third
succeeding annual meeting of stockholders, and at each annual meeting of
stockholders after the 1995 annual meeting of stockholders, the directors to be
elected at such annual meeting shall be elected for a full terra of three years
to succeed those whose terms then expire. In case of any change in the number of
directors, the increase or decrease shall be apportioned among the several
classes as nearly equally as is possible and any additional director resulting
from an increase shall be elected, and any director elected to fill a vacancy in
the Board in each case resulting from the death, disability, resignation or
removal of a director shall be elected for a term of office which shall be the
same as the term office of the other directors of the class of directors of
which such director is a member. In no case shall a decrease in the number of
directors shorten the term of office of any incumbent director. Except as
otherwise required by law, any vacancy on the Board



of Directors that results from an increase in the number of directors shall be
filled only by a majority of the Board of Directors then in office, provided
that a quorum is present, and any other vacancy occurring in the Board of
Directors shall be filled by a majority of the directors then in office, even if
less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his or her predecessor. Notwithstanding
the foregoing, whenever the holders of any one or more classes or series of
stock issued by the Corporation shall have the right, voting separately by class
or series, to elect directors at an annual or special meeting of stockholders,
the election, term of office, filling of vacancies and other features of such
directorships shall be governed by the terms of this Certificate of
Incorporation applicable thereto, such directors so elected shall not he divided
into classes pursuant to Article IX and the number of such directors shall not
be counted in determining the maximum number of directors permitted under the
foregoing provision of Article IX, in each case unless expressly provided by
such terms.

Any director elected by the stockholders or by the Board of Directors to fill a
vacancy may be removed only for cause by the affirmative vote of the holders of
a majority of all the shares of stock of the Corporation outstanding and
entitled to vote for the election of directors, given at a duly called annual
or special meeting of stockholders.

                                   ARTICLE IX

The Board of Directors is expressly authorized to adopt, amend or repeal the
By-laws of the Corporation.

                                    ARTICLE X

The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation,

IN WITNESS WHEREOF, the undesigned has executed this Amended and Restated
Certificate of Incorporation and caused it to be attested by its Secretary on
this 19th day of November, 2003.

/s/ Jonah Shacknai
- ------------------
Jonah Shacknai
Chairman and Chief Executive Officer

ATTEST:

/s/ Mark A. Prygocki, Sr.
- -------------------------
Mark A. Prygocki, Sr.
Executive Vice President, Chief Financial Officer, Corporate Secretary and
Treasurer

EX-4.1D

                                                                  EXHIBIT 4.1(d)

                       MEDICIS PHARMACEUTICAL CORPORATION

                1.5% Contingent Convertible Senior Notes Due 2033

                                    INDENTURE

                           Dated as of August 19, 2003

                      DEUTSCHE BANK TRUST COMPANY AMERICAS

                                     TRUSTEE






Trust Indenture Act Section                                                     Indenture Section
- --------------------------------------------------------------------------      -----------------
                                                                             
310(a)(1).................................................................                 7.10
(a)(2)....................................................................                 7.10
(a)(3)....................................................................                 N.A.
(a)(4)....................................................................                 N.A.
(a)(5)....................................................................                 N.A.
(b).......................................................................           7.08, 7.10
(c).......................................................................                 N.A.
311(a)....................................................................                 7.11
(b).......................................................................                 7.11
(c).......................................................................                 N.A.
312(a)....................................................................                 2.05
(b).......................................................................                11.03
(c).......................................................................                11.03
313(a)....................................................................                 7.06
(b)(1)....................................................................                 7.06
(b)(2)....................................................................                 7.06
(c).......................................................................                 7.06
(d).......................................................................                 7.06
314(a)....................................................................           4.02, 4.03
(b).......................................................................                 N.A.
(c)(1)....................................................................                11.04
(c)(2)....................................................................                11.04
(c)(3)....................................................................                 N.A.
(d).......................................................................                 N.A.
(e).......................................................................                11.05
(f).......................................................................                 N.A.
315(a)....................................................................              7.01(b)
(b).......................................................................                 7.05
(c).......................................................................                 7.01
(d).......................................................................              7.01(c)
(e).......................................................................                 6.11
316(a)(1)(A)..............................................................                 6.05
(a)(1)(B).................................................................                 6.04
(a)(2)....................................................................                 N.A.
(b).......................................................................                 6.07
(c).......................................................................              1.05(e)
317(a)(1).................................................................                 6.08
(a)(2)....................................................................                 6.09
(b).......................................................................                 2.04
318(a)....................................................................                 N.A.


N.A. means not applicable.

*This Cross-Reference Table is not part of the Indenture.

                                        i



                               Table of Contents



                                                                                Page
                                                                                ----
                                                                             
                                   ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.  Definitions................................................        1
Section 1.02.  Other Definitions..........................................        4
Section 1.03.  Incorporation by Reference of Trust Indenture Act..........        5
Section 1.04.  Rules of Construction......................................        6
Section 1.05.  Acts of Holders............................................        6

                                   ARTICLE 2
                                 THE SECURITIES

Section 2.01.  Form and Dating............................................        7
Section 2.02.  Execution and Authentication...............................        8
Section 2.03.  Registrar, Paying Agent and Conversion Agent...............        9
Section 2.04.  Paying Agent to Hold Money in Trust........................        9
Section 2.05.  Securityholder Lists.......................................       10
Section 2.06.  Transfer and Exchange......................................       10
Section 2.07.  Replacement Securities.....................................       11
Section 2.08.  Outstanding Securities; Determinations of Holders' Action..       11
Section 2.09.  Temporary Securities.......................................       12
Section 2.10.  Cancellation...............................................       12
Section 2.11.  Persons Deemed Owners......................................       13
Section 2.12.  Global Securities..........................................       13
Section 2.13.  CUSIP Numbers..............................................       14

                                 ARTICLE 3
                         REDEMPTION AND PURCHASES

Section 3.01.  Right To Redeem; Notices To Trustee........................       15
Section 3.02.  Selection of Securities to Be Redeemed.....................       15
Section 3.03.  Notice of Redemption.......................................       15
Section 3.04.  Effect of Notice of Redemption.............................       16
Section 3.05.  Deposit of Redemption Price................................       16
Section 3.06.  Securities Redeemed in Part................................       17
Section 3.07.  Reserved...................................................       17
Section 3.08.  Purchase of Securities at Option of the Holder.............       17
Section 3.09.  Purchase of Securities at Option of the Holder upon Change
                in Control................................................       19
Section 3.10.  Effect of Purchase Notice or Change in Control Purchase
                Notice....................................................       22
Section 3.11.  Deposit of Purchase Price or Change in Control Purchase
                Price.....................................................       23
Section 3.12.  Securities Purchased in Part...............................       23


                                       ii



                                                                              
Section 3.13.  Covenant to Comply with Securities Laws upon Purchase of
                Securities................................................       23
Section 3.14.  Repayment to the Company...................................       23

                                ARTICLE 4
                                COVENANTS

Section 4.01.  Payment of Securities......................................       24
Section 4.02.  SEC and Other Reports......................................       24
Section 4.03.  Compliance Certificate.....................................       25
Section 4.04.  Further Instruments and Acts...............................       25
Section 4.05.  Maintenance of Office or Agency............................       25
Section 4.06.  Tax Treatment of Securities................................       25

                                ARTICLE 5
                          SUCCESSOR CORPORATION

Section 5.01.  When the Company May Merge or Transfer Assets..............       26

                                ARTICLE 6
                          DEFAULTS AND REMEDIES

Section 6.01.  Events of Default..........................................       27
Section 6.02.  Defaults and Remedies......................................       28
Section 6.03.  Other Remedies.............................................       29
Section 6.04.  Waiver of Past Defaults....................................       29
Section 6.05.  Control by Majority........................................       29
Section 6.06.  Limitation on Suits........................................       29
Section 6.07.  Rights of Holders to Receive Payment.......................       30
Section 6.08.  Collection Suit by Trustee.................................       30
Section 6.09.  Trustee May File Proofs of Claim...........................       30
Section 6.10.  Priorities.................................................       31
Section 6.11.  Priorities.................................................       31
Section 6.12.  Waiver of Stay, Extension or Usury Laws....................       31

                                ARTICLE 7
                                 TRUSTEE

Section 7.01.  Duties of Trustee..........................................       32
Section 7.02.  Rights of Trustee..........................................       33
Section 7.03.  Individual Rights of Trustee...............................       35
Section 7.04.  Trustee's Disclaimer.......................................       35
Section 7.05.  Notice of Defaults.........................................       35
Section 7.06.  Reports by Trustee to Holders..............................       35
Section 7.07.  Compensation and Indemnity.................................       35
Section 7.08.  Replacement of Trustee.....................................       36
Section 7.09.  Successor Trustee by Merger................................       37
Section 7.10.  Eligibility; Disqualification..............................       37



                                       iii



                                                                              
Section 7.11.  Preferential Collection of Claims Against Company..........       37

                                ARTICLE 8
                          DISCHARGE OF INDENTURE

Section 8.01.  Discharge of Liability on Securities.......................       37
Section 8.02.  Repayment to the Company...................................       38

                                ARTICLE 9
                               AMENDMENTS

Section 9.01.  Without Consent of Holders.................................       38
Section 9.02.  With Consent of Holders....................................       38
Section 9.03.  Compliance with Trust Indenture Act........................       39
Section 9.04.  Revocation and Effect of Consents..........................       39
Section 9.05.  Notation on or Exchange of Securities......................       40
Section 9.06.  Trustee to Sign Supplemental Indentures....................       40
Section 9.07.  Effect of Supplemental Indentures..........................       40

                                ARTICLE 10
                               CONVERSIONS

Section 10.01. Conversion Privilege.......................................       40
Section 10.02. Conversion Procedure.......................................       43
Section 10.03. Adjustments Below Par Value................................       45
Section 10.04. Taxes on Conversion........................................       45
Section 10.05. Company to Provide Stock...................................       45
Section 10.06. Adjustment of Conversion Price.............................       46
Section 10.07. No Adjustment..............................................       51
Section 10.08. Equivalent Adjustments.....................................       51
Section 10.09. Adjustment for Tax Purposes................................       52
Section 10.10. Notice of Adjustment.......................................       52
Section 10.11. Notice of Certain Transactions.............................       52
Section 10.12. Effect of Reclassification, Consolidation, Merger, Share
               Exchange or Sale on Conversion Privilege...................       53
Section 10.13. Trustee's Disclaimer.......................................       54
Section 10.14. Voluntary Reduction........................................       54
Section 10.15. Simultaneous Adjustments...................................       54

                                ARTICLE 11
                              MISCELLANEOUS

Section 11.01. Trust Indenture Act Controls ..............................       55
Section 11.02. Notices ...................................................       55
Section 11.03. Communication by Holders with Other Holders ...............       56
Section 11.04. Certificate and Opinion as to Conditions Precedent ........       56
Section 11.05. Statements Required in Certificate or Opinion .............       57
Section 11.06. Separability Clause .......................................       57



                                       iv



                                                                              
Section 11.07. Rules by Trustee, Paying Agent, Conversion Agent and
               Registrar .................................................       57
Section 11.08. Legal Holidays ............................................       57
Section 11.09. Governing Law .............................................       57
Section 11.10. No Recourse Against Others ................................       58
Section 11.11. Successors ................................................       58
Section 11.12. Multiple Originals ........................................       58

Exhibit A-1 -  Form of Global Security
Exhibit A-2 -  Form of Certificated Security



                                        v



      INDENTURE dated as of August 19, 2003 between MEDICIS PHARMACEUTICAL
CORPORATION, a Delaware corporation (the "COMPANY"), and DEUTSCHE BANK TRUST
COMPANY AMERICAS, a New York banking corporation duly organized and existing
under the laws of the State of New York (the "TRUSTEE").

      Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the Holders of the Company's 1.5% Contingent
Convertible Senior Notes Due 2033 ("NOTES"):

                                    ARTICLE 1
                   DEFINITIONS AND INCORPORATION BY REFERENCE

      Section 1.01. Definitions.

      "AFFILIATE" of any specified person means any other person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"CONTROL" when used with respect to any specified person means the power to
direct or cause the direction of the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.

      "APPLICABLE PROCEDURES" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Security, in each case to the extent
applicable to such transaction and as in effect from time to time.

      "BOARD OF DIRECTORS" means either the board of directors of the Company or
any duly authorized committee of such board.

      "BOARD RESOLUTION" means a copy of one or more resolutions, certified by
an Officer of the Company to have been duly adopted or consented to by the
applicable Board of Directors and to be in full force and effect, and delivered
to the Trustee.

      "BUSINESS DAY" means, with respect to any Security, a day that in The City
of New York is not a day on which banking institutions are authorized by law or
regulation to close.

      "CAPITAL STOCK" for any corporation means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) stock issued by that corporation.

      "CERTIFICATED SECURITIES" means Securities that are in the form of the
Securities attached hereto as Exhibit A-2.

      "CLASS A COMMON STOCK" shall mean shares of the Company's Class A Common
Stock, $0.014 par value per share, as they exist on the date of this Indenture
or any other shares of



Capital Stock of the Company into which the Class A Common Stock shall be
reclassified or changed.

      "CLASS B COMMON STOCK" shall mean shares of the Company's Class B Common
Stock, $0.014 par value per share, as they exist on the date of this Indenture
or any other shares of Capital Stock of the Company into which the Class B
Common Stock shall be reclassified or changed.

      "COMMON STOCK" shall mean shares of the Company's Class A Common Stock and
Class B Common Stock.

      "COMPANY" means the party named as the "COMPANY" in the first paragraph of
this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.

      "COMPANY ORDER" means a written request or order signed in the name of the
Company by any two Officers.

      "CORPORATE TRUST OFFICE" means the office of the Trustee at which at any
time the trust created by this Indenture shall be administered, which office at
the date hereof is located at 60 Wall Street, New York, New York 10005,
Attention: Corporate Trust and Agency Services, or such other address as the
Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company).

      "DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.

      "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder, as in effect from time to
time.

      "GLOBAL SECURITIES" means Securities that are in the form of the
Securities attached hereto as Exhibit A-1 that is registered in the name of the
Depositary (as defined below) or a nominee.

      "HOLDER" or "SECURITYHOLDER" means a person in whose name a Security is
registered on the Registrar's books.

      "INDENTURE" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof, including the provisions of the TIA
that are deemed to be a part hereof.

      "ISSUE DATE" of any Security means the date on which the Security was
originally issued or deemed issued as set forth on the face of the Security.

                                        2



      "OFFICER" means the Chairman and Chief Executive Officer, the President,
any Executive Vice President, any Senior Vice President, any Vice President, the
Chief Financial Officer, the Treasurer, the Secretary, any Assistant Secretary
or any Director of the Company.

      "OFFICERS' CERTIFICATE" means a written certificate containing the
information specified in Sections 11.04 and 11.05, signed in the name of the
Company by any two Officers, and delivered to the Trustee. An Officers'
Certificate given pursuant to Section 4.03 shall be signed by the Treasurer or
Chief Financial Officer of the Company but need not contain the information
specified in Sections 11.04 and 11.05.

      "OPINION OF COUNSEL" means a written opinion containing the information
specified in Section 11.04 and 11.05, from legal counsel who is acceptable to
the Trustee in its reasonable discretion. The counsel may be an employee of, or
counsel to, the Company or the Trustee.

      "PERSON" or "PERSON" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or other entity.

      "PRINCIPAL AMOUNT" or "PRINCIPAL AMOUNT" of a Security means the Principal
Amount as set forth on the face of the Security.

      "REDEMPTION DATE" or "REDEMPTION DATE" shall mean the date specified for
redemption of the Securities in accordance with the terms of the Securities and
this Indenture.

      "REDEMPTION PRICE" or "REDEMPTION PRICE" shall have the meaning set forth
in paragraph 5 of the Securities.

      "RESPONSIBLE OFFICER" shall mean, when used with respect to the Trustee,
any officer within the corporate trust department of the Trustee, including any
director, managing director, vice president, assistant vice president, assistant
secretary, assistant treasurer, associate, trust officer or any other officer
of the Trustee who customarily performs functions similar to those performed by
the Persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of such person's knowledge of and
familiarity with the particular subject and who shall have direct responsibility
for the administration of this Indenture.

      "SEC" means the Securities and Exchange Commission.

      "SECURITIES" means any of the Company's 1.5% Contingent Convertible Senior
Notes Due 2033, as amended or supplemented from time to time, issued under this
Indenture.

      "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder, as in effect from time to time.

      "SECURITYHOLDER" or "HOLDER" means a person in whose name a Security is
registered on the Registrar's books.

                                        3



      "STATED MATURITY", when used with respect to any Security, means the date
specified in such Security as the fixed date on which an amount equal to the
Principal Amount of such Security is due and payable.

      "SUBSIDIARY" means any person of which at least a majority of the
outstanding Voting Stock shall at the time directly or indirectly be owned or
controlled by the Company or by one or more Subsidiaries or by the Company and
one or more Subsidiaries.

      "TIA" means the Trust Indenture Act of 1939 as in effect on the date of
this Indenture, provided, however, that in the event the TIA is amended after
such date, TIA means, to the extent required by any such amendment, the TIA as
so amended.

      "TRADING DAY" means a day during which trading in securities generally
occurs on the New York Stock Exchange or, if the Class A Common Stock is not
listed on the New York Stock Exchange, on the principal other national or
regional securities exchange on which the Class A Common Stock is then listed
or, if the Class A Common Stock is not listed on a national or regional
securities exchange, on the National Association of Securities Dealers Automated
Quotation System or, if the Class A Common Stock is not quoted on the National
Association of Securities Dealers Automated Quotation System, on the principal
other market on which the Class A Common Stock is then traded.

      "TRUSTEE" means the party named as the "TRUSTEE" in the first paragraph
of this Indenture until a successor replaces it pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor. The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.

      "VOTING STOCK" of a person means Capital Stock of such person of the class
or classes pursuant to which the holders thereof have the general voting power
under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of such person (irrespective of whether or not
at the time Capital Stock of any other class or classes shall have or might have
voting power by reason of the happening of any contingency).

      Section 1.02. Other Definitions.



                                                                                  Defined in
Term:                                                                              Section:
- -----                                                                           -------------
                                                                             
95% Trading Condition................................................            10.01
Act..................................................................             1.05(a)
Agent Members........................................................             2.12(b)(i)(v)
Aggregate Market Premium.............................................            10.06
beneficial owner.....................................................             3.09(a)
cash.................................................................             3.08(b)
Change in Control....................................................             3.09(a)
Change in Control Purchase Date......................................             3.09(a)
Change in Control Purchase Notice....................................             3.09(c)
Change in Control Purchase Price.....................................             3.09(a)


                                        4





                                                                                  Defined in
Term:                                                                              Section:
- ------                                                                          -------------
                                                                             
Closing Price............................................................               10.06
Company Notice...........................................................             3.08(c)
Company Notice Date......................................................             3.08(c)
Comparable Yield.........................................................             Section
                                                                                         4.06
Continuing Directors.....................................................             3.09(a)
Conversion Agent.........................................................                2.03
Conversion Date..........................................................               10.02
Conversion Price.........................................................               10.06
Conversion Shares........................................................               10.01
Depositary...............................................................             Section
                                                                                      2.01(a)
DTC......................................................................             Section
                                                                                      2.01(a)
Event of Default.........................................................                6.01
ex-dividend date.........................................................               10.01
Group....................................................................                3.09
Legal Holiday............................................................               11.08
Market Capitalization....................................................               10.06
Notice of Default........................................................                6.01
Paying Agent.............................................................                2.03
Principal Value Conversion...............................................               10.02
Principal Value Conversion Notice........................................               10.02
Purchase Date............................................................             3.08(a)
Purchase Notice..........................................................             3.08(a)
Purchase Price...........................................................             3.08(a)
Quarter..................................................................               10.01
Registrar................................................................                2.03
Security Trading Price...................................................               10.01
Stockholder Rights Plan..................................................            10.06(g)


      Section 1.03. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:

      "INDENTURE SECURITIES" means the Securities.

      "INDENTURE SECURITY HOLDER" means a Securityholder.

      "INDENTURE TO BE QUALIFIED" means this Indenture.

      "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee.

                                        5



      "OBLIGOR" on the indenture securities means the Company.

      All other TIA terms used in this Indenture that are defined by the TIA,
defined by a TIA reference to another statute or defined by an SEC rule have the
meanings assigned to them by such definitions.

      Section 1.04. Rules of Construction. Unless the context otherwise
requires:

            (a)   a term has the meaning assigned to it;

            (b)   an accounting term not otherwise defined has the meaning
                  assigned to it in accordance with generally accepted
                  accounting principles as in effect from time to time;

            (c)   "or" is not exclusive;

            (d)   "including" means including, without limitation; and

            (e)   words in the singular include the plural, and words in the
                  plural include the singular.

      Section 1.05. Acts of Holders. (a) Any request, demand, authorization,
direction, notice, consent, waiver or other action provided by this Indenture to
be given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "ACT" of Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the
Company, if made in the manner provided in this Section.

      (b)   The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to such officer the execution thereof.
Where such execution is by a signer acting in a capacity other than such
signer's individual capacity, such certificate or affidavit shall also
constitute sufficient proof of such signer's authority.

      The fact and date of the execution of any such instrument or writing, or
the authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.

      (c)   The ownership of Registered Securities shall be proved by the
register maintained by the Registrar.

                                        6



      (d)   Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.

      (e)   If the Company shall solicit from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a Board Resolution, fix in advance a record
date for the determination of Holders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other Act, but the Company
shall have no obligation to do so. If such a record date is fixed, such request,
demand, authorization, direction, notice, consent, waiver or other Act may be
given before or after such record date, but only the Holders of record at the
close of business on such record date shall be deemed to be Holders for the
purposes of determining whether Holders of the requisite proportion of
outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six months after the
record date.

                                    ARTICLE 2
                                 THE SECURITIES

      Section 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication shall be substantially in the forms set forth on
Exhibits A-I and A-2, which are a part of this Indenture and incorporated by
reference herein. The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage; provided that any such notation,
legend or endorsement required by usage is in a form acceptable to the Company.
The Company shall provide any such notations, legends or endorsements to the
Trustee in writing. Each Security shall be dated the date of its authentication.

      (a)   Global Securities. The Securities shall be issued initially in
global form and shall be substantially in the form of Exhibit A-1. Each Global
Security shall represent such of the outstanding Securities as shall be
specified therein and each shall provide that it shall represent the aggregate
amount of outstanding Securities from time to time endorsed thereon and that the
aggregate amount of outstanding Securities represented thereby may from time to
time be reduced or increased, as appropriate, to reflect exchanges, redemptions
and conversions.

      Any adjustment of the aggregate principal amount of a Global Security to
reflect the amount of any increase or decrease in the amount of outstanding
Securities represented thereby shall be made by the Trustee in accordance with
instructions given by the Holder thereof as required by Section 2.12 hereof and
shall be made on the records of the Trustee and The Depository Trust Company
("DTC") or the nominee thereof (such depositary, or any successor thereto, and
any such nominee being hereinafter referred to as the "DEPOSITARY").

                                        7



      (b)   Book-Entry Provisions. The Company shall execute and the Trustee
shall, in accordance with this Section 2.01(b), authenticate and deliver
initially one or more Global Securities that (a) shall be registered in the name
of the Depositary, (b) shall be delivered by the Trustee to the Depositary or
pursuant to the Depositary's instructions and (c) shall bear legends
substantially to the following effect:

            "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
            REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO MEDICIS
            PHARMACEUTICAL CORPORATION (THE "COMPANY") OR ITS AGENT FOR
            REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
            ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
            AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
            TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO
            SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
            THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE
            HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
            THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
            TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO
            NOMINEES OF THE DEPOSITORY TRUST COMPANY OR TO A SUCCESSOR THEREOF
            OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
            SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
            RESTRICTIONS SET FORTH IN ARTICLE TWO OF THE INDENTURE REFERRED TO
            ON THE REVERSE HEREOF."

      (c)   Certificated Securities. Securities not issued as interests in the
Global Securities will be issued in certificated form substantially in the form
of Exhibit A-2 attached hereto.

      Section 2.02. Execution and Authentication. The Securities shall be
executed on behalf of the Company by any Officer, under its corporate seal
reproduced thereon. The signature of the officer of the Company on the
Securities may be manual or facsimile.

      Securities bearing the manual or facsimile signatures of individuals who
were at the time of the execution of the Securities the proper Officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of authentication of
such Securities.

      No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein duly
executed by the Trustee by manual signature of an authorized officer, and such
certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and delivered
hereunder.

                                        8



      The Trustee shall authenticate and deliver Securities for original issue
in an aggregate Principal Amount of up to $492,000,000 upon a Company Order
without any further action by the Company. The aggregate Principal Amount of
Securities outstanding at any time may not exceed the amount set forth in the
foregoing sentence, except as provided in Section 2.07.

      The Securities shall be issued only in registered form without coupons and
only in denominations of $1,000 of Principal Amount and any integral multiple
thereof.

      Section 2.03. Registrar, Paying Agent and Conversion Agent. The
Company shall maintain an office or agency where Securities may be presented for
registration of transfer or for exchange ("REGISTRAR"), an office or agency
where Securities may be presented for purchase or payment ("PAYING AGENT") and
an office or agency where Securities may be presented for conversion
("CONVERSION AGENT"). The Registrar shall keep a register of the Securities and
of their transfer and exchange. The Company may have one or more co-registrars,
one or more additional paying agents and one or more additional conversion
agents. The term Paying Agent includes any additional paying agent, including
any named pursuant to Section 4.05. The term Conversion Agent includes any
additional conversion agent, including any named pursuant to Section 4.05.

      The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent, Conversion Agent or co-registrar (other than the
Trustee). The agreement shall implement the provisions of this Indenture that
relate to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Registrar, Paying
Agent or Conversion Agent, the Trustee shall act as such and shall be entitled
to appropriate compensation therefor pursuant to Section 7.07. The Company or
any Subsidiary or an Affiliate of either of them may act as Paying Agent,
Registrar, Conversion Agent or co-registrar.

      The Company initially appoints the Trustee as Registrar, Conversion Agent
and Paying Agent in connection with the Securities.

      Section 2.04. Paying Agent to Hold Money in Trust. Except as otherwise
provided herein, on or prior to each due date of payments in respect of any
Security, the Company shall deposit with the Paying Agent a sum of money (in
immediately available funds if deposited on the due date) sufficient to make
such payments when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold in
trust for the benefit of Security holders or the Trustee all money held by the
Paying Agent for the making of payments in respect of the Securities and shall
notify the Trustee of any Default by the Company in making any such payment. At
any time during the continuance of any such Default, the Paying Agent shall,
upon the written request of the Trustee, forthwith pay to the Trustee all money
so held in trust. If the Company, a Subsidiary or an Affiliate of either of them
acts as Paying Agent, it shall segregate the money held by it as Paying Agent
and hold it as a separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and to account for any
funds disbursed by it. Upon doing so, the Paying Agent shall have no further
liability for the money.

                                        9



      Section 2.05. Security holder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Security holders. If the Trustee is not the
Registrar, the Company shall cause to be furnished to the Trustee at least
semiannually on May 4 and November 4 a listing of Securityholders dated within
15 days of the date on which the list is furnished and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Security
holders.

      Section 2.06. Transfer and Exchange. (a) Subject to Section 2.12 hereof,
upon surrender for registration of transfer of any Securities, together with a
written instrument of transfer satisfactory to the Registrar duly executed by
the Security holder or such Securityholder's attorney duly authorized in
writing, at the office or agency of the Company designated as Registrar or
co-registrar pursuant to Section 2.03, the Company shall execute and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities of any authorized denomination or
denominations, of a like aggregate Principal Amount. The Company shall not
charge a service charge for any registration of transfer or exchange, but the
Company may require payment of a sum sufficient to pay all taxes, assessments or
other governmental charges that may be imposed in connection with the transfer
or exchange of the Securities from the Securityholder requesting such transfer
or exchange.

      At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denomination or denominations, of a like aggregate
Principal Amount, upon surrender of the Securities to be exchanged, together
with a written instrument of transfer satisfactory to the Registrar duly
executed by the Securityholder or such Securityholder's attorney duly authorized
in writing, at such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to
receive.

      The Company shall not be required to make, and the Registrar need not
register, transfers or exchanges of Securities selected for redemption (except,
in the case Of securities to be redeemed in part, the portion thereof not to be
redeemed) or any Securities in respect of which a Purchase Notice or Change in
Control Purchase Notice has been given and not withdrawn by the Holder thereof
in accordance with the terms of this Indenture (except, in the case of
Securities to be purchased in part, the portion thereof not to be purchased) or
any Securities for a period of 15 days before the mailing of a notice of
redemption of Securities to be redeemed.

      (b)   Notwithstanding any provision to the contrary herein, so long as a
Global Security remains outstanding and is held by or on behalf of the
Depositary, transfers of a Global Security, in whole or in part, shall be made
only in accordance with Section 2.12 and this Section 2.06(c)(b). Transfers of a
Global Security shall be limited to transfers of such Global Security in whole,
or in part, to nominees of the Depositary or to a successor of the Depositary or
such successor's nominee.

      (c)   Successive registrations and registrations of transfers and
exchanges as aforesaid may be made from time to time as desired, and each such
registration shall be noted on the register for the Securities.

                                       10



      (d)   Any Registrar appointed pursuant to Section 2.03 hereof shall
provide to the Trustee such information as the Trustee may reasonably require in
connection with the delivery by such Registrar of Securities upon transfer or
exchange Of securities.

      (e)   No Registrar shall be required to make registrations of transfer or
exchange of Securities during any periods designated in the text of the
Securities or in this Indenture as periods during which such registration of
transfers and exchanges need not be made.

      Section 2.07. Replacement Securities. If any mutilated Security is
surrendered to the Trustee, or the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any Security, and there
is delivered to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Security has been acquired by a
protected purchaser (within the meaning of Section 8-303 of the Uniform
Commercial Code), the Company shall execute, and upon the Company's written
request the Trustee shall authenticate and deliver, in exchange for any such
mutilated Security or in lieu of any such destroyed, lost or stolen Security, a
new Security of like tenor and Principal Amount, bearing a number not
contemporaneously outstanding.

      In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, or is about to be purchased by the
Company pursuant to Article 3 hereof, the Company in its discretion may, instead
of issuing a new Security, pay or purchase such Security, as the case may be.

      Upon the issuance of any new Securities under this Section, the Company
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.

      Every new Security issued pursuant to this section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.

      The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

      Section 2.08. Outstanding Securities; Determinations of Holders' Action.
Securities outstanding at any time are all the Securities authenticated by the
Trustee, except for those cancelled by it, those paid pursuant to Section 2.07
delivered to it for cancellation and those described in this Section 2.08 as not
outstanding. A Security does not cease to be outstanding because the Company or
an Affiliate thereof holds the Security; provided, however, that in determining
whether the Holders of the requisite Principal Amount Of securities have given
or concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the

                                       11



Company or such other obligor shall be disregarded and deemed not to be
outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
actually knows to be so owned shall be so disregarded. Subject to the foregoing,
only Securities outstanding at the time of such determination shall be
considered in any such determination (including, without limitation,
determinations pursuant to Articles 6 and 9).

      If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a protected purchaser.

      If the Paying Agent holds, in accordance with this Indenture, on a
Redemption Date, or on the Business Day following a Purchase Date or a Change in
Control Purchase Date, or on Stated Maturity, money sufficient to pay amounts
owed with respect to Securities payable on that date, then immediately after
such Redemption Date, Purchase Date, Change in Control Purchase Date or Stated
Maturity, as the case may be, such Securities shall cease to be outstanding and
interest, if any (including contingent interest, if any), on such Securities
shall cease to accrue; provided that if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this Indenture or
provision there for satisfactory to the Trustee has been made.

      If a Security is converted in accordance with Article 10, then from and
after the time of conversion on the Conversion Date, such Security shall cease
to be outstanding and interest, if any (including contingent interest, if any),
shall cease to accrue on such Security.

      Section 2.09. Temporary Securities. Pending the preparation of definitive
Securities, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of which they
are issued and with such appropriate insertions, omissions, substitutions and
other variations as the officers executing such Securities may determine, as
conclusively evidenced by their execution of such Securities.

      If temporary Securities are issued, the Company will cause definitive
Securities to be prepared without unreasonable delay. After the preparation of
definitive Securities, the temporary Securities shall be exchangeable for
definitive Securities upon surrender of the temporary Securities at the office
or agency of the Company designated for such purpose pursuant to Section 2.03,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like Principal Amount of
definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.

      Section 2.10. Cancellation. All Securities surrendered for payment,
purchased by the Company pursuant to Article 3, conversion, redemption or
registration of transfer or exchange (other than Securities exchanged pursuant
to Section 10.02) shall, if surrendered to any person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The

                                       12




Company may at any time deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder that the Company may have
acquired in any manner whatsoever, and all Securities so delivered shall be
promptly cancelled by the Trustee. The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation or
that any Holder has converted pursuant to Article 10. No Securities shall be
authenticated in lieu of or in exchange for any Securities cancelled as provided
in this Section, except as expressly permitted by this Indenture. All cancelled
Securities held by the Trustee shall be disposed of by the Trustee in accordance
with the Trustee's customary procedure.

      Section 2.11. Persons Deemed Owners. Prior to due presentment of a
Security for registration of transfer, the Company, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
the Principal Amount of the Security or the payment of any Redemption Price,
Purchase Price or Change in Control Purchase Price in respect thereof, and
accrued and unpaid interest thereon, for the purpose of conversion and for all
other purposes whatsoever, whether or not such Security be overdue, and neither
the Company, the Trustee nor any agent of the Company or the Trustee shall be
affected by notice to the contrary.

      Section 2.12. Global Securities. (a) A Global Security may not be
transferred, in whole or in part, to any Person other than the Depositary or a
nominee or any successor thereof, and no such transfer to any such other Person
may be registered; provided that the foregoing shall not prohibit any transfer
of a Security that is issued in exchange for a Global Security but is not itself
a Global Security. No transfer of a Security to any Person shall be effective
under this Indenture or the Securities unless and until such Security has been
registered in the name of such Person. Notwithstanding any other provisions of
this Indenture or the Securities, transfers of a Global Security, in whole or in
part, shall be made only in accordance with Section 2.06 and this Section 2.12.

      (b)   The provisions of clauses (i), (ii), (iii) and (iv) below shall
apply only to Global Securities:

            (i)   Notwithstanding any other provisions of this Indenture or the
      Securities, a Global Security shall not be exchanged in whole or in part
      for a Security registered in the name of any Person other than the
      Depositary or one or more nominees thereof; provided that a Global
      Security may be exchanged for Securities registered in the names of any
      person designated by the Depositary in the event that (x) the Depositary
      has notified the Company that it is unwilling or unable to continue as
      Depositary for such Global Security or such Depositary has ceased to be a
      "clearing agency" registered under the Exchange Act, and a successor
      Depositary is not appointed by the Company within 90 days, (y) the Company
      has provided the Depositary with written notice that it has decided to
      discontinue use of the system of book-entry transfer through the
      Depositary or any successor Depositary or (z) an Event of Default has
      occurred and is continuing with respect to the Securities. Any Global
      Security exchanged pursuant to clauses (x) or (y) above shall be so
      exchanged in whole and not in part, and any Global Security exchanged
      pursuant to clause (z) above may be exchanged in whole or from time to
      time in part as directed by the Depositary. Any Security issued in
      exchange for a Global Security or any

                                       13



      portion there of shall be a Global Security; provided that any such
      Security so issued that is registered in the name of a Person other than
      the Depositary or a nominee thereof shall not be a Global Security.

            (ii)  Securities issued in exchange for a Global Security or any
      portion thereof shall be issued in definitive, fully registered form,
      without interest coupons, shall have an aggregate Principal Amount equal
      to that of such Global Security or portion there of to be so exchanged,
      shall be registered in such names and be in such authorized denominations
      as the Depositary shall designate and shall bear the applicable legends
      provided for herein. Any Global Security to be exchanged in whole shall be
      surrendered by the Depositary to the Trustee, as Registrar. With regard to
      any Global Security to be exchanged in part, either such Global Security
      shall be so surrendered for exchange or, if the Trustee is acting as
      custodian for the Depositary or its nominee with respect to such Global
      Security, the Principal Amount thereof shall be reduced, by an amount
      equal to the portion there of to be so exchanged, by means of an
      appropriate adjustment made on the records of the Trustee. Upon any such
      surrender or adjustment, the Trustee shall authenticate and deliver the
      Security issuable on such exchange to or upon the order of the Depositary
      or an authorized representative thereof.

            (iii) Subject to the provisions of clause (v) below, the registered
      Holder may grant proxies and otherwise authorize any Person, including
      Agent Members (as defined below) and persons that may hold interests
      through Agent Members, to take any action which a holder is entitled to
      take under this Indenture or the Securities.

            (iv)  In the event of the occurrence of any of the events specified
      in clause (i) above, the Company will promptly make available to the
      Trustee a reasonable supply of Certificated Securities in definitive,
      fully registered form, without interest coupons.

            (v)   Neither any members of, or participants in, the Depositary
      (collectively, THE "AGENT MEMBERS") nor any other Persons on whose behalf
      Agent Members may act shall have any rights under this Indenture with
      respect to any Global Security registered in the name of the Depositary or
      any nominee thereof, or under any such Global Security, and the Depositary
      or such nominee, as the case may be, may be treated by the Company, the
      Trustee and any agent of the Company or the Trustee as the absolute owner
      and holder of such Global Security for all purposes whatsoever.
      Notwithstanding the foregoing, nothing herein shall prevent the Company,
      the Trustee or any agent of the Company or the Trustee from giving effect
      to any written certification, proxy or other authorization furnished by
      the Depositary or such nominee, as the case may be, or impair, as between
      the Depositary, its Agent Members and any other person on whose behalf an
      Agent Member may act, the operation of customary practices of such Persons
      governing the exercise of the rights of a holder of any Security.

      Section 2.13. CUSIP Numbers. The Company may issue the Securities with one
or more "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on

                                       14



the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee of any change in the CUSIP numbers.

                                    ARTICLE 3
                            REDEMPTION AND PURCHASES

      Section 3.01. Right To Redeem; Notices To Trustee. (a) Optional
Redemption. The Company, at its option, may redeem the Securities in accordance
with the provisions of paragraphs 5 and 7 of the Securities and at the
Redemption Price specified in paragraph 5 of the Securities, together with
accrued and unpaid interest, if any (including contingent interest, if any,
thereon up to but not including the Redemption Date; provided that if the
Redemption Date is on or after an interest record date, but on or prior to the
related interest payment date, interest will be payable to the Holders in whose
names the Securities are registered at the close of business on the relevant
record date for payment of such interest.

      (b)   Notice to Trustee. If the Company elects to redeem Securities
pursuant to this Section 3.01, it shall notify the Trustee in writing of the
Redemption Date, the Principal Amount of Securities to be redeemed and the
Redemption Price. The Company shall give the notice to the Trustee provided for
in this Section 3.01(b) by a Company Order at least 45 days before the
Redemption Date (unless a shorter notice shall be satisfactory to the Trustee).

      Section 3.02. Selection of Securities to Be Redeemed. If less than all the
Securities are to be redeemed, unless the procedures of the Depositary provide
otherwise, the Trustee shall select the Securities to be redeemed by any method
approved by the Trustee. The Trustee may select for redemption portions of the
Principal Amount of Securities that have denominations of $1,000 and integral
multiples thereof.

      Securities and portions of them the Trustee selects shall be in Principal
Amounts of $1,000 or an integral multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.

      If any Security selected for partial redemption is converted in part
before termination of the conversion right with respect to the portion of the
Security so selected, the converted portion of such Security shall be deemed (so
far as possible) to be the portion selected for redemption. Securities that have
been converted during a selection of Securities to be redeemed may be treated by
the Trustee as outstanding for the purpose of such selection.

      Section 3.03. Notice of Redemption. At least 30 days but not more than 60
days before a Redemption Date, the Company shall mail a notice of redemption by
first-class mail, postage prepaid, to each Holder of Securities to be redeemed.

      The notice shall identify the Securities to be redeemed and shall state:

            (a)   the Redemption Date;

                                       15



            (b)   the Redemption Price;

            (c)   the Conversion Price;

            (d)   the name and address of the Paying Agent and Conversion Agent;

            (e)   that Securities called for redemption may be converted at any
                  time before the close of business on the second Business Day
                  immediately preceding the Redemption Date;

            (0    that Holders who want to convert Securities must satisfy the
                  requirements set forth in paragraph 8 of the Securities;

            (g)   that Securities called for redemption must be surrendered to
                  the Paying Agent to collect the Redemption Price therefor,
                  together with all accrued and unpaid interest;

            (h)   if fewer than all the outstanding Securities are to be
                  redeemed, the certificate numbers, if any, and Principal
                  Amounts of the particular Securities to be redeemed;

            (i)   that, unless the Company defaults in making payment of such
                  Redemption Price, interest, if any (including contingent
                  interest, if any), on Securities called for redemption will
                  cease to accrue on and after the Redemption Date and the
                  Securities will cease to be convertible; and

            (j)   the CUSIP number of the Securities.

      At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense; provided that the Company
makes such request prior to the date by which such notice of redemption must be
given to Holders in accordance with this Section 3.03 and the Company provides
the Trustee with all information required for such notice of redemption.

      Section 3.04. Effect of Notice of Redemption. Once notice of redemption is
given, Securities called for redemption become due and payable on the Redemption
Date and at the Redemption Price stated in the notice, except for Securities
which are converted in accordance with the terms of this Indenture. Upon
surrender to the Paying Agent, such Securities shall be paid at the Redemption
Price stated in the notice, together with accrued and unpaid interest, if any
(including contingent interest, if any), thereon, up to but not including the
Redemption Date.

      Section 3.05. Deposit of Redemption Price. Prior to 11:00 a.m. (New York
City time) on the Redemption Date the Company shall deposit with the Paying
Agent (or if the Company or a Subsidiary or an Affiliate of either of them is
the Paying Agent, shall segregate and hold in trust) money sufficient to pay the
Redemption Price of all Securities to be redeemed on that date, together with
accrued and unpaid interest, if any (including contingent interest, if any),
thereon, up to but not including the Redemption Date other than Securities or
portions of Securities called for redemption that on or prior thereto have been
delivered by the Company to the Trustee for

                                       16



cancellation or have been converted. The Paying Agent shall as promptly as
practicable return to the Company any money not required for that purpose
because of conversion of Securities pursuant to Article 10. If such money is
then held by the Company in trust and is not required for such purpose it shall
be discharged from such trust.

      Section 3.06. Securities Redeemed in Part. Upon surrender of a Security
that is redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, without service charge, a new Security
or Securities, of any authorized denomination as requested by such Holder in
aggregate Principal Amount equal to, and in exchange for, the unredeemed portion
of the Principal Amount of the Security surrendered.

      Section 3.07. Reserved.

      Section 3.08. Purchase of Securities at Option of the Holder. (a) General.
Securities shall be purchased by the Company in accordance with the provisions
of paragraph 6 of the Securities on June 4, 2008, June 4, 2013 and June 4, 2018
(each, a "PURCHASE DATE") AT A purchase price per Security equal to 100% of the
aggregate Principal Amount of the Security (the "PURCHASE PRICE"), together with
accrued and unpaid interest (including contingent interest, if any), thereon,
up to but not including the Purchase Date; provided that if the Purchase Date is
on or after an interest record date but on or prior to the related interest
payment date, interest will be payable to the Holders in whose names the
Securities are registered at the close of business on the relevant record date.

      Purchases of Securities hereunder shall be made, at the option of the
Holder thereof, upon:

            (i)   delivery to the Company and the Paying Agent by the Holder of
      a written notice of purchase (a "PURCHASE NOTICE") at any time from the
      opening of business on the date that is 20 Business Days prior to the
      Purchase Date until the close of business on the Business Day prior to
      such Purchase Date stating:

                  (A)   the certificate number of the Security which the Holder
            will deliver to be purchased (in the case of Certificated
            Securities);

                  (B)   the portion of the Principal Amount of the Security
            which the Holder will deliver to be purchased, which portion must be
            in principal amounts at maturity of $1,000 or an integral multiple
            thereof;

                  (C)   that such Security shall be purchased as of the Purchase
            Date pursuant to the terms and conditions specified in paragraph 6
            of the Securities and in this Indenture; and

            (ii)  delivery of such Security to the Paying Agent prior to, on or
      after the Purchase Date (together with all necessary endorsements) at the
      offices of the Paying Agent, such delivery being a condition to receipt by
      the Holder of the Purchase Price therefor, together with accrued and
      unpaid interest, if any (including contingent interest, if any); provided,
      however, that such Purchase Price, together with accrued and unpaid
      interest, if any (including contingent interest, if any) , shall be so
      paid pursuant to this

                                       17



      Section 3.08 only if the Security so delivered to the Paying Agent shall
      conform in all respects to the description thereof in the related
      Purchase Notice, as determined by the Company in its sole discretion.

      The Company shall purchase from the Holder thereof, pursuant to this
Section 3.08, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.

      Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.08 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Purchase Date and
the time of delivery of the Security.

      Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Purchase Notice contemplated by this Section 3.08(a)shall
have the right to withdraw such Purchase Notice at any time prior to the close
of business on the Business Day prior to the Purchase Date by delivery of a
written notice of withdrawal to the Paying Agent at the principal office of the
Paying Agent in accordance with Section 3.10.

      The Paying Agent shall promptly notify the Company of the receipt by it
of any Purchase Notice or written notice of withdrawal thereof.

      (b)   Manner of Payment of Purchase Price. The Purchase Price of
Securities in respect of which a Purchase Notice pursuant to Section 3.08 has
been given shall be paid in U.S. legal tender ("CASH").

      (c)   Company Notice. In connection with any purchase of Securities
pursuant to Section 3.08, the Company shall give written notice of the Purchase
Date to the Holders (the "COMPANY NOTICE"). The Company Notice shall be sent by
first-class mail to the Trustee and to each Holder not less than 20 Business
Days prior to any Purchase Date (the "COMPANY NOTICE DATE"). Each Company Notice
shall include a form of Purchase Notice to be completed by a Securityholder and
shall state:

            (i)    the Purchase Price and the Conversion Price;

            (ii)   the name and address of the Paying Agent and the Conversion
      Agent;

            (iii)  that Securities as to which a Purchase Notice has been given
      may be converted if they are otherwise convertible only in accordance with
      Article 10 hereof and paragraph 8 of the Securities if the applicable
      Purchase Notice has been withdrawn in accordance with the terms of this
      Indenture;

            (iv)   that Securities must be surrendered to the Paying Agent to
      collect payment;

            (v)    that the Purchase Price for, and any accrued and unpaid
      interest (including contingent interest, if any) on, any Security as to
      which a Purchase Notice has been given

                                       18



      and not withdrawn will be paid promptly following the later of the
      Purchase Date and the time of surrender of such Security as described in
      subclause (iv) above;

            (vi)   the procedures the Holder must follow to exercise rights
      under Section 3.08 and a brief description of those rights;

            (vii)  briefly, the conversion rights of the Securities;

            (viii) the procedures for withdrawing a Purchase Notice (as
      specified in Section 3.10);

            (ix)   that, unless the Company defaults in making payment on
      Securities for which a Purchase Notice has been submitted, interest, if
      any (including contingent interest), on such Securities will cease to
      accrue on the Purchase Date; and

            (x)   the CUSIP number of the Securities.

      At the Company's request, the Trustee shall give such Company Notice in
the Company's name and at the Company's expense;provided, however, that the
Company makes such request at least three (3) Business Days prior to the date by
which such Company Notice must be given to the Holders and that, in all cases,
the text of such Company Notice shall be prepared by the Company.

      Section 3.09. Purchase of Securities at Option of the Holder upon Change
in Control. (a) If at any time that Securities remain outstanding there shall
have occurred a Change in Control (as hereinafter defined), Securities shall be
repurchased by the Company, at the option of the Holder thereof, at a purchase
price (the "CHANGE IN CONTROL PURCHASE PRICE") equal to the principal amount
there of plus accrued and unpaid interest, if any (including contingent
interest, if any), thereon, up to and including the date (the "CHANGE IN CONTROL
PURCHASE DATE") fixed by the Company that is not less than 45 days nor more than
60 days after the date of the Company Notice, subject to satisfaction by or on
behalf of the Holder of the requirements set forth in Section 3.09(c).

      Whenever in this Indenture there is a reference to the principal of any
Security as of any time, such reference shall be deemed to include reference to
the Change in Control Purchase Price payable in respect of such Security to the
extent that such Change in Control Purchase Price is, was or would be payable at
such time, and express mention of the Change in Control Purchase Price in any
provision of this Indenture shall not be construed as excluding the Change in
Control Purchase Price in those provisions of this Indenture when such express
mention is not made.

      A "CHANGE IN CONTROL" shall be deemed to have occurred at such time after
the original issuance of the Securities as any of the following occur:

            (i)    any sale, lease, exchange or other transfer (in one
      transaction or a series of related transactions) of all or substantially
      all of the assets of the Company and its subsidiaries, taken as a whole,
      to any person or group of related persons, as defined in Section 13(d) of
      the Exchange Act (a "GROUP");

                                       19



            (ii)   the approval by the holders of Capital Stock of the Company
      of any plan or proposal for the liquidation or dissolution of the Company
      (whether or not otherwise in compliance with the provisions of this
      indenture);

            (iii)  any person or Group shall become the owner, directly or
      indirectly, beneficially or of record, of shares representing more than
      50% of the aggregate ordinary voting power represented by the Company's
      issued and outstanding Voting Stock of or any successor to all or
      substantially all of the Company's assets; or

            (iv)   the first day of which a majority of the members of the
      Company's Board of Directors are not Continuing Directors (as hereinafter
      defined).

      "BENEFICIAL OWNER" shall be determined in accordance with Rules 13d-3 and
13d-5 promulgated by the SEC under the Exchange Act or any successor provision,
except that a Person shall be deemed to have "beneficial ownership" of all
securities that such Person has the right to acquire, whether exercisable
immediately or only after the passage of time.

      "CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the original issuance of the Securities or (ii) was
nominated for election or elected to the Board of Directors with the approval
of a majority of the continuing directors who were members of such Board
of Directors at the time of such nomination or election.

      (b)   Within 30 days after the occurrence of a Change in Control, the
Company shall mail a written notice of the Change in Control by first-class mail
to the Trustee and to each Holder (and to beneficial owners as required by
applicable law). The notice shall include a form of Change in Control Purchase
Notice to be completed by the Securityholder and shall state:

            (i)    briefly, the events causing a Change in Control and the date
      of such Change in Control;

            (ii)   the date by which the Change in Control Purchase Notice
      pursuant to this Section 3.09 must be given;

            (iii)  the Change in Control Purchase Date;

            (iv)   the Change in Control Purchase Price;

            (v)    the name and address of the Paying Agent and the Conversion
      Agent;

            (vi)   the Conversion Price and any adjustments thereto;

            (vii)  that Securities as to which a Change in Control Purchase
      Notice has been given may be converted pursuant to Article 10 here of only
      if the Change in Control Purchase Notice has been withdrawn in accordance
      with the terms of this Indenture;

            (viii) that Securities must be surrendered to the Paying Agent to
      collect payment;

                                       20

            (ix) that the Change in Control Purchase Price for any Security as
      to which a Change in Control Purchase Notice has been duly given and not
      withdrawn will be paid promptly following the later of the Change in
      Control Purchase Date and the time of surrender of such Security as
      described in clause (viii);

            (x) briefly, the procedures the Holder must follow to exercise
      rights under this Section 3.09;

            (xi) briefly, the conversion rights of the Securities;

            (xii) the procedures for withdrawing a Change in Control Purchase
      Notice (as specified in Section 3.10);

            (xiii) that, unless the Company defaults in making payment of such
      Change in Control Purchase Price, interest (including contingent interest,
      if any), on Securities surrendered for purchase by the Company will cease
      to accrue on and after the Change in Control Purchase Date; and

            (xiv) the CUSIP number of the Securities.

      (c) A Holder may exercise its rights specified in Section 3.09(a) upon
delivery of a written notice of purchase (a "CHANGE IN CONTROL PURCHASE
NOTICE"), together with the securities subject thereto, to the Company and the
Paying Agent at any time prior to the close of business on the third Business
Day prior to the Change in Control Purchase Date, stating:

            (i) the certificate number of the Security that the Holder will
      deliver to be purchased;

            (ii) the portion of the Principal Amount of the Security which the
      Holder will deliver to be purchased, which portion must be $1,000 or an
      integral multiple thereof; and

            (iii) that such Security shall be purchased pursuant to the terms
      and conditions specified in paragraph 6 of the Securities.

      The delivery of such Security to the Paying Agent prior to, on or after
the Change in Control Purchase Date (together with all necessary endorsements)
at the offices of the Paying Agent shall be a condition to the receipt by the
Holder of the Change in Control Purchase Price therefor; provided, however, that
such Change in Control Purchase Price shall be so paid pursuant to this Section
3.09 only if the Security so delivered to the Paying Agent shall conform in all
respects to the description there of set forth in the related Change in Control
Purchase Notice.

      The Company shall purchase from the Holder thereof, pursuant to this
Section 3.09, a portion of a Security if the Principal Amount of such portion is
$1,000 or an integral multiple of $1,000. Provisions of this Indenture that
apply to the purchase of all of a Security also apply to the purchase of such
portion of such Security.

                                       21



      Any purchase by the Company contemplated pursuant to the provisions of
this Section 3.09 shall be consummated by the delivery of the consideration to
be received by the Holder promptly following the later of the Change in Control
Purchase Date and the time of delivery of the Security to the Paying Agent in
accordance with this Section 3.09.

      Notwithstanding anything herein to the contrary, any Holder delivering to
the Paying Agent the Change in Control Purchase Notice contemplated by this
Section 3.09(c) shall have the right to withdraw such Change in Control
Purchase Notice at any time prior to the close of business on the Business Day
preceding the Change in Control Purchase Date by delivery of a written notice of
withdrawal to the Paying Agent in accordance with Section 3.10.

      The Paying Agent shall promptly notify the Company of the receipt by it of
any Change in Control Purchase Notice or written withdrawal thereof.

      Notwithstanding anything herein to the contrary, the Company's obligations
pursuant to this Section 3.09 shall be satisfied if a third party makes a change
of control offer in the manner and at the times and otherwise in compliance in
all material respects with the requirements of this Section 3.09 and purchases
all Securities properly tendered and not withdrawn pursuant to the requirements
of this Section 3.09.

      Section 3.10. Effect of Purchase Notice or Change in Control Purchase
Notice. Upon receipt by the Paying Agent of the Purchase Notice or Change in
Control Purchase Notice specified in Section 3.08 or Section 3.09(c), as
applicable, the Holder of the Security in respect of which such Purchase Notice
or Change in Control Purchase Notice, as the case may be, was given shall
(unless such Purchase Notice or Change in Control Purchase Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Purchase Price, together with all accrued and unpaid interest, if any
(including contingent interest, if any), thereon, to but not including the
Purchase Date or Change in Control Purchase Price, as the case may be, with
respect to such Security. Such Purchase Price, together with accrued and unpaid
interest, if any (including contingent interest, if any), thereon, to but not
including the Purchase Date or Change in Control Purchase Price, as the case may
be, shall be paid to such Holder, subject to receipt of funds and/or securities
by the Paying Agent, promptly following the later of (x) the Purchase Date or
the Change in Control Purchase Date, as the case may be, with respect to such
Security (provided that the conditions in Section 3.08 or Section 3.09(c), as
applicable, have been satisfied) and (y) the time of delivery of such Security
to the Paying Agent by the Holder thereof in the manner required by Section
3.08 or Section 3.09(c), as applicable. Securities in respect of which a
Purchase Notice or Change in Control Purchase Notice, as the case may be, has
been given by the Holder thereof may not be converted pursuant to Article 10
hereof on or after the date of the delivery of such Purchase Notice or Change in
Control Purchase Notice, as the case may be, unless such Purchase Notice or
Change in Control Purchase Notice, as the case may be, has first been validly
withdrawn as specified in the following two paragraphs.

      A Purchase Notice or Change in Control Purchase Notice, as the case may
be, may be withdrawn by means of a written notice of withdrawal delivered to the
office of the Paying Agent in accordance with the Purchase Notice or Change in
Control Purchase Notice, as the case may be, at any time prior to the close of
business on the Business Day prior to the Purchase Date

                                       22



or prior to the close of business on the Change in Control Purchase Date, as the
case may be, specifying:

            (i)   the certificate number, if any, of the Security in respect of
                  which such notice of withdrawal is being submitted,

            (ii)  the Principal Amount of the Security with respect to which
                  such notice of withdrawal is being submitted, and

            (iii) the Principal Amount, if any, of such Security which remains
                  subject to the original Purchase Notice or Change in Control
                  Purchase Notice, as the case may be, and which has been or
                  will be delivered for purchase by the Company.

      Section 3.11. Deposit of Purchase Price or Change in Control Purchase
Price. Prior to 11:00 a.m. (New York City time) on the Business Day following
the Purchase Date or the Change in Control Purchase Date, as the case may be,
the Company shall deposit with the Trustee or with the Paying Agent (or, if the
Company or a Subsidiary or an Affiliate of either of them is acting as the
Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an
amount of money (in immediately available funds if deposited on such Business
Day) sufficient to pay the aggregate Purchase Price, together with all accrued
and unpaid interest, if any (including contingent interest, if any), thereon, to
but not including the Purchase Date or Change in Control Purchase Price, as the
case may be, of all the Securities or portions thereof which are to be purchased
as of the Purchase Date or Change in Control Purchase Date, as the case may be.

      Section 3.12. Securities Purchased in Part. Any Certificated Security that
is to be purchased only in part shall be surrendered at the office of the Paying
Agent (with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or such Holder's attorney duly
authorized in writing) and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without service charge,
a new Security or Securities, of any authorized denomination as requested by
such Holder in aggregate Principal Amount equal to, and in exchange for, the
portion of the Principal Amount of the Security so surrendered which is not
purchased.

      Section 3.13. Covenant to Comply with Securities Laws upon Purchase of
Securities. When complying with the provisions of Sections 3.08 or 3.09 hereof
(provided that such offer or purchase constitutes an "issuer tender offer" for
purposes of Rule 13e-4 (which term, as used herein, includes any successor
provision thereto) under the Exchange Act at the time of such offer or
purchase), the Company shall (i) comply in all material respects with Rule
13e-4 and Rule 14e-1 under the Exchange Act, (ii) file the related Schedule TO
(or any successor schedule, form or report) under the Exchange Act, and (iii)
otherwise comply in all material respects with all Federal and state securities
laws so as to permit the rights and obligations under Sections 3.08 or 3.09 to
be exercised in the time and in the manner specified in Sections 3.08 or 3.09.

      Section 3.14. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company any cash that remains unclaimed as provided in
paragraph 11 of the Securities,

                                       23



together with interest or dividends, if any, thereon (subject to the provisions
of Section 7.01(f)), held by them for the payment of the Purchase Price or
Change in Control Purchase Price, as the case may be, and accrued and unpaid
interest, if any (including contingent interest, if any); provided, however,
that to the extent that the aggregate amount of cash deposited by the Company
pursuant to Section 3.11 exceeds the aggregate Purchase Price or Change in
Control Purchase Price, as the case may be, of the Securities or portions
thereof which the Company is obligated to purchase as of the Purchase Date or
Change in Control Purchase Date, as the case may be, and accrued and unpaid
interest thereon, if any (including contingent interest, if any), then, unless
otherwise agreed in writing with the Company, promptly after the Business Day
following the Purchase Date or Change in Control Purchase Date, as the case may
be, the Trustee shall return any such excess to the Company together with
interest or dividends, if any, thereon (subject to the provisions of Section
7.01(f)).

                                    ARTICLE 4
                                    COVENANTS

      Section 4.01. Payment of Securities. The Company shall promptly make all
payments in respect of the Securities on the dates and in the manner provided in
the Securities or pursuant to this Indenture. Any amounts to be given to the
Trustee or Paying Agent, as the case may be, shall be deposited with the Trustee
or Paying Agent, as the case may be, by 11:00 a.m. (New York City time) by the
Company. Interest installments, Principal Amount, Redemption Price, Purchase
Price, Change in Control Purchase Price and interest, if any, due on overdue
amounts shall be considered paid on the applicable date due if at 11:00 a.m.
(New York City time) on such date (or, in the case of a Purchase Price or Change
in Control Purchase Price, on the Business Day following the applicable Purchase
Date or Change in Control Purchase Date, as the case may be) the Trustee or the
Paying Agent, as the case may be, holds, in accordance with this Indenture,
money sufficient to pay all such amounts then due.

      The Company shall, to the extent permitted by law, pay interest on over
due amounts at the rate per annum set forth in paragraph 1 of the Securities,
compounded semiannually, which interest shall accrue from the date such over due
amount was originally due to the date payment of such amount, including interest
thereon, has been made or duly provided for. All such interest shall be payable
on demand. The accrual of such interest on overdue amounts shall be in addition
to the continued accrual of interest on the Securities.

      Section 4.02. SEC and Other Reports. The Company shall file with the
Trustee, within 15 days after it files such annual and quarterly reports,
information, documents and other reports with the SEC, copies of its annual
report and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. In the event the Company is at any time
no longer subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, it shall continue to provide the Trustee with reports containing
substantially the same information as would have been required to be filed with
the SEC had the Company continued to have been subject to such reporting
requirements. In such event, such reports shall be provided to the Trustee at
the times the

                                       24



Company would have been required to provide reports had it continued to have
been subject to such reporting requirements.

      In addition, the Company shall comply with the other provisions of TIA
Section 314(a).

      Section 4.03. Compliance Certificate. The Company shall deliver to the
Trustee within 120 days after the end of each fiscal year of the Company
(beginning with the fiscal year ending on June 30, 2004) an Officers'
Certificate, stating whether or not to the best knowledge of the signers
thereof the Company is in default in the performance and observance of any of
the terms, provisions and conditions of this Indenture (without regard to any
period of grace or requirement of notice provided hereunder) and if the Company
shall be in default, specifying all such Defaults and the nature and status
thereof of which they may have knowledge.

      Section 4.04. Further Instruments and Acts. Upon request of the Trustee,
the Company will execute and deliver such further instruments and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purposes of this Indenture.

      Section 4.05. Maintenance of Office or Agency. The Company will maintain
in the Borough of Manhattan, The City of New York, an office or agency of the
Trustee, Registrar, Paying Agent and Conversion Agent where Securities may be
presented or surrendered for payment, where Securities may be surrendered for
registration of transfer, exchange, purchase, redemption or conversion and where
notices and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Corporate Trust Office of the Trustee shall
initially be such office or agency for all of the aforesaid purposes. The
Company shall give prompt written notice to the Trustee of the location, and of
any change in the location, of any such office or agency (other than a change in
the location of the office of the Trustee). If at any time the Company shall
fail to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the address of the Trustee set forth in Section
11.02.

      The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, The City of New York, for such purposes.

      Section 4.06. Tax Treatment of Securities. The Company and the Holders, by
purchasing the Securities, agree that (i) the Securities are contingent payment
debt instruments as described in Treasury Regulations Section 1.1275-4(b), (ii)
each Holder shall be bound by the Company's application of the Treasury
Regulations to the Securities, including the Company's determination of the rate
at which interest will be deemed to accrue on the Securities for United States
federal income tax purposes will be 9.15% compounded semi-annually (the
"COMPARABLE YIELD"), which is the rate comparable to the rate at which the
Company would borrow on a noncontingent, nonconvertible borrowing with terms and
conditions otherwise comparable to the Securities, (iii) each Holder shall use
the Comparable Yield and the projected payment schedule with respect to the
Securities provided by the Company to the Holder, as provided in Treasury
Regulations Section 1.1 275-4(b)(4), to determine its interest accruals and
adjustments as provided in

                                       25



Treasury Regulations Section 1.l275-4(b)(4)(iv), (iv) each Holder shall treat
the delivery of Class A Common Stock or cash (including cash delivered in lieu
of a fractional share) to a Holder of a Security upon conversion of such
Security as a contingent payment (in an amount equal to the sum of the fair
market value of such Class A Common Stock and any cash received) under Treasury
Regulations Section 1.1275-4(b), and (v) the Company and each Holder will not
take any position on a tax return inconsistent with (i), (ii), (iii) or (iv)
unless required by applicable law.

                                    ARTICLE 5
                              SUCCESSOR CORPORATION

      Section 5.01. When the Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or in to any other person or convey,
transfer or lease its properties and assets substantially as an entirety to any
person, unless:

            (i)   (1) the Company shall be the continuing corporation or (2) the
                  person (if other than the Company) formed by such
                  consolidation or into which the Company is merged or the
                  person which acquires by conveyance, transfer or lease the
                  properties and assets of the Company substantially as an
                  entirety (i) shall be a corporation organized and validly
                  existing under the laws of the United States or any State
                  there of or the District of Columbia, and (ii) shall expressly
                  assume, by an indenture supplemental hereto, executed and
                  delivered to the Trustee, in form satisfactory to the Trustee,
                  all of the obligations of the Company under the Securities and
                  this Indenture;

            (ii)  immediately after giving effect to such transaction, no
                  Default shall have occurred and be continuing; and

            (iii) the Company shall have delivered to the Trustee an Officers'
                  Certificate and an Opinion of Counsel, each stating that such
                  consolidation, merger, conveyance, transfer or lease and, if a
                  supplemental indenture is required in connection with such
                  transaction, such supplemental indenture, comply with this
                  Article 5 and that all conditions precedent herein provided
                  for relating to such transaction have been satisfied.

      For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of the properties and assets of one or more Subsidiaries (other than
to the Company or another Subsidiary), which, if such assets were owned by the
Company would constitute all or substantially all of the properties and assets
of the Company shall be deemed to be the transfer of all or substantially all of
the properties and assets of the Company.

      The successor person formed by such consolidation or into which the
Company is merged or the successor person to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor had been named as the Company herein; and thereafter, except in
the case of a lease and obligations the Company may have under

                                       26



a supplemental indenture pursuant to Section 10.12, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Securities. Subject to Section 9.06. the Company, the Trustee and the successor
person shall enter into a supplemental indenture to evidence the succession and
substitution of such success or person and such discharge and release of the
Company.

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

      Section 6.01, Events of Default. Subject to the provisions set forth
below in this Section 6.01, an "EVENT OF DEFAULT" occurs if:

            (a)   the Company defaults in the payment of interest, if any
                  (including contingent interest, if any), payable on any
                  Security when the same becomes due and payable and such
                  Default continues for a period of 30 days after receipt by the
                  Company of a Notice of Default;

            (b)   the Company defaults in the payment of the Principal Amount,
                  Redemption Price, Purchase Price or Change in Control Purchase
                  Price on any Security when the same becomes due and payable at
                  its Stated Maturity, upon redemption, upon declaration, when
                  due for purchase by the Company or otherwise;

            (c)   the Company fails to comply with any of its agreements in the
                  Securities or this Indenture (other than those referred to in
                  clauses (1) and (2) above) and such failure continues for 60
                  days after receipt by the Company of a Notice of Default from
                  the Trustee or from Holders of not less than 25% in aggregate
                  principal amount of the then outstanding Securities;

            (d)   the Company fails to pay when due the principal of
                  indebtedness for money borrowed by the Company or its
                  Subsidiaries in excess of $20,000,000, or the acceleration of
                  that indebtedness that is not withdrawn within 15 days after
                  the date of written notice to the Company by the Trustee or to
                  the Company and the Trustee by the Holders of at least 25% in
                  aggregate principal amount of the then outstanding Securities;

            (e)   a court having jurisdiction in the premises shall enter a
                  decree or order for relief in respect of the Company in an
                  involuntary case under any applicable bankruptcy, insolvency
                  or other similar law now or hereafter in effect, or appointing
                  a receiver, liquidator, assignee, custodian, trustee or
                  sequestrator (or similar official) of the Company or for any
                  substantial part of its property or ordering the winding up or
                  liquidation of its affairs and such decree or order shall
                  remain unstayed and in effect for a period of 60 consecutive
                  days; or

            (f)   the Company shall commence a voluntary case under any
                  applicable bankruptcy, insolvency or other similar law now or
                  hereafter in effect, or

                                       27



                  consent to the entry of an order for relief in an involuntary
                  case under any such law, or consent to the appointment of or
                  taking possession by a receiver, liquidator, assignee,
                  custodian, trustee or sequestrator (or similar official) of
                  the Company or for any substantial part of its property or
                  make any general assignment for the benefit of creditors.

      A Default under clause (a) or (b) above is not an Event of Default until
the Trustee notifies the Company, or the Holders of at least 25% in aggregate
Principal Amount of the Securities at the time outstanding notify the Company
and the Trustee, of the Default and the Company does not cure such Default (and
such Default is not waived) within the time specified in clause (c) or (d)
above, as applicable, after actual receipt of such notice. Any such notice must
specify the Default, demand that it be remedied and state that such notice is a
"NOTICE OF DEFAULT."

      The Company shall deliver to the Trustee, within 30 days after it becomes
aware of the occurrence thereof, written notice of any event which with the
giving of notice or the lapse of time, or both, would become an Event of Default
under clause (c) or (d) above, its status and what action the Company is taking
or proposes to take with respect thereto.

      Section 6.02. Defaults and Remedies. If an Event of Default (other than an
Event of Default specified in Section 6.01(e) or 6.01(f)) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least 25%
in aggregate Principal Amount of the Securities at the time out standing by
notice to the Company and the Trustee, may declare the Principal Amount of all
the Securities plus accrued and unpaid interest, if any (including contingent
interest, if any), thereon, through the date of declaration to be immediately
due and payable. Upon such a declaration, such Principal Amount plus accrued and
unpaid interest, if any (including contingent interest, if any), shall become
and be immediately due and payable. If an Event of Default specified in Section
6.01(e) or 6.01(f) occurs and is continuing, the Principal Amount of all the
Securities plus accrued and unpaid interest, if any (including contingent
interest, if any), thereon, shall become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any Security
holder.

      The Holders of a majority in principal amount of the Securities then
outstanding by notice to the Trustee may rescind an acceleration and its
consequences if (a) all Existing Events of Default, other than then on payment
of the principal of and accrued and unpaid interest, if any (including
contingent interest, if any), on the Securities which has become due solely by
such declaration of acceleration, have been cured or waived; (b) the Company has
paid or deposited with the Trustee a sum sufficient to pay (i) all over due
interest (including contingent interest, if any), on the Securities, (ii) the
principal of any Security which has become due otherwise then by such
declaration of acceleration, and (iii) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal, which has become due otherwise than by such declaration of
acceleration; (c) the rescission would not conflict with any judgment or decree
of a court of competent jurisdiction; and (d) all payments due to the Trustee
and any predecessor Trustee under Section 7.07 have been made. No such
rescission shall affect any subsequent Default or impair any right consequent
thereon.

                                       28



      Section 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of the Principal Amount of all the Securities plus all accrued and unpaid
interest (including contingent interest, if any), thereon or to enforce the
performance of any provision of the Securities or this Indenture.

      The Trustee may maintain a proceeding even if the Trustee does not possess
any of the Securities or does not produce any of the Securities in the
proceeding. A delay or omission by the Trustee or any Security holder in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of, or acquiescence in, the
Event of Default. No remedy is exclusive of any other remedy. All available
remedies are cumulative to the extent permitted by law.

      Section 6.04. Waiver of Past Defaults. The Holders of a majority in
aggregate Principal Amount of the Securities at the time outstanding, by notice
in writing to the Trustee (and without notice to any other Security holder), may
waive an existing Default and its consequences, except (a) an Event of Default
described in Section 6.01 (a) or 6.01(b), (b) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Security holder affected or (c) a Default which constitutes a failure to convert
any Security in accordance with the terms of Article 10. When a Default is
waived, it is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right. This Section 6.04 shall be in lieu
of Section 3l6(a)1(B) of the TIA and such Section 3l6(a)1(B) is hereby expressly
excluded from this Indenture, as permitted by the TIA.

      Section 6.05. Control by Majority. The Holders of a majority in aggregate
Principal Amount of the Securities at the time outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or of exercising any trust or power conferred on the Trustee. However,
the Trustee may refuse to follow any direction that conflicts with law or this
Indenture or that the Trustee determines in good faith is unduly prejudicial to
the rights of other Security holders or would involve the Trustee in personal
liability unless the Trustee is offered indemnity satisfactory to it. This
Section 6.05 shall be in lieu of Section 316(a) 1(A) of the TIA and such Section
316(a) 1(A) is hereby expressly excluded from this Indenture, as permitted by
the TIA.

      Section 6.06. Limitation on Suits. A Security holder may not pursue any
remedy with respect to this Indenture or the Securities unless:

            (a)   the Holder gives to the Trustee written notice stating that an
                  Event of Default is continuing;

            (b)   the Holders of at least 25% in aggregate Principal Amount of
                  the Securities at the time outstanding make a written request
                  to the Trustee to pursue the remedy;

            (c)   such Holder or Holders offer to the Trustee security or
                  indemnity satisfactory to the Trustee against any loss,
                  liability or expense;

            (d)   the Trustee does not comply with there quest within
                  60 days after receipt of such notice, request and offer of
                  security or indemnity; and

                                       29



            (e)   the Holders of a majority in aggregate Principal Amount of the
                  Securities at the time out standing do not give the Trustee a
                  direction inconsistent with the request during such 60-day
                  period.

      A Security holder may not use this Indenture to prejudice the rights of
any other Security holder or to obtain a preference or priority over any other
Security holder.

      Section 6.07. Rights of Holders to Receive Payment. Not with standing any
other provision of this Indenture, the right of any Holder to receive payment of
interest installments (including contingent interest, if any), the Principal
Amount, Redemption Price, Purchase Price, Change in Control Purchase Price or
interest, if any, due on over due amounts in respect of the Securities held by
such Holder, on or after the respective due dates expressed in the Securities,
and to convert the Securities in accordance with Article 10,or to bring suit for
the enforcement of any such payment on or after such respective dates or the
right to convert, shall not be impaired or affected adversely without the
consent of such Holder.

      Section 6.08. Collection Suit by Trustee. If an Event of Default described
in Section 6.01(a) or 6.01(b)occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
for the whole amount owing with respect to the Securities and the amounts
provided for in Section 7.07.

      Section 6.09. Trustee May File Proofs of Claim. In case of the pendency of
any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether interest installments (including contingent interest, if any), the
Principal Amount, Redemption Price, Purchase Price, Change in Control Purchase
Price or interest, if any, due on overdue amounts in respect of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any such amount) shall been titled and empowered,
by intervention in such proceeding or otherwise,

            (a)   to file and prove a claim for any accrued and unpaid interest
                  installments (including contingent interest, if any), the
                  whole amount of the Principal Amount, Redemption Price,
                  Purchase Price, Change in Control Purchase Price or interest,
                  if any, due on overdue amounts in respect of the Securities,
                  and to file such other papers or documents as may be necessary
                  or advisable in order to have the claims of the Trustee
                  (including any claim for the reasonable compensation,
                  expenses, disbursements and advances of the Trustee, its
                  agents and counsel or any other amounts due the Trustee under
                  Section 7.07) and of the Holders allowed in such judicial
                  proceeding, and

            (b)   to collect and receive any moneys or other property payable or
                  deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the

                                       30



Trustee and, in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay the Trustee any amount due it for
the reason able compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07.

      Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

      Section 6.10. Priorities. If the Trustee collects any money pursuant to
this Article 6, it shall pay out the money in the following order:

                  FIRST: to the Trustee for amounts due under Section 7.07;

                  SECOND: to Security holders for amounts due and unpaid on the
                  Securities for any accrued and unpaid interest installments
                  (including contingent interest, if any), the Principal Amount,
                  Redemption Price, Purchase Price, Change in Control Purchase
                  Price or interest, if any, due on overdue amounts in respect
                  of the Securities, as the case may be, ratably, without
                  preference or priority of any kind, according to such amounts
                  due and payable on the Securities ; and

                  THIRD: the balance, if any, to the Company.

      The Trustee may fix a record date and payment date for any payment to
Security holders pursuant to this Section 6.10. At least 15 days before such
record date, the Trustee shall mail to each Security holder and the Company a
notice that states there cord date, the payment date and the amount to be paid.

      Section 6.11. Priorities. In any suit for the enforcement of any right or
remedy under this Indenture or in any suit against the Trustee for any action
taken or omitted by it as Trustee, a court in its discretion may require the
filing by any party litigant (other than the Trustee) in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to
Section 6.07 or a suit by Holders of more than 10%in aggregate Principal Amount
of the Securities at the time outstanding. This Section 6.11 shall be in lieu of
Section 315(e) of the TIA and such Section 315(e) is hereby expressly excluded
from this Indenture, as permitted by the TIA.

      Section 6.12. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may law fully do so) that it will not at any
time insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law or any usury or other law
wherever enacted, now or at anytime hereafter in force, which would prohibit or
forgive the Company from paying all or any portion of any interest installment
(including contingent interest, if any), the Principal Amount, Redemption
Price, Purchase Price, Change in Control Purchase Price or interest, if any, due
on over due amounts in respect of the securities, as

                                       31



contemplated herein, or which may affect the covenants or the performance of
this Indenture; and the Company (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.

                                    ARTICLE 7
                                     TRUSTEE

      Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred
and is continuing, the Trustee shall exercise the rights and powers vested in it
by this Indenture and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.

      (b) Except during the continuance of an Event of Default:

            (i) the Trustee need perform only those duties that are specifically
      set forth in this Indenture and no others; and

            (ii) in the absence of bad faith on its part, the Trustee may
      conclusively rely, as to the truth of the statements and the correctness
      of the opinions expressed therein, upon certificates or opinions furnished
      to the Trustee and conforming to the requirements of this Indenture, but
      in case of any such certificates or opinions which by any provision hereof
      are specifically required to be furnished to the Trustee, the Trustee
      shall examine the certificates and opinions to determine whether or not
      they conform to the requirements of this Indenture, but need not confirm
      or investigate the accuracy of mathematical calculations or other facts
      stated therein.

      This Section 7.01(b) shall be in lieu of Section 3.15(a) of the TIA and
such Section 315(a) is hereby expressly excluded from this Indenture, as
permitted by the TIA.

      (c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:

            (i) this paragraph (c) does not limit the effect of paragraph (b) of
      this Section 7.01;

            (ii) the Trustee shall not be liable for any error of judgment made
      in good faith by a Responsible Officer unless it is proved that the
      Trustee was negligent in ascertaining the pertinent facts; and

            (iii) the Trustee shall not be liable with respect to any action it
      takes or omits to take in good faith in accordance with a direction
      received by it pursuant to Section 6.05.

                                       32



      Section 7.01(c)(i), (ii) and (iii) shall be in lieu of Sections 315(d)(l),
315(d)(2) and 315 (d)(3) of the TIA and such Sections 315(d)(l). 315(d)(2) and
315 (d) (3) are hereby expressly excluded from this Indenture, as permitted by
the TIA.

      (d) Every provision of this Indenture that in any way relates to the
Trustee is subject to Section 7.01(a), (b), (c) and (e).

      (e) The Trustee may refuse to perform any duty or exercise any right or
power or expend or risk its own funds or otherwise incur any financial liability
unless it receives indemnity satisfactory to it against any loss, liability or
expense.

      (f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee (acting in
any capacity hereunder) shall be under no liability for interest on any money
received by it hereunder unless otherwise agreed in writing with the Company.

      Section 7.02. Rights of Trustee. Subject to its duties and
responsibilities under the TIA,

            (a)   the Trustee may conclusively rely and shall be protected in
                  acting or refraining from acting upon any resolution,
                  certificate, statement, instrument, opinion, report, notice,
                  request, direction, consent, order, bond, debenture, note,
                  other evidence of indebtedness or other paper or document
                  reasonably believed by it to be genuine and to have been
                  signed or presented by the proper party or parties;

            (b)   whenever in the administration of this Indenture the Trustee
                  shall deem it desirable that a matter be proved or established
                  prior to taking, suffering or omitting any action hereunder,
                  the Trustee (unless other evidence be herein specifically
                  prescribed) may obtain and, in the absence of bad faith or
                  negligence on its part, conclusively rely upon an Officers'
                  Certificate and/or an Opinion of Counsel;

            (c)   the Trustee may execute any of the trusts or powers hereunder
                  or perform any duties hereunder either directly or by or
                  through agents, attorneys, custodians or nominees and the
                  Trustee shall not be responsible for any misconduct or
                  negligence on the part of any agent, attorney, custodian or
                  nominee appointed with due care by it hereunder;

            (d)   The Trustee shall not be liable for any action taken,
                  suffered, or omitted to be taken by it in good faith which it
                  reasonably believes to be authorized or within its rights or
                  powers conferred under this Indenture;

            (e)   The Trustee may consult with counsel selected by it and any
                  advice or opinion of such counsel shall be full and complete
                  authorization and protection in respect of any action taken or
                  suffered or omitted by it hereunder in good faith and in
                  accordance with such advice or opinion of such counsel;

                                       33



            (f)   the Trustee shall be under no obligation to exercise any of
                  the rights or powers vested in it by this Indenture at the
                  request, order or direction of any of the Holders, pursuant to
                  the provisions of this Indenture, unless such Holders shall
                  have offered to the Trustee security or indemnity satisfactory
                  to it against the costs, expenses and liabilities which may be
                  incurred therein or thereby;

            (g)   any request or direction of the Company mentioned herein shall
                  be sufficiently evidenced by a Company Order and any
                  resolution of the Board of Directors be sufficiently evidenced
                  by a Board Resolution;

            (h)   the Trustee shall not be bound to make any investigation into
                  the facts or matters stated in any resolution, certificate,
                  statement, instrument, opinion, report, notice, request,
                  direction, consent, order, bond, debenture, note, other
                  evidence of indebtedness or other paper or document, but the
                  Trustee, in its discretion, may make such further inquiry or
                  investigation into such facts or matters as it may see fit,
                  and, if the Trustee shall determine to make such further
                  inquiry or investigation, it shall be entitled, during normal
                  business hours, to examine the books, records and premises of
                  the Company, personally or by agent or attorney at the sole
                  cost of the Company and shall incur no liability or additional
                  liability of any kind by reason of such inquiry or
                  investigation;

            (i)   the Trustee shall not be deemed to have notice of any Default
                  or Event of Default unless a Responsible Officer of the
                  Trustee has actual knowledge there of or unless written notice
                  of any event which is in fact such a Default is received by
                  the Trustee at the Corporate Trust Office of the Trustee, and
                  such notice references the Securities and this Indenture;

            (j)   the rights, privileges, protections, immunities and benefits
                  given to the Trustee, including its right to be indemnified,
                  are extended to, and shall be enforceable by, the Trustee in
                  each of its capacities hereunder, and to each agent, custodian
                  and other Person employed to act hereunder; and

            (k)   the Trustee may request that the Company deliver an Officers'
                  Certificate setting forth the names of individuals and/or
                  titles of officers authorized at such time to take specified
                  actions pursuant to this Indenture, which Officers'
                  Certificate may be signed by any person authorized to sign an
                  Officers' Certificate, including any person specified as so
                  authorized in any such certificate previously delivered and
                  not superseded.

      Neither the Trustee nor any of its officers, directors, employees or
agents shall be liable for any action taken or omitted under this Indenture or
in connection therewith except to the extent caused by the Trustee's gross
negligence, bad faith or willful misconduct, as determined by the final judgment
of a court of competent jurisdiction, no longer subject to appeal or review.
Anything in this Indenture to the contrary notwithstanding, in no event shall
the Trustee be liable for special, indirect or consequential loss or damage of
any kind whatsoever (including but no

                                       34



limited to lost profits), even if the Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action.

      Section 7.03. Individual Rights of Trustee. The Trustee in its individual
or any other capacity may become the owner or pledgee of Securities and may
otherwise deal with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Paying Agent, Registrar, Conversion Agent or
co-registrar may do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.

      Section 7.04. Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use or application of the proceeds from the
Securities, it shall not be responsible for any statement in any registration
statement for the Securities under the Securities Act or in any offering
document for the Securities, the Indenture or the Securities (other than its
certificate of authentication), or the determination as to which beneficial
owners are entitled to receive any notices hereunder.

      Section 7.05. Notice of Defaults. If a Default occurs and if it is known
to the Trustee, the Trustee shall give to each Security holder notice of all
current Defaults known to it within 90 days after any such Default occurs or, if
later, within 15 days after it is known to the Trustee, unless such Default
shall have been cured or waived before the giving of such notice.
Notwithstanding the preceding sentence, except in the case of a Default
described in Sections 6.01(a) and 6.0 1(b), the Trustee may withhold the notice
if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Security holders.
The second sentence of this Section 7.05 shall be in lieu of the proviso to
Section 315(b) of the TIA and such proviso is hereby expressly excluded from
this Indenture, as permitted by the TIA.

      Section 7.06. Reports by Trustee to Holders. Within 60 days after each May
15 beginning with the May IS following the date of this Indenture, the Trustee
shall mail to each Security holder a brief report dated as of such May 15 that
complies with TIA Section 313(a), if required by such Section 313(a). The
Trustee also shall comply with TIA Section 313(b).

      A copy of each report at the time of its mailing to Security holders shall
be filed with the SEC and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify the Trustee promptly
whenever the securities become listed on any Securities exchange and of any deli
sting thereof.

      Section 7.07. Compensation and Indemnity. The Company agrees:

            (a)   to pay to the Trustee from time to time, and the Trustee shall
                  be entitled to, such compensation as the Company and the
                  Trustee shall from time to time agree in writing for all
                  services rendered by it hereunder (which compensation shall
                  not be limited (to the extent permitted by law) by any
                  provision of law in regard to the compensation of a trustee of
                  an express trust);

            (b)   to reimburse the Trustee upon its request for all reasonable
                  expenses, disbursements and advances incurred or made by the
                  Trustee in accordance

                                       35



                  with any provision of this Indenture or any documents executed
                  in connection herewith (including the reasonable compensation
                  and the expenses, advances and disbursements of its agents and
                  counsel), except any such expense, disbursement or advance as
                  may be attributable to its negligence, bad faith or willful
                  misconduct; and

            (c)   to indemnify the Trustee or any predecessor Trustee and their
                  agents, officers, directors and employees for, and to hold
                  them harmless against, any loss, damage, claim, liability,
                  cost or expense (including attorneys' fees and expenses and
                  taxes (other than taxes based upon, measured by or determined
                  by the income of the Trustee)) incurred without negligence,
                  misconduct or bad faith on its part, arising out of or in
                  connection with the acceptance or administration of this
                  trust, including the costs and expenses of defending itself
                  against any claim (whether asserted by the Company or any
                  Holder or any other Person) or liability in connection with
                  the exercise or performance of any of its powers or duties
                  hereunder.

      To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee, except that held in trust to pay interest
installments (including contingent interest, if any), the Principal Amount,
Redemption Price, Purchase Price, Change in Control Purchase Price or interest,
if any, due on overdue amounts, as the case may be, in respect of any particular
Securities.

      The Company's payment obligations pursuant to this Section 7.07 shall
survive the discharge of this Indenture or the earlier termination or
resignation of the Trustee. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(e) or Section 6.0 1(f), the
expenses, including the reasonable charges and expenses of its counsel, are
intended to constitute expenses of administration under any bankruptcy law.

      Section 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company; provided, however, that no such resignation shall be
effective until a successor Trustee has accepted its appointment pursuant to
this Section 7.08. The Holders of a majority in aggregate Principal Amount of
the Securities at the time outstanding may remove the Trustee by so notifying
the Trustee and the Company. The Company shall remove the Trustee if:

            (a)   the Trustee fails to comply with Section 7.10;

            (b)   the Trustee is adjudged bankrupt or insolvent;

            (c)   a receiver or public officer takes charge of the Trustee or
                  its property; or

            (d)   the Trustee otherwise becomes incapable of acting.

      If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint, by resolution of
its Board of Directors, a successor Trustee.

                                       36


      A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company satisfactory in form and substance to
the retiring Trustee and the Company. Thereupon the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.

      If a successor Trustee does not take office within 30 days after the
retiring Trustee gives its notice of resignation or is removed, the retiring
Trustee, the Company or the Holders of a majority in aggregate Principal Amount
of the Securities at the time outstanding may petition any court of competent
jurisdiction at the expense of the Company for the appointment of a successor
Trustee.

      If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

      Section 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets (including the administration of the trust
created by this Indenture) to, another corporation, the resulting, surviving or
transferee corporation without any further act shall be the successor Trustee.

      Section 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA Section 310(a)(1). The Trustee (or its
parent holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. Nothing herein contained shall prevent the Trustee from filing with
the SEC the application referred to in the penultimate paragraph of TIA Section
310(b). The Trustee shall comply with TIA Section 310(b); provided, however,
that there shall be excluded from the operation of TIA Section 310(b)(1) any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Company are outstanding if the
requirements for such exclusion set forth in TIA Section 310(b)(1) are met.

      Section 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.

                                    ARTICLE 8
                             DISCHARGE OF INDENTURE

      Section 8.01. Discharge of Liability on Securities. When (i) the Company
delivers to the Trustee all outstanding Securities (other than Securities
replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding
Securities have become due and payable and the Company deposits with the Trustee
cash sufficient to pay all amounts due and owing on all outstanding Securities
(other than Securities replaced pursuant to Section 2.07), and if in either case
the

                                       37



Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 7.07, cease to be of further effect. The
Trustee shall join in the execution of a document prepared by the Company
acknowledging satisfaction and discharge of this Indenture on demand at the cost
and expense of the Company and accompanied by an Officers' Certificate and
Opinion of Counsel.

      Section 8.02. Repayment to the Company. The Trustee and the Paying Agent
shall return to the Company upon written request any money held by them for the
payment of any amount with respect to the Securities that remains unclaimed for
two years, subject to applicable unclaimed property law. After return to the
Company, as applicable, Holders entitled to the money must look to the Company
for payment as general creditors unless an applicable abandoned property law
designates another person and the Trustee and the Paying Agent shall have no
further liability to the Securityholders with respect to such money or
securities for that period commencing after the return thereof.

                                    ARTICLE 9
                                   AMENDMENTS

      Section 9.01. Without Consent of Holders. The Company and the Trustee may
amend or supplement this Indenture or the Securities without notice to or
consent of any Securityholder:

            (a)   to comply with Article 5 or Section 10.12;

            (b)   to cure any ambiguity, omission, defect or inconsistency, or
                  to make any other change that does not adversely affect the
                  rights of any Securityholder;

            (c)   to make provisions with respect to the conversion right of the
                  Holders pursuant to the requirements of Section 10.12 and
                  Section 10.01;

            (d)   to evidence and provide for the acceptance of appointment
                  hereunder by a successor Trustee with respect to the
                  Securities; or

            (e)   to comply with the provisions of the TIA, or with any
                  requirement of the SEC arising as a result of the
                  qualification of this Indenture under the TIA.

      Section 9.02. With Consent of Holders.

      The Company and the Trustee may amend or supplement this Indenture or the
Securities without notice to any Securityholder but with the written consent of
the Holders of a majority in aggregate principal amount of the Securities then
outstanding. The Holders of a majority in aggregate principal amount of the
Securities then outstanding may waive compliance by the Company with restrictive
provisions of this Indenture other than as set forth in this Section 9.02 below,
and waive any past Default under this Indenture and its consequences, except a
Default in the payment of the principal of or interest on any Security or in
respect of a provision which under this Indenture cannot be modified or amended
without the consent of the Holder of each outstanding Security affected.

                                       38



      Subject to Section 9.04, without the written consent of each
Securityholder affected, however, an amendment, supplement or waiver, including
a waiver pursuant to Section 6.04, may not:

            (a)   change the Stated Maturity of the principal of, or any payment
                  date of any installment of interest (including contingent
                  interest, if any), on, any Security;

            (b)   reduce the principal amount of, or the rate of interest
                  (including contingent interest, if any), on, any Security,
                  whether upon acceleration, redemption or otherwise, or alter
                  the manner of calculation of interest or the rate of accrual
                  thereof on any Security;

            (c)   change the currency for payment of principal of, or interest
                  (including contingent interest, if any) on any Security;

            (d)   impair the right to institute suit for the enforcement of any
                  payment of principal of, or interest (including contingent
                  interest, if any) on, any Security when due;

            (e)   adversely affect the conversion rights provided in Article 10;

            (f)   modify the provisions of this Indenture requiring the Company
                  to make an offer to repurchase Securities upon a Change in
                  Control or to repurchase the Securities at the option of the
                  Holders pursuant to Section 3.08 in any case in a manner
                  adverse to the Holders of the Securities;

            (g)   reduce the percentage of principal amount of the outstanding
                  Securities necessary to modify or amend this Indenture or to
                  consent to any waiver provided for in this Indenture;

            (h)   waive a Default in the payment of the principal amount of, or
                  interest (including contingent interest, if any) on, any
                  Security (except as provided in Section 6.02); or

            (i)   make any changes in Section 6.04, Section 6.07 or this
                  paragraph.

      It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

      After an amendment under this Section 9.02 becomes effective, the Company
shall mail to each Holder a notice briefly describing the amendment. Failure to
mail the notice or a defect in the notice shall not effect the validity of the
amendment.

      Section 9.03. Compliance with Trust Indenture Act. Every supplemental
indenture executed pursuant to this Article shall comply with the TIA.

      Section 9.04. Revocation and Effect of Consents. Until an amendment,
waiver or other action by Holders becomes effective, a consent thereto by a
Holder of a Security hereunder is a

                                       39



continuing consent by the Holder and every subsequent Holder of that Security or
portion of the Security that evidences the same obligation as the consenting
Holder's Security, even if notation of the consent, waiver or action is not made
on the Security. However, any such Holder or subsequent Holder may revoke the
consent, waiver or action as to such Holder's Security or portion of the
Security if the Trustee receives the notice of revocation before the date the
amendment, waiver or action becomes effective. After an amendment, waiver or
action becomes effective, it shall bind every Securityholder.

      Section 9.05. Notation on or Exchange of Securities. Securities
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article 9 may, and shall if required by the Trustee, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Company shall so determine, new Securities so
modified as to conform, in the opinion of the Trustee and the Board of Directors
of the Company, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange for
outstanding Securities.

      Section 9.06. Trustee to Sign Supplemental Indentures. The Trustee shall
sign any supplemental indenture authorized pursuant to this Article 9 if the
amendment contained therein does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but need
not, sign such supplemental indenture. In signing such supplemental indenture
the Trustee shall receive, and (subject to the provisions of Section 7.01) shall
be fully protected in relying upon, an Officers' Certificate and an Opinion of
Counsel stating that such amendment is authorized or permitted by this
Indenture.

      Section 9.07. Effect of Supplemental Indentures. Upon the execution of any
supplemental indenture under this Article 9, this Indenture shall be modified in
accordance therewith, and such supplemental indenture shall form a part of this
Indenture for all purposes, and every Holder of Securities theretofore or
thereafter authenticated and delivered hereunder shall be bound thereby.

                                   ARTICLE 10
                                   CONVERSIONS

      Section 10.01. Conversion Privilege. Subject to the provisions of this
Article 10, a Holder of a Security may convert such Security into Class A Common
Stock (the shares of Class A Common Stock issuable upon such conversion, the
"CONVERSION SHARES"), at the Conversion Price (as defined below) then in effect,
together with those rights, warrants or options specified in Section 10.06(g)
hereof, to the extent applicable, if any of the following conditions is
satisfied:

            (a)   during any calendar quarter (the "QUARTER") commencing after
                  September 30, 2003, if the Closing Price (as defined
                  hereinafter) per share of Class A Common Stock for at least 20
                  Trading Days in the period of 30 consecutive Trading Days
                  ending on the last Trading Day of the preceding Quarter is
                  more than 120% of the Conversion Price on such 30th Trading
                  Day;

                                       40



            (b)   the Security has been called for redemption by the Company
                  pursuant to Section 3.01;

            (c)   the conversion of such Security occurs during the five Trading
                  Day period immediately following a period of nine consecutive
                  Trading Days in which the Security Trading Price (as
                  determined following a request by a Holder of the Securities
                  in accordance with the procedures set forth below in this
                  Section 10.01) for each Trading Day in such period was less
                  than 95% of the product of the Closing Price per share of
                  Class A Common Stock on such Trading Day multiplied by the
                  number of shares of Class A Common Stock issuable (assuming
                  satisfaction of conditions to conversion) upon conversion of
                  $1,000 in principal amount of the Securities (the condition
                  specified in this clause (e) being the "95% TRADING
                  CONDITION");

            (d)   (i) an issuance of rights, warrants or options referred to in
                  Section 10.06(b) occurs or (ii) a distribution referred to in
                  Section 10.06(c) occurs where the fair market value of such
                  distribution per share of Class A Common Stock (as determined
                  by the Board of Directors of the Company, which determination
                  shall be conclusive evidence of such fair market value)
                  exceeds 10% of the Closing Price per share of Class A Common
                  Stock on the Trading Day immediately preceding the date of
                  declaration of such distribution; or

            (e)   (x) the Company is party to a consolidation, merger, share
                  exchange, sale of all or substantially all of its assets or
                  other similar transaction pursuant to which the Class A Common
                  Stock is subject to conversion into shares of stock, other
                  securities or property (including cash) pursuant to Section
                  10.12 and (y) the conversion of such Security occurs at any
                  time from and after the date that is 15 days prior to the date
                  of the anticipated effective time of such transaction until
                  and including the date that is 15 days after the actual
                  effective date of such transaction.

      In the case of the foregoing clause (a), at the end of each Quarter, the
Conversion Agent will determine on behalf of the Company whether the Securities
are convertible pursuant to the terms described therein.

      In the case of the foregoing clauses (d)(i) and (ii), the Company must
notify the Holders at least 20 days prior to the ex-dividend date for such
issuance or distribution. Once the Company has given such notice, Holders may
surrender their Securities for conversion at any time thereafter until the
earlier of the close of business on the Business Day prior to the ex-dividend
date or the Company's announcement that such issuance or distribution will not
take place. This provision shall not apply if the Holder of a Security otherwise
participates in the distribution without conversion.

      The "EX-DIVIDEND DATE" for any such issuance or distribution means the
date immediately prior to the commencement of "ex-dividend" trading for such
issuance or distribution on The New York Stock Exchange or such other national
securities exchange or The Nasdaq Stock

                                       41



Market or similar system of automated dissemination of quotations of securities
prices on which the Class A Common Stock is then listed or quoted.

      The number of shares of Class A Common Stock issuable upon conversion of a
Security shall be determined by dividing the principal amount of the Security or
portion thereof surrendered for conversion by the Conversion Price in effect on
the Conversion Date. The initial Conversion Price is set forth in paragraph 8 of
the Securities and is subject to adjustment as provided in this Article 10.

      A Holder may convert a portion of a Security equal to $1,000 or any
integral multiple thereof. Provisions of this Indenture that apply to conversion
of all of a Security also apply to conversion of a portion of a Security.

      If a Security is called for redemption pursuant to Article 3, the right to
convert such Security shall terminate at the close of business on the second
Business Day before the redemption date for such Security (unless the Company
shall default in making the redemption payment then due, in which case the
conversion right shall terminate on the date such Default is cured and such
Security is redeemed). A Security in respect of which a Holder has delivered a
Purchase Notice pursuant to Section 3.08 or a Change in Control Purchase Notice
pursuant to Section 3.09 exercising the option of such Holder to require the
Company to repurchase such Security may be converted only if such Purchase
Notice or Change in Control Purchase Notice, as the case may be, is withdrawn by
a written notice of withdrawal delivered to the Paying Agent prior to the close
of business on the Business Day prior to the Purchase Date or prior to the close
of business on the Change in Control Purchase Date, as the case may be, in
accordance with Section 3.10.

      A Holder of Securities is not entitled to any rights of a holder of Class
A Common Stock until such Holder has converted its Securities into Class A
Common Stock and, upon such conversion, only to the extent such Securities are
deemed to have been converted into Class A Common Stock pursuant to this Article
10.

      The "SECURITY TRADING PRICE" per $1,000 in principal amount of Securities
on any date of determination means the average of the secondary market bid
quotations per $1,000 in principal amount of Securities obtained by the
Conversion Agent for $5,000,000 in principal amount of Securities at
approximately 3:30 p.m., New York City time, on such determination date from
three independent nationally recognized securities dealers selected by the
Company; provided that if at least three such bids cannot reasonably be obtained
by the Conversion Agent, but two such bids are obtained, then the average of the
two bids shall be used, and if only one such bid can reasonably be obtained by
the Conversion Agent, such one bid shall be used. If the Conversion Agent cannot
reasonably obtain at least one bid for $5,000,000 in principal amount of
Securities from a nationally recognized securities dealer or, in the reasonable
judgment of the Company, the bid quotations are not indicative of the secondary
market value of the Securities, then the Security Trading Price will be
determined in good faith by the calculation agent (which shall initially be the
Trustee unless the Trustee shall have appointed a calculation agent, which may
be any investment bank with a national or international reputation with
experience in such matters, including the Initial Purchaser or its successors)
taking into account in such determination such factors as it, in its sole
discretion after consultation with the Company, deems

                                       42



appropriate. Other than in connection with a determination of whether contingent
interest shall be payable, the Conversion Agent shall have no obligation to
determine the Security Trading Price unless the Company has requested such
determination; and the Company shall have no obligation to make such request
unless a Holder of the Securities provides the Company with reasonable evidence
that the Security Trading Price would be less than 95% of the product of the
Closing Price per share of the Class A Common Stock and the number of shares of
Class A Common Stock issuable upon conversion of $1,000 in principal amount of
Securities (assuming satisfaction of conditions to such conversion); at which
time the Company shall instruct the Conversion Agent to determine the Security
Trading Price beginning on the next Trading Day and on each successive Trading
Day until the Security Trading Price is greater than or equal to 95% of the
product of the Closing Price per share of Class A Common Stock and the number of
shares of Class A Common Stock issuable upon conversion of $1,000 in principal
amount of Securities (assuming satisfaction of conditions to such conversion).

      Section 10.02. Conversion Procedure. To convert a Security, a Holder must
satisfy the requirements in paragraph 8 of the Securities and (i) complete and
manually sign the conversion notice on the back of the Security and deliver such
notice to the Conversion Agent, (ii) surrender the Security to the Conversion
Agent, (iii) furnish appropriate endorsements and transfer documents if required
by the Registrar or the Conversion Agent, (iv) pay any transfer or other tax, if
required by Section 10.04 and (v) if the Security is held in book-entry form,
complete and deliver to the Depositary appropriate instructions pursuant to the
Depositary's book-entry conversion programs. The date on which the Holder
satisfies all of the foregoing requirements is the "CONVERSION DATE". As soon as
practicable after the Conversion Date, the Company shall deliver to the Holder
through the Conversion Agent either (i) a certificate for or (ii) a book-entry
notation of the number of whole shares of Class A Common Stock issuable upon the
conversion and cash in lieu of any fractional shares pursuant to Section 10.05;
provided, however, that in the event of a Principal Value Conversion referred to
below in this Section 10.02, the Company shall deliver to the Holder through the
Conversion Agent such cash and/or Class A Common Stock as shall be specified in
the Principal Value Conversion Notice pertaining to such Principal Value
Conversion.

      The person in whose name the certificate is registered shall be deemed to
be a stockholder of record on the Conversion Date; provided, however, that no
surrender of a Security on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the person or persons entitled
to receive the shares of Class A Common Stock upon such conversion as the record
holder or holders of such shares of Class A Common Stock on such date, but such
surrender shall be effective to constitute the person or persons entitled to
receive such shares of Class A Common Stock as the record holder or holders
thereof for all purposes at the close of business on the next succeeding day on
which such stock transfer books are open; provided, further, that such
conversion shall be at the Conversion Price in effect on the date that such
Security shall have been surrendered for conversion, as if the stock transfer
books of the Company had not been closed. Upon conversion of a Security, such
person shall no longer be a Holder of such Security.

      No payment or adjustment will be made for accrued interest, if any
(including contingent interest, if any), on a converted Security or for
dividends or distributions on shares of Class A Common Stock issued upon
conversion of a Security, but if any Holder surrenders a Security for

                                       43



conversion between the record date for the payment of an installment of
interest and the next interest payment date, then, notwithstanding such
conversion, the interest (including contingent interest, if any) payable on such
interest payment date shall be paid to the Holder of such Security on such
record date. In such event, such Security, when surrendered for conversion, must
be accompanied by delivery of a check payable to the Conversion Agent in an
amount equal to the interest (including contingent interest, if any) payable on
such interest payment date on the portion so converted. If such payment does not
accompany such Security, the Security shall not be converted; provided, however,
that no such check shall be required if such Security has been called for
redemption on a redemption date within the period between and including such
record date and such interest payment date, or if such Security is surrendered
for conversion on the interest payment date. If the Company defaults in the
payment of interest (including contingent interest, if any) payable on the
interest payment date, the Conversion Agent shall repay such funds to the
Holder.

      If a Holder converts more than one Security at the same time, the number
of shares of Class A Common Stock issuable upon the conversion shall be based on
the aggregate principal amount of Securities converted.

      Upon surrender of a Security that is converted in part, the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder, a new
Security equal in principal amount to the unconverted portion of the Security
surrendered.

      If on the date of conversion of a Security pursuant to the 95% Trading
Condition the Closing Price per share of Class A Common Stock is greater than
the Conversion Price, the Company will pay to the Holder of such Security, in
lieu of issuance of Conversion Shares based on the Conversion Price, cash or
Class A Common Stock or a combination of cash and Class A Common Stock, at the
Company's option, with a value equal to the principal amount of the Security
surrendered for conversion as of such Conversion Date (a "PRINCIPAL VALUE
CONVERSION"). The Company shall notify the surrendering Holder of any Security
whose conversion is a Principal Value Conversion and the Trustee (such notice
being A "PRINCIPAL VALUE CONVERSION NOTICE") of such Principal Value Conversion
by the second Trading Day following the Conversion Date for such conversion
whether the Company shall pay to such Holder all or a portion of the principal
amount of such Security in cash, Class A Common Stock or a combination of cash
and Class A Common Stock and, if a combination, the percentages of the principal
amount in respect of which it will pay in cash or Class A Common Stock. The
Company may not change its election with respect to the consideration (or
components or percentages of components thereof) to be paid upon a Principal
Value Conversion once the Company has given its Principal Value Conversion
Notice to the Holder surrendering such Security whose conversion is a Principal
Value Conversion. Any Class A Common Stock to be delivered upon a Principal
Value Conversion shall be valued at the greater of (x) the Conversion Price on
the Conversion Date for such conversion and (y) the Closing Price per share of
Class A Common Stock on the third Trading Day after such Conversion Date. The
Company shall pay any portion of the principal amount to be paid in cash in a
Principal Value Conversion on the third Trading Day after the Conversion Date
for such conversion. With respect to any portion of the principal amount to be
paid in Class A Common Stock in a Principal Value Conversion, the Company shall
deliver the Class A Common Stock to the Holder of the Security surrendered for

                                       44



conversion in such Principal Value Conversion on the fourth Trading Day
following the Conversion Date for such conversion.

      Section 10.03. Adjustments Below Par Value. Before taking any action which
would cause an adjustment decreasing the Conversion Price so that the shares of
Class A Common Stock issuable upon conversion of the Securities would be issued
for less than the par value of such Class A Common Stock, the Company will take
all corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of such Class A
Common Stock at such adjusted Conversion Price.

      Section 10.04. Taxes on Conversion. If a Holder converts a Security, the
Company shall pay any documentary, stamp or similar issue or transfer tax due on
the issue of shares of Class A Common Stock upon such conversion. However, the
Holder shall pay any such tax which is due because the Holder requests the
shares to be issued in a name other than the Holder's name. The Conversion Agent
may refuse to deliver the certificates representing the Class A Common Stock
being issued in a name other than the Holder's name until the Conversion Agent
receives a sum sufficient to pay any tax which will be due because the shares
are to be issued in a name other than the Holder's name. Nothing herein shall
preclude any tax withholding required by law or regulations.

      Section 10.05. Company to Provide Stock.

      The Company shall, prior to issuance of any Securities hereunder, and from
time to time as may be necessary, reserve, out of its authorized but unissued
Class A Common Stock a sufficient number of shares of Class A Common Stock to
permit the conversion of all outstanding Securities for shares of Class A Common
Stock.

      No fractional shares of Class A Common Stock shall be issued upon
conversion of Securities. If more than one Security shall be surrendered for
conversion at one time by the same holder, the number of full shares which shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Securities (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of Class A Common
Stock would be issuable upon the conversion of any Security or Securities, the
Company shall make an adjustment thereof in cash at the current market value
thereof. For these purposes, the current market value of a share of Class A
Common Stock shall be the Closing Price per share of Class A Common Stock on the
first Business Day immediately preceding the day on which the Securities (or
specified portions thereof) are deemed to have been converted.

      The Company covenants that all shares of Class A Common Stock delivered
upon conversion of the Securities shall be newly issued shares or treasury
shares, shall be duly authorized, validly issued, fully paid and non-assessable
and shall be free from preemptive rights and free of any lien or adverse claim.

      The Company will endeavor promptly to comply with all federal and state
securities laws regulating the offer and delivery of shares of Class A Common
Stock upon conversion of Securities, if any, and will list or cause to have
quoted such shares of Class A Common Stock on

                                       45



each national securities exchange or in the over-the-counter market or such
other market on which the Class A Common Stock is then listed or quoted.

      Section 10.06. Adjustment of Conversion Price. The conversion price (the
"CONVERSION PRICE") shall be that price set forth in paragraph 8 of the form of
Security attached hereto as Exhibit A-1 and shall be adjusted from time to time
by the Company as follows:

            (a)   In case the Company shall (i) pay a dividend or other
                  distribution in shares of Class A Common Stock or other
                  Capital Stock to all holders of Common Stock, (ii) subdivide
                  its outstanding Common Stock into a greater number of shares,
                  (iii) combine its outstanding Common Stock into a smaller
                  number of shares or (iv) reclassify its outstanding Common
                  Stock, the Conversion Price in effect immediately prior
                  thereto shall be adjusted so that the Holder of any Security
                  thereafter surrendered for conversion shall be entitled to
                  receive the number of shares of Capital Stock which it would
                  have owned or have been entitled to receive had such Security
                  been converted immediately prior to the happening of such
                  event. An adjustment made pursuant to this subsection (a)
                  shall become effective immediately after the record date in
                  the case of a dividend or distribution and shall become
                  effective immediately after the effective date in the case
                  of subdivision, combination or reclassification.

            (b)   In case the Company shall issue to all holders of its Class A
                  Common Stock, rights, warrants or options entitling such
                  holders (for a period commencing no earlier than the record
                  date described below and expiring not more than 60 days after
                  such record date) to subscribe for or purchase shares of
                  Common Stock (or securities convertible into Common Stock) at
                  a price per share less than the current market price per share
                  of Common Stock (as defined in subsection (f) below) at the
                  record date for the determination of stockholders entitled to
                  receive such rights, warrants or options, the Conversion Price
                  in effect immediately prior thereto shall be adjusted so that
                  the Conversion Price shall equal the price determined by
                  multiplying the Conversion Price in effect immediately prior
                  to such record date by a fraction, the numerator of which
                  shall be the number of shares of Common Stock outstanding on
                  such record date, plus the number of shares which the
                  aggregate subscription or purchase price for the total number
                  of shares of Common Stock offered by the rights, warrants or
                  options so issued (or the aggregate conversion price of the
                  convertible securities offered by such rights, warrants or
                  options) would purchase at such current market price, and the
                  denominator of which shall be the number of shares of Common
                  Stock outstanding on such record date plus the number of
                  additional shares of Common Stock offered by such rights,
                  warrants or options (or into which the convertible securities
                  so offered by such rights, warrants or options are
                  convertible). Such adjustment shall be made successively
                  whenever any such rights, warrants or options are issued, and
                  shall become effective immediately after such record date. If
                  at the end of the period during which such rights, warrants or
                  options are exercisable not all rights, warrants or options
                  shall have been exercised, the adjusted Conversion Price shall
                  be immediately readjusted to what it would have been upon
                  application of

                                       46



                  the foregoing adjustment substituting the number of additional
                  shares of Common Stock actually issued (or the number of
                  shares of Common Stock issuable upon conversion of convertible
                  securities actually issued) for the total number of shares of
                  Common Stock offered (or the convertible securities offered).

            (c)   In case the Company shall distribute to all holders of its
                  Class A Common Stock any shares of Capital Stock of the
                  Company (other than Common Stock) or evidences of its
                  indebtedness, cash, other securities or other assets, or shall
                  distribute to all holders of its Class A Common Stock, rights,
                  warrants or options to subscribe for or purchase any of its
                  securities (excluding (i) rights, options and warrants
                  referred to in Section 10.06(b) above; (ii) those dividends,
                  distributions, subdivisions and combinations referred to in
                  Section 10.06(a) above; and (iii) dividends and distributions
                  paid in cash referred to in subsection (f) below), then in
                  each such case the Conversion Price shall be adjusted so that
                  the same shall equal the price determined by multiplying the
                  Conversion Price in effect immediately prior to the date of
                  such distribution by a fraction, the numerator of which shall
                  be the current market price per share (as defined in
                  subsection (f) below) of the Common Stock on the record date
                  mentioned below less the fair market value on such record date
                  (as determined by the Board of Directors of the Company, whose
                  determination shall be conclusive evidence of such fair market
                  value) of the portion of the Capital Stock or evidences of
                  indebtedness, securities or assets so distributed or of such
                  rights, warrants or options, in each case as applicable, to
                  one share of Common Stock, and the denominator of which shall
                  be the current market price per share (as defined in
                  subsection (f) below) of the Common Stock on such record date.
                  Such adjustment shall become effective immediately after the
                  record date for the determination of stockholders entitled to
                  receive such distribution.

            (d)   In case the Company shall, by dividend or otherwise,
                  distribute cash to all or substantially all of the holders of
                  its Class A Common Stock (an "EXTRAORDINARY CASH DIVIDEND")
                  (excluding any quarterly cash dividend or distribution on the
                  Class A Common Stock to the extent the aggregate cash
                  dividends or distributions per share of Class A Common Stock
                  in any twelve month period) does not exceed (A) on or prior to
                  June 11, 2008, $0.05 per issued and outstanding share of Class
                  A Common Stock per fiscal quarter (subject to appropriate
                  adjustment to give effect to any subdivisions, combinations,
                  stock dividends and stock splits), and (B) after June 11,
                  2008, together with any and all other cash distributions and
                  consideration payable in respect of any tender or exchange
                  offer by the Company or any of its Subsidiaries for shares of
                  Class A Common Stock made within the preceding twelve months,
                  5% of the Market Capitalization (as defined in subsection (f)
                  below) of the Company immediately prior to the date of
                  declaration of such distribution, in such case, the Conversion
                  Price shall be adjusted so that the same shall equal the price
                  determined by dividing the Conversion Price in effect
                  immediately prior to the close of business on such date of
                  declaration by a fraction,

                                       47



                  (i)   the numerator of which shall be the current market price
                        per share (as defined in subsection (f) below) of the
                        Class A Common Stock on the date of declaration of such
                        distribution less the amount of cash so distributed (and
                        not excluded as provided above) applicable to one share
                        of Class A Common Stock, and

                  (ii)  the denominator of which shall be such current market
                        price per share (as defined in subsection (f) below) of
                        the Class A Common Stock,

                  such adjustment to be effective immediately prior to the
                  opening of business on the day following the date of
                  declaration of such distribution; provided, however, that in
                  the event the portion of the cash so distributed applicable to
                  one share of Class A Common Stock is equal to or greater than
                  the current market price per share (as defined in subsection
                  (f) below) of the Class A Common Stock on the date of
                  declaration of such distribution, in lieu of the foregoing
                  adjustment, adequate provision shall be made so that each
                  Holder shall have the right to receive upon conversion the
                  amount of cash such holder would have received had such holder
                  converted each Security on the date of declaration of such
                  distribution. In the event that such dividend or distribution
                  is not so paid or made, the Conversion Price shall again be
                  adjusted to be the Conversion Price that would then be in
                  effect if such dividend or distribution had not been declared.
                  If any adjustment is required to be made as set forth in this
                  Section 10.06(d) as a result of a distribution that is a
                  quarterly dividend, such adjustment shall be based upon the
                  amount by which such distribution exceeds the amount of the
                  quarterly cash dividend permitted to be excluded pursuant
                  hereto. If an adjustment is required to be made as set forth
                  in this Section 10.06(d) above as a result of a distribution
                  that is not a quarterly dividend, such adjustment shall be
                  based upon the full amount of the distribution.

            (e)   In case the Company or any of its Subsidiaries shall complete
                  a repurchase (including by way of a tender offer) of shares of
                  Common Stock, and the fair market value of the sum of (i) the
                  aggregate consideration paid for such Common Stock, (ii) the
                  aggregate amount of any cash dividends paid within the twelve
                  (12) months preceding the date of purchase of such shares of
                  Common Stock in respect of which no adjustment pursuant to
                  this Section 10.06 previously has been made, and (iii) the
                  aggregate fair market value of any amounts previously paid for
                  the repurchase of Common Stock of a type described in this
                  paragraph (e) within the twelve (12) months preceding the date
                  of purchase of such shares of Common Stock in respect of which
                  no adjustment pursuant to this Section 10.06 previously has
                  been made, exceeds 5% of Market Capitalization (as defined in
                  Section 10.06(f) below) on the date of, and after giving
                  effect to, such repurchase, then the Conversion Price shall be
                  adjusted so that the same shall equal the price determined by
                  multiplying the Conversion Price in effect immediately prior
                  to the date of such purchase by a fraction, the numerator of
                  which shall be the current market price per share (as defined
                  in subsection (f) below) of the Class A Common Stock on the
                  date of

                                       48



                  such repurchase, less the quotient obtained by dividing the
                  Aggregate Market Premium involved in such repurchase (as
                  defined hereinafter) by the difference between the number of
                  shares of Common Stock outstanding before such repurchase and
                  the number of shares of Common Stock the subject of such
                  repurchase, and the denominator of which shall be the current
                  market price per share (as defined in subsection (f) below) of
                  the Common Stock on the date of such repurchase. Such
                  adjustment shall become effective immediately after the date
                  of such repurchase. For purposes of this subsection (e), the
                  "AGGREGATE MARKET PREMIUM" is the excess, if any, of the
                  aggregate repurchase price paid for all such Common Stock over
                  the aggregate current market value per share (as defined in
                  subsection (f) below) of all such repurchased stock,
                  determined with respect to each share involved in each such
                  repurchase as of the date of repurchase with respect to such
                  share.

            (f)   In case someone other than the Company or one of its
                  subsidiaries makes a payment in respect of a tender offer or
                  exchange offer for shares of Class A Common Stock in which, as
                  of the closing date of the offer, the Company's board of
                  directors is not recommending rejection of the offer, the
                  Conversion Price will be adjusted as provided in subsection
                  (e) above. The adjustment referred to in this clause will only
                  be made if:

                  (i)   the tender offer or exchange offer is for an amount that
                        increases the offeror's ownership of common stock to
                        more than 25% of the total shares of the Company's
                        Common Stock outstanding; and

                  (ii)  cash and value of any other consideration included in
                        the payment per share of Common Stock exceeds the
                        current market price per share of Common Stock on the
                        next Business Day succeeding the last date on which
                        tenders or exchanges may be made pursuant to the tender
                        or exchange offer.

                  However, the adjustment referred to in this subsection (f)
            will not be made if as of the closing of the offer, the offering
            documents disclose a plan or an intention to cause the Company to
            engage in a consolidation or merger of the Company or a sale of all
            or substantially all of the Company's assets.

                  For the purpose of any computation under Section 10.06(b),
            (c), (d), and (e) above and this Section 10.06(f), the "CURRENT
            MARKET PRICE PER SHARE" of Common Stock on any date shall be deemed
            to be the average of the Closing Prices per share of Class A Common
            Stock for 20 consecutive Trading Days commencing 30 Trading Days
            before the record date with respect to any distribution, issuance or
            other event requiring such computation. The "CLOSING PRICE" with
            respect to the Class A Common Stock for any day shall mean the
            closing sale price, regular way, per share of Class A Common Stock
            on such day or, in case no such sale of Class A Common Stock takes
            place on such day, the average of the reported closing bid and asked
            prices, regular way, per share of Class A Common Stock in each case
            on the New York Stock Exchange, the Nasdaq Stock Market or principal
            national security

                                       49


            exchange or other quotation system on which the Class A Common Stock
            is quoted or listed or admitted to trading on such day, or, if the
            Class A Common Stock is not so quoted or listed or admitted to
            trading on any national securities exchange or quotation system, the
            average of the closing bid and asked prices per share of Class A
            Common Stock on the over-the-counter market on the day in question
            as reported by the National Quotation Bureau Incorporated, or a
            similar generally accepted reporting service, or, if such average is
            not so available, determined in such manner as furnished by any New
            York Stock Exchange member firm selected from time to time by the
            Board of Directors for that purpose, or if not so determinable as
            provided under any applicable alternative above, a price per share
            of Class A Common Stock determined in good faith by the Board of
            Directors or, to the extent permitted by applicable law, a duly
            authorized committee thereof, whose determination shall be
            conclusive. "MARKET CAPITALIZATION" means, as of any date of
            calculation, the Closing Price of the Class A Common Stock on the
            Trading Day immediately prior to such date of calculation multiplied
            by the aggregate number of shares of Class A Common Stock and Class
            B Common Stock outstanding on the Trading Day immediately prior to
            such date of calculation.

            (g)   If the rights provided for in the Company's rights agreement
                  dated as of August 17, 1995, as amended, (the "STOCKHOLDER
                  RIGHTS PLAN") have separated from the Company's Class A Common
                  Stock in accordance with the provisions of the Stockholder
                  Rights Plan so that the Holders of the Securities would not be
                  entitled to receive any rights in respect of Class A Common
                  Stock issuable upon conversion of the Securities, the
                  Conversion Price will be adjusted as provided in paragraph (c)
                  above, subject to readjustment in the event of the expiration,
                  termination or redemption of the rights. In lieu of any such
                  adjustment, the Company may amend its Stockholder Rights Plan
                  to provide that upon conversion of the Securities the Holders
                  will receive, in addition to Class A Common Stock issuable
                  upon such conversion, the rights which would have attached to
                  such shares of Class A Common Stock if the rights had not
                  become separated from the Class A Common Stock under the
                  Company's Stockholder Rights Plan. To the extent that the
                  Company adopts any future rights plan, upon conversion of the
                  Securities into Class A Common Stock, Securityholders will
                  receive, in addition to Class A Common Stock, the rights under
                  the future rights plan whether or not the rights have
                  separated from the Class A Common Stock at the time of
                  conversion and no adjustment to the Conversion Price will be
                  made in accordance with paragraph (c).

      In any case in which this Section 10.06 shall require that an adjustment
be made immediately following a record date established for purposes of Section
10.06, the Company may elect to defer (but only until five Business Days
following the filing by the Company with the Trustee of the certificate
described in Section 10.06) issuing to the holder of any Security converted
after such record date the shares of Class A Common Stock and other Capital
Stock of the Company issuable upon such conversion over and above the shares of
Class A Common Stock and other Capital Stock of the Company issuable upon such
conversion only on the basis of the Conversion Price prior to adjustment; and,
in lieu of the shares the issuance of which is so

                                       50



deferred, the Company shall issue or cause its transfer agents to issue due
bills or other appropriate evidence of the right to receive such shares.

      If after an adjustment a Holder of a Security upon conversion of such
Security may receive shares of two or more classes of Capital Stock of the
Company, the Conversion Price shall thereafter be subject to adjustment upon the
occurrence of an action taken with respect to any such class of Capital Stock as
is contemplated by this Article 10 with respect to the Class A Common Stock, on
terms comparable to those applicable to Class A Common Stock in this Article 10.

      Section 10.07. No Adjustment. No adjustment in the Conversion Price shall
be required unless the adjustment would require an increase or decrease of at
least 1% in the Conversion Price as last adjusted; provided, however, that any
adjustments which by reason of this Section 10.07 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this Article 10 shall be made to the nearest cent or to
the nearest one-hundredth of a share, as the case may be.

      No adjustment need be made for a transaction referred to in Section 10.06
if Holders are to participate in the transaction on a basis and with notice that
the Board of Directors determines to be fair and appropriate in light of the
basis and notice on which holders of Class A Common Stock participate in the
transaction. Such participation by Holders may include participation upon
conversion; provided that an adjustment shall be made at such time as the
Holders are no longer entitled to participate.

      No adjustment need be made for rights to purchase Class A Common Stock or
issuances of Class A Common Stock pursuant to a Company plan for reinvestment of
dividends or interest payable on the Company's securities and the investment
of any additional optional amounts of shares of Class A Common Stock under any
Company sponsored plan.

      No adjustment need be made for a change in the par value or a change to no
par value of the Class A Common Stock.

      No adjustment need be made upon the issuance of any shares of Class A
Common Stock or options or rights to purchase those shares pursuant to any
present or future Company employee, director or consultant benefit plan or
program.

      No adjustment need be made upon the issuance of any shares of Class A
Common Stock pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding as of the date the Securities were first
issued.

      To the extent that the Securities become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue on
the cash.

      Section 10.08. Equivalent Adjustments. In the event that, as a result of
an adjustment made pursuant to Section 10.06 above, the holder of any Security
thereafter surrendered for conversion shall become entitled to receive any
shares of Capital Stock of the Company other than shares of its Class A Common
Stock, thereafter the Conversion Price of such other shares so receivable upon
conversion of any Securities shall be subject to adjustment from time to time in

                                       51



a manner and on terms as nearly equivalent as practicable to the provisions with
respect to Class A Common Stock contained in this Article 10.

      Section 10.09. Adjustment for Tax Purposes. The Company shall be entitled
to make such reductions in the Conversion Price, in addition to those required
by Section 10.06, as it in its discretion shall determine to be advisable in
order that any stock dividends, subdivision of shares, distribution of rights to
purchase stock or securities, or a distribution or securities convertible into
or exchangeable for stock hereafter made by the Company to its stockholders
shall not be taxable.

      Section 10.10. Notice of Adjustment. Whenever the Conversion Price is
adjusted, or Securityholders become entitled to other securities or due bills,
the Company shall promptly mail to Securityholders a notice of the adjustment
and file with the Trustee an Officers' Certificate briefly stating the facts
requiring the adjustment and the manner of computing it. The certificate shall
be conclusive evidence of the correctness of such adjustment and the Trustee may
conclusively assume that, unless and until such certificate is received by it,
no such adjustment is required.

      Section 10.11. Notice of Certain Transactions. In case:

            (a)   the Company shall declare a dividend (or any other
                  distribution) on its Class A Common Stock (other than in cash
                  out of retained earnings); or

            (b)   the Company shall authorize the granting to the holders of its
                  Class A Common Stock of rights, warrants or options to
                  subscribe for or purchase any share of any class or any other
                  rights, warrants or options; or

            (c)   of any reclassification of the Common Stock of the Company
                  (other than a subdivision or combination of its outstanding
                  Common Stock, or a change in par value, or from par value to
                  no par value, or from no par value to par value, or a
                  conversion or reclassification of its Class B Common Stock
                  solely into Class A Common Stock), or of any consolidation,
                  merger, or share exchange to which the Company is a party and
                  for which approval of any stockholders of the Company is
                  required, or of the sale or transfer of all or substantially
                  all of the assets of the Company; or

            (d)   of the voluntary or involuntary dissolution, liquidation or
                  winding-up of the Company;

the Company shall cause to be filed with the Trustee and the Conversion Agent
and to be mailed to each Holder of Securities at its address appearing on the
list provided for in Section 2.05, as promptly as possible but in any event at
least ten days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights, warrants or options, or, if a record is not to
be taken, the date as of which the holders of Class A Common Stock of record to
be entitled to such dividend, distribution or rights are to be determined, or
(y) the date on which such reclassification, consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding-up is expected to
become effective or occur, and the date as of which it is expected that holders
of

                                       52



Class A Common Stock of record shall be entitled to exchange their Class A
Common Stock for securities or other property deliverable upon such
reclassification, consolidation, merger, share exchange, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, share exchange,
transfer, dissolution, liquidation or winding-up.

      Section 10.12. Effect of Reclassification, Consolidation, Merger, Share
Exchange or Sale on Conversion Privilege.

      If any of the following shall occur, namely: (i) any reclassification or
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination, or a conversion or reclassification
of its Class B Common Stock solely into Class A Common Stock); (ii) any
consolidation, combination, merger or share exchange to which the Company is a
party other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a change
in name, or par value, or from par value to no par value, or from no par value
to par value, or as a result of a subdivision or combination, or a conversion or
reclassification of its Class B Common Stock solely into Class A Common Stock)
in, outstanding shares of Class A Common Stock; or (iii) any sale or conveyance
of all or substantially all of the assets of the Company, then the Company, or
such successor or purchasing corporation. as the case may be, shall, as a
condition precedent to such reclassification, change, consolidation, merger,
share exchange, sale or conveyance, execute and deliver to the Trustee a
supplemental indenture providing that the Holder of each Security then
outstanding shall have the right to convert such Security into the kind and
amount of shares of Capital Stock and other securities and property (including
cash) receivable upon such reclassification, change, consolidation, merger,
share exchange, sale or conveyance by a holder of the number of shares of Class
A Common Stock deliverable upon conversion of such Security immediately prior to
such reclassification, change, consolidation, merger, share exchange, sale or
conveyance. Such supplemental indenture shall provide for adjustments of the
Conversion Price which shall be as nearly equivalent as may be practicable to
the adjustments of the Conversion Price provided for in this Article 10. If, in
the case of any such consolidation, merger, share exchange, sale or conveyance,
the stock or other securities and property (including cash) receivable thereupon
by a holder of Class A Common Stock includes shares of Capital Stock or other
securities and property of a corporation other than the successor or purchasing
corporation, as the case may be, in such consolidation, merger, share exchange,
sale or conveyance, then such supplemental indenture shall also be executed by
such other corporation and shall contain such additional provisions to protect
the interests of the Holders of the Securities as the Board of Directors of the
Company shall reasonably consider necessary by reason of the foregoing. The
provision of this Section 10.12 shall similarly apply to successive
consolidations, mergers, share exchanges, sales or conveyances. Notwithstanding
the foregoing, a distribution by the Company to all or substantially all holders
of its Class A Common Stock for which an adjustment to the Conversion Price or
provision for conversion of the Securities may be made pursuant to Section 10.06
shall not be deemed to be a sale or conveyance of all or substantially all of
the assets of the Company for purposes of this Section 10.12.

                                       53



      In the event the Company shall execute a supplemental indenture pursuant
to this Section 10.12, the Company shall promptly file with the Trustee an
Opinion of Counsel stating that such supplemental indenture is authorized or
permitted by this Indenture and an Officers' Certificate briefly stating the
reasons therefor, the kind or amount of shares of stock or securities or
property (including cash) receivable by Holders of the Securities upon the
conversion of their Securities after any such reclassification, change,
consolidation, merger, share exchange, sale or conveyance, any adjustment to be
made with respect thereto and that all conditions precedent have been complied
with.

      Section 10.13. Trustee `s Disclaimer.

      The Trustee has no duty to determine when an adjustment under this Article
10 should be made, how it should be made or what such adjustment should be made,
but may accept as conclusive evidence of the correctness of any such adjustment,
and shall be protected in relying upon, the Officers' Certificate with respect
thereto which the Company is obligated to file with the Trustee pursuant to
Section 10.10. The Trustee shall not be accountable for and makes no
representation as to the validity or value of any securities or assets issued
upon conversion of Securities, and the Trustee shall not be responsible for the
Company's failure to comply with any provisions of this Article 10. Each
Conversion Agent (other than the Company or an Affiliate of the Company) shall
have the same protection under this Section 10.13 as the Trustee.

      The Trustee shall not be under any responsibility to determine the
correctness of any provisions contained in any supplemental indenture executed
pursuant to Section 10.12, but may accept as conclusive evidence of the
correctness thereof and shall be protected in relying upon, the Officers'
Certificate with respect thereto which the Company is obligated to file with the
Trustee pursuant to Section 10.12.

      Section 10.14. Voluntary Reduction.

      The Company from time to time may reduce the Conversion Price by any
amount for any period of time if the period is at least 20 Trading Days or such
longer period as may be required by law and if the reduction is irrevocable
during the period; provided that in no event may the Conversion Price be less
than the par value of a share of Class A Common Stock.

      Section 10.15. Simultaneous Adjustments.

      In the event that this Article 10 requires adjustments to the Conversion
Price under more than one of Sections 10.06(c), (d), (e) and (f), and the record
dates for the distributions giving rise to such adjustments shall occur on the
same date, then such adjustments shall be made by applying, first, the
provisions of Section 10.06(d), (e) or (1), as applicable, and, second, the
provisions of Section 10.06(c). If more than one event requiring adjustment
pursuant to Section 10.06 shall occur before completing the determination of the
Conversion Price for the first event requiring such adjustment, then the Board
of Directors (whose determination shall, if made in good faith, be conclusive)
shall make such adjustments to the Conversion Price (and the calculation
thereof) after giving effect to all such events as shall preserve for
Securityholders the Conversion Price protection provided in Section 10.06.

                                       54



                                   ARTICLE 11
                                  MISCELLANEOUS

      Section 11.01. Trust Indenture Act Controls.

      If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control.

      Section 11.02. Notices.

      Any request, demand, authorization, notice, waiver, consent or
communication shall be in writing and delivered in person or mailed by
first-class mail, postage prepaid, addressed as follows, or transmitted by
facsimile transmission (confirmed orally) to the following facsimile numbers:

            if to the Company, to:

            Medicis Pharmaceutical Corporation
            8125 North Hayden Road
            Scottsdale, Arizona 85258-2463
            Attention: Chief Financial Officer
            Facsimile No.: (602) 808-3888

            in either case, with a copy to:

            Akin Gump Strauss Hauer & Feld LLP
            590 Madison Avenue
            New York, New York 10022
            Attention Stephen E. Older, Esq.
            Facsimile No.: (212) 872-1002

            if to the Trustee, to:

            Deutsche Bank Trust Company Americas
            60 Wall Street, 27th Floor
            New York, NY 10005
            Attention: Corporate Trust and Agency Services
            Facsimile No.: (212) 797-8614

      The Company or the Trustee by notice given to the other in the manner
provided above may designate additional or different addresses for subsequent
notices or communications.

      Any notice or communication given to a Securityholder shall be mailed to
the Securityholder, by first-class mail, postage prepaid, at the
Securityholder's address as it appears on the registration books of the
Registrar and shall be sufficiently given if so mailed within the time
prescribed.

                                       55


      Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.

      If the Company mails a notice or communication to the Securityholders, it
shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion
Agent or co-registrar.

      Section 11.03. Communication by Holders with Other Holders.

      Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar, the Paying Agent, the
Conversion Agent and anyone else shall have the protection of TIA Section 3
12(c).

      Section 11.04. Certificate and Opinion as to Conditions Precedent.

      Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:

            (a)   an Officers' Certificate stating that, in the opinion of the
                  signers, all conditions precedent, if any, provided for in
                  this Indenture relating to the proposed action have been
                  complied with; and

            (b)   an Opinion of Counsel stating that, in the opinion of such
                  counsel, all such conditions precedent have been complied
                  with.

      In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such mattes be certified by, or covered by the opinion of, only one such Person,
or that they be so certified or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such eligible and qualified Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one or several
documents.

      Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise
of reasonable case should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
the information on which counsel is relying unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.

      Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

                                       56



      Section 11.05. Statements Required in Certificate or Opinion.

      Each Officers' Certificate or Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Indenture shall
include:

            (a)   a statement that each person making such Officers' Certificate
                  or Opinion of Counsel has read such covenant or condition;

            (b)   a brief statement as to the nature and scope of the
                  examination or investigation upon which the statements or
                  opinions contained in such Officers' Certificate or Opinion of
                  Counsel are based;

            (c)   a statement that, in the opinion of each such person, he has
                  made such examination or investigation as is necessary to
                  enable such person to express an informed opinion as to
                  whether or not such covenant or condition has been complied
                  with; and

            (d)   a statement that, in the opinion of such person, such covenant
                  or condition has been complied with.

      Section 11.06. Separability Clause.

      In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

      Section 11.07. Rules by Trustee, Paying Agent, Conversion Agent and
Registrar.

      The Trustee may make reasonable rules for action by or a meeting of
Securityholders. The Registrar, the Conversion Agent and the Paying Agent may
make reasonable rules for their functions.

      Section 11.08. Legal Holidays.

      A "Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action shall
be taken on the next succeeding day that is not a Legal Holiday, and, if the
action to be taken on such date is a payment in respect of the Securities, no
interest (including contingent interest, if any) shall accrue for the
intervening period.

      Section 11.09. Governing Law.

      THIS INDENTURE AND EACH NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                                       57



      Section 11.10. No Recourse Against Others.

      A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.

      Section 11.11. Successors.

      All agreements of the Company in this Indenture and the Securities shall
bind its successor. All agreements of the Trustee in this Indenture shall bind
its successor.

      Section 11.12. Multiple Originals.

      This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute but
one and the same instrument.

                                       58



      IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Indenture on behalf of the respective parties hereto as of the date first
above written.

                                    MEDICIS PHARMACEUTICAL
                                    CORPORATION

                                    By: /s/ Mark A. Prygocki, Sr.
                                        ----------------------------------------
                                        Name:  Mark A. Prygocki, Sr.
                                        Title: Executive Vice President, Chief
                                               Financial Officer, Secretary and
                                               Treasurer

                                    DEUTSCHE BANK TRUST COMPANY
                                    AMERICAS

                                    By: /s/ Wanda Camacho
                                        ----------------------------------------
                                        Name:  Wanda Camacho
                                        Title: Vice President



                                                                     EXHIBIT A-1

                        [FORM OF FACE OF GLOBAL SECURITY]

      THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL
INCOME TAX PURPOSES. HOLDERS OF THIS SECURITY MAY OBTAIN INFORMATION REGARDING
THE ISSUE PRICE, THE ISSUE DATE, THE COMPARABLE YIELD, THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, THE YIELD TO MATURITY AND THE PROJECTED PAYMENT SCHEDULE FOR
THIS SECURITY BY SUBMITTING A WRITTEN REQUEST FOR SUCH INFORMATION TO: MEDICIS
PHARMACEUTICAL CORPORATION, 8125 NORTH HAYDEN ROAD, SCOTTSDALE, ARIZONA
85258-2463, ATTN.: VICE PRESIDENT OF FINANCE, SUCH INFORMATION TO BE MADE
AVAILABLE, BEGINNING NO LATER THAN 10 DAYS AFTER THE ISSUE DATE, PROMPTLY UPON
REQUEST.

      UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY TO MEDICIS PHARMACEUTICAL CORPORATION (THE
"COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.

      TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS TO
NOMINEES OF THE DEPOSITORY TRUST COMPANY, OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN
ARTICLE TWO OF THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.

                                      A-1-1



                       MEDICIS PHARMACEUTICAL CORPORATION

               1.5% Contingent Convertible Senior Notes Due 2033

No.: 1                                            CUSIP: 584690 AB 7

Issue Date: August 19, 2003                       Principal Amount: $283,910,000

      MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation, promises to
pay to Cede & Co. or registered assigns, the Principal Amount as set forth on
Schedule I hereto, on June 4, 2033, subject to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place. This Security is
convertible as specified on the other side of this Security.

      Interest Payment Dates: June 4 and December 4, commencing December 4,
2003,

      Record Dates: May 15 and November 15, commencing November 15, 2003

Dated: August 19, 2003            MEDICIS PHARMACEUTICAL
                                  CORPORATION

                                  By: ______________________________________
                                      Name:  Mark A. Prygocki, Sr.
                                      Title: Executive Vice President,
                                             Chief Financial Officer, Secretary
                                             and Treasurer

                                     A-1-2


                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee, certifies that this is one of
the Securities referred to in the within-mentioned Indenture.

By:
   -----------------------------
         Authorized Signatory

Dated: August 19, 2003

                                     A-1-3


                         [FORM OF REVERSE SIDE OF NOTE]

                       MEDICIS PHARMACEUTICAL CORPORATION

                1.5% Contingent Convertible Senior Notes Due 2033

      1.    Interest.

      This Security shall accrue interest at an initial rate of 1.5% per annum.
The Company promises to pay interest on the Securities in cash semiannually on
each June 4 and December 4, commencing December 4, 2003, to Holders of record on
the immediately preceding May 15 and November 15, respectively. Interest on the
Securities will accrue from and including August 14, 2003, until the Principal
Amount is paid or duly made available for payment. The Company will pay interest
on any overdue Principal Amount at the interest rate borne by the Securities at
the time such interest on the overdue Principal Amount accrues, compounded
semiannually, and it shall pay interest on overdue installments of interest at
the same interest rate compounded semiannually. Interest (including contingent
interest, if any) on the Securities will be computed on the basis of a 360-day
year comprised of twelve 30-day months.

      The Company shall pay contingent interest to the Holders during any
six-month period (a "CONTINGENT INTEREST PERIOD") From June 4 to December 3 and
from December 4 to June 3, commencing June 4, 2008, if the average Security
Trading Price for the five Trading Day period ending on the third Trading Day
immediately preceding the first day of the applicable Contingent Interest Period
equals $1,200 or more. The amount of contingent interest payable per $1,000
principal amount of Notes in respect of any Contingent Interest Period shall
equal 0.5% per annum. The Company will pay contingent interest, if any, in the
same manner as it will pay interest as described above.

      2.    Method of Payment.

      The Company will pay interest (including contingent interest, if any) on
this Security (except defaulted interest) to the Person who is the registered
Holder of this Security at the close of business on May 15 or November 15, as
the case may be, next preceding the related interest payment date. Subject to
the terms and conditions of the Indenture, the Company will make payments in
respect of the Redemption Price, Purchase Price, Change in Control Purchase
Price and the Principal Amount at Stated Maturity, as the case may be, to the
Holder who surrenders a Security to a Paying Agent to collect such payments in
respect of the Security. The Company will pay cash amounts in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. However, the Company may pay interest (including contingent
interest, if any), the Redemption Price, Purchase Price, Change in Control
Purchase Price and the Principal Amount at Stated Maturity, as the case may be,
by check or wire payable in such money; provided, however, that a Holder holding
Securities with an aggregate Principal Amount in excess of $1,000,000 will be
paid by wire transfer in immediately available funds at the election of such
Holder. The Company may mail an interest check to the Holder's registered
address. Notwithstanding the foregoing, so long as this Security is registered
in the name of a

                                     A-1-4



Depositary or its nominee, all payments hereon shall be made by wire transfer of
immediately available funds to the account of the Depositary or its nominee.

      3.    Paying Agent, Conversion Agent and Registrar.

      Initially, DEUTSCHE BANK TRUST COMPANY AMERICAS (the "TRUSTEE") will act
as Paying Agent, Conversion Agent and Registrar. The Company may appoint and
change any Paying Agent, Conversion Agent or Registrar without notice, other
than notice to the Trustee; provided that the Company will maintain at least one
Paying Agent in the State of New York, City of New York, Borough of Manhattan,
which shall initially be an office or agency of The Trustee. The Company or any
of its Subsidiaries or any of their Affiliates may act as Paying Agent,
Conversion Agent or Registrar.

      4.    Indenture.

      The Company issued the Securities under an Indenture dated as of
August 19, 2003 (the "INDENTURE"), between the Company and the Trustee. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by reference to the Trust Indenture Act of 1939, as in
effect from time to time (the "TIA"). Capitalized terms used herein and not
defined herein have the meanings ascribed thereto in the Indenture. The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture and the TIA for a statement of those terms.

      The Securities are general unsecured obligations of the Company limited to
up to $283,910,000 in aggregate Principal Amount subject to Section 2.07 of the
Indenture. The Indenture does not limit other indebtedness of the Company,
secured or unsecured.

      5.    Redemption at the Option of the Company.

      No sinking fund is provided for the Securities. The Securities are not
redeemable prior to June 11, 2008. Beginning on June 11, 2008 and during the
periods thereafter to maturity, the Securities are redeemable as a whole, or
from time to time in part, in any integral multiple of $1,000, at any time at
the option of the Company at a Redemption Price equal to 100% of the Principal
Amount), together with accrued and unpaid interest (including contingent
interest, if any) thereon, up to but not including the Redemption Date; provided
that, if the Redemption Date is on or after an interest record date but on or
prior to the related interest payment date, interest will be payable to the
Holders in whose names the Securities are registered at the close of business on
the relevant record date.

      6.    Purchase By the Company at the Option of the Holder.

      Subject to the terms and conditions of the Indenture, the Company shall
become obligated to purchase, at the option of the Holder, all or any portion of
the Securities held by such Holder, in any integral multiple of $1,000, on June
4, 2008, June 4, 2013 and June 4, 2018 (each, A "PURCHASE DATE") for cash at a
purchase price per Security equal to 100% of the aggregate Principal Amount of
the Security (the "PURCHASE PRICE"), Together With accrued and unpaid interest
(including contingent interest, if any) thereon, up to but not including the
Purchase Date (provided that, if the Purchase Date is on or after an interest
record date but on or

                                     A-1-5



prior to the related interest payment date, accrued and unpaid interest, if any
(including contingent interest, if any), will be payable to the Holders in whose
names the Securities are registered at the close of business on the relevant
record date) upon delivery of a Purchase Notice containing the information set
forth in the Indenture, together with the Securities subject thereto, at any
time from the opening of business on the date that is 20 Business Days prior to
such Purchase Date until the close of business on the Business Day prior to such
Purchase Date, and upon delivery of the Securities to the Paying Agent by the
Holder as set forth in the Indenture.

      At the option of the Holder and subject to the terms and conditions of the
Indenture, the Company shall become obligated to purchase the Securities held by
such Holder after the occurrence of a Change in Control of the Company for a
Change in Control Purchase Price equal to 100% of the Principal Amount
thereof plus accrued and unpaid interest (including contingent interest, if any)
thereon, up to but not including the Change in Control Purchase Date which
Change in Control Purchase Price shall be paid in cash. Holders have the right
to withdraw any Purchase Notice or Change in Control Purchase Notice, as the
case may be, by delivering to the Paying Agent a written notice of withdrawal in
accordance with the provisions of the Indenture.

      If cash sufficient to pay the Purchase Price or Change in Control Purchase
Price, as the case may be, and accrued and unpaid interest (including contingent
interest, if any) of all Securities or portions thereof to be purchased as of
the Purchase Date or the Change in Control Purchase Date, as the case may be, is
deposited with the Paying Agent on the Business Day following the Purchase Date
or the Change in Control Purchase Date, interest (including contingent interest,
if any) cease to accrue on such Securities (or portions thereof) immediately
after such Purchase Date or Change in Control Purchase Date, and the Holder
thereof shall have no other rights as such other than the right to receive the
Purchase Price or Change in Control Purchase Price, as the case may be, upon
surrender of such Security.

      7.    Notice of Redemption.

      Notice of redemption pursuant to paragraph 5 of this Security will be
mailed at least 30 days but not more than 60 days before the Redemption Date to
each Holder of Securities to be redeemed at the Holder's registered address. If
money sufficient to pay the Redemption Price of all Securities (or portions
thereof) to be redeemed on the Redemption Date is deposited with the Paying
Agent prior to or on the Redemption Date, immediately after such Redemption Date
interest (including contingent interest, if any) cease to accrue on such
Securities or portions thereof. Securities in denominations larger than $1,000
of Principal Amount may be redeemed in part but only in integral multiples
of $1,000 of Principal Amount.

      8.    Conversion.

      Subject to the provisions of Article X of the Indenture, a Holder of a
Note may convert such Note into shares of Class A Common Stock of the Company if
any of the conditions specified in paragraphs (a) through (e) of Section 10.01
of the Indenture is satisfied; provided, however, that if such Note is called
for redemption, the conversion right will terminate at the close of business on
the second Business Day before the redemption date of such Note (unless the
Company shall default in making the redemption payment when due, in which case
the conversion right shall terminate at the close of business on the date such
Default is cured and

                                     A-1-6



such Note is redeemed). The initial conversion price is $77.52 per share,
subject to adjustment under certain circumstances as described in the Indenture
(the "CONVERSION PRICE"). The number of shares issuable upon conversion of a
Note is determined by dividing the principal amount converted by the Conversion
Price in effect on the Conversion Date. In the event of a conversion of a Note
in a Principal Value Conversion the Company has the option to deliver cash
and/or Class A Common Stock to the Holder of the Note surrendered for such
conversion as provided in Section 10.02 of the Indenture. Upon conversion, no
adjustment for interest, if any (including contingent interest, if any), or
dividends will be made. No fractional shares will be issued upon conversion; in
lieu thereof, an amount will be paid in cash based upon the current market price
(as defined in the Indenture) of the Common Stock on the last Trading Day prior
to the date of conversion.

      To convert a Note, a Holder must (a) complete and sign the conversion
notice set forth below and deliver such notice to the Conversion Agent, (b)
surrender the Note to the Conversion Agent, (c) furnish appropriate endorsements
and transfer documents if required by the Registrar or the Conversion Agent, (d)
pay any transfer or similar tax, if required and (e) if the Note is held in
book-entry form, complete and deliver to the Depositary appropriate instructions
pursuant to the Depositary's book-entry conversion programs. If a Holder
surrenders a Note for conversion between the record date for the payment of an
installment of interest and the next interest payment date, the Note must be
accompanied by payment of an amount equal to the interest (including contingent
interest, if any) payable on such interest payment date on the principal amount
of the Note or portion thereof then converted; provided, however, that no such
payment shall be required if such Note has been called for redemption on a
redemption date within the period between and including such record date and
such interest payment date, or if such Note is surrendered for conversion on the
interest payment date. A Holder may convert a portion of a Note equal to $1,000
or any integral multiple thereof.

      A Note in respect of which a Holder has delivered a Purchase Notice or a
Change of Control Repurchase Notice exercising the option of such Holder to
require the Company to repurchase such Note as provided in Section 3.08 or
Section 3.09, respectively, of the Indenture may be converted only if such
notice of exercise is withdrawn as provided above and in accordance with the
terms of the Indenture.

      9.    Denominations; Transfer; Exchange.

      The Securities are in fully registered form, without coupons, in
denominations of $1,000 of Principal Amount and integral multiples of $1,000. A
Holder may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities in respect of which a Purchase Notice or a Change in Control Purchase
Notice has been given and not withdrawn (except, in the case of a Security to be
purchased in part, the portion of the Security not to be purchased) or any
Securities for a period of 15 days before the mailing of a notice of redemption
of Securities to be redeemed.

                                     A-1-7



      10.   Persons Deemed Owners.

      The registered Holder of this Security may be treated as the owner of this
Security for all purposes.

      11.   Unclaimed Money or Securities.

      The Trustee and the Paying Agent shall return to the Company upon written
request any money or securities held by them for the payment of any amount with
respect to the Securities that remains unclaimed for two years, subject to
applicable unclaimed property law. After return to the Company, Holders entitled
to the money or securities must look to the Company, for payment as general
creditors unless an applicable abandoned property law designates another person.

      12.   Amendment; Waiver.

      Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in aggregate Principal Amount of the Securities
at the time outstanding and (ii) certain Defaults may be waived with the written
consent of the Holders of a majority in aggregate Principal Amount of the
Securities at the time outstanding. Subject to certain exceptions set forth in
the Indenture, without the consent of any Securityholder, the Company and the
Trustee may amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency or to make any other changes that do not
adversely affect the rights of any holder, (ii) to comply with Article 5 or
Section 10.01(e) or Section 10.12 of the Indenture, (iii) to evidence and
provide for the acceptance of appointment under the Indenture by a successor
Trustee, or (iv) to comply with the provisions of the TIA, or with any
requirement of the SEC in connection with the qualification of the Indenture
under the TIA.

      13.   Defaults and Remedies.

      Under the Indenture, Events of Default include, in summary form, (i)
default for 30 days in payment of any interest (including contingent interest,
if any) on any Securities after receipt by the Company of a Notice of Default;
(ii) default in payment of the Principal Amount, Redemption Price, Purchase
Price or Change in Control Purchase Price, as the case may be, in respect of the
Securities when the same becomes due and payable; (iii) failure by the Company
to comply with other agreements in the Indenture or the Securities, subject to
notice and lapse of time; (iv) default by the Company in the payment at the
final maturity thereof after the expiration of any applicable grace period, of
principal of indebtedness for money borrowed, other than nonrecourse
indebtedness, in the principal amount then outstanding in excess of $20,000,000,
or acceleration of any indebtedness in such principal amount so that it becomes
due and payable prior to the date on which it would otherwise have become due
and payable and such acceleration is not rescinded within 15 business days after
notice to the Company in accordance with the Indenture; and (v) certain events
of bankruptcy or insolvency.

      Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in

                                     A-1-8



aggregate Principal Amount of the Securities at the time outstanding may direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Securityholders notice of any continuing Default (except a Default in payment
of amounts specified in clause (i) or (ii) above) if it determines that
withholding notice is in their interests.

      14.   Trustee Dealings with the Company.

      Subject to certain limitations imposed by the TIA, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.

      15.   No Recourse Against Others.

      A director, officer, employee or shareholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. By accepting a Security, each
Securityholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Securities.

      16.   Authentication.

      This Security shall not be valid until an authorized signatory of the
Trustee manually signs the Trustee's Certificate of Authentication on the other
side of this Security.

      17.   Abbreviations.

      Customary abbreviations may be used in the name of a Securityholder or an
assignee, such as TEN COM ("TENANTS IN COMMON"), TEN ENT ("TENANTS BY THE
ENTIRETIES"), JT TEN ("JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS
TENANTS IN COMMON"), CUST ("CUSTODIAN") and U/G/M/A ("UNIFORM GIFT TO MINORS
ACT").

      18.   Governing Law.

      THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS
SECURITY.

      The Company will furnish to any Securityholder upon written request and
without charge a copy of the Indenture which has in it the text of this Security
in larger type. Requests may be made to:

            Medicis Pharmaceutical Corporation
            8125 North Hayden Road
            Scottsdale, Arizona 85258-2463
            Attn.:  Chief Financial Officer

                                     A-1-9



________________________________________________________________________________
      ASSIGNMENT FORM                                  CONVERSION NOTICE

To assign this Security, fill in     To convert this Security into Class A
the form below:                      Common Stock of the Company, check the box
                                     [ ]
________________________________________________________________________________
I or we assign and transfer this     To convert only  part of this Security,
Security to                          state the Principal Amount to be converted
__________________________________   (which must be $1,000 or an integral
__________________________________    multiple of $1,000):
(Insert assignee's soc. sec. or
tax ID  no.)
__________________________________   If you want the stock certificate made out
__________________________________   in another person's name fill in the form
__________________________________   below:
(Print or type assignee's name,      ___________________________________________
address and zip code)                ___________________________________________
                                     (Insert the other person's soc. sec. tax
                                      ID no.)
and irrevocably appoint

_______________agent to transfer     ___________________________________________
this Security on the books of the    ___________________________________________
Company. The agent may substitute    ___________________________________________
another to act for him.              ___________________________________________
                                     (Print or type other person's name, address
                                      and zip code)
________________________________________________________________________________

Date:________         Your Signature:___________________________________________
                                     (Sign exactly as your name appears on the
                                     other side of this Security)


Signature Guaranteed

______________________________________
Participant in  a Recognized Signature
Guarantee Medallion Program

By:___________________
     Authorized Signatory

                                    A-1-10



                                   SCHEDULE I
                       MEDICIS PHARMACEUTICAL CORPORATION
                1.5% Contingent convertible Senior notes Due 2033

Date                         Principal Amount                           Notation
                             $283,910,000

                                    A-1-11



                                                                     EXHIBIT A-2

                        [Form of Certificated Security]

      THIS SECURITY WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR U.S. FEDERAL
INCOME TAX PURPOSES. HOLDERS OF THIS SECURITY MAY OBTAIN INFORMATION REGARDING
THE ISSUE PRICE, THE ISSUE DATE, THE COMPARABLE YIELD, THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT, THE YIELD TO MATURITY AND THE PROJECTED PAYMENT SCHEDULE FOR
THIS SECURITY BY SUBMITTING A WRITTEN REQUEST FOR SUCH INFORMATION TO: MEDICIS
PHARMACEUTICAL CORPORATION, 8125 NORTH HAYDEN ROAD, SCOTTSDALE, ARIZONA
85258-2463, ATTN.: VICE PRESIDENT OF FINANCE, SUCH INFORMATION TO BE MADE
AVAILABLE, BEGINNING NO LATER THAN 10 DAYS AFTER THE ISSUE DATE, PROMPTLY UPON
REQUEST.

                                      A-2-1


                       MEDICIS PHARMACEUTICAL CORPORATION

                1.5% Contingent Convertible Senior Notes Due 2033

No.:                                                       CUSIP:

Issue Date:                                                Principal  Amount:

      MEDICIS PHARMACEUTICAL CORPORATION, a Delaware corporation, promises to
pay to__________________________________________________________________________
________________________________________________________________________________
or registered assigns, the Principal Amount of_________________________________,
on June 4, 2033, subject to the further provisions of this Note set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place. This Security is convertible as specified
on the other side of this Security.

      Interest Payment Dates: June 4 and December 4, commencing December 4,
2003,

      Record Dates: May 15 and November 15, commencing November 15, 2003

Dated:

                                         MEDICIS PHARMACEUTICAL
                                         CORPORATION

                                         By:------------------------------------
                                            Name:
                                            Title:

                                      A-2-2



                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

DEUTSCHE BANK TRUST COMPANY AMERICAS, as Trustee, certifies that this is one of
the Securities referred to in the within-mentioned Indenture.

By:-------------------------------
       Authorized Signatory

Dated:

                                     A-2-3



               [FORM OF REVERSE SIDE IS IDENTICAL TO EXHIBIT A-1]

                                      A-2-4

EX-10.1

                                                                    EXHIBIT 10.1

- --------------------------------------------------------------------------------

                            ASSET PURCHASE AGREEMENT

                                      among

                       MEDICIS PHARMACEUTICAL CORPORATION,
                             a Delaware corporation,

                            ASCENT PEDIATRICS, INC.,
                             a Delaware corporation,

                          BIOMARIN PHARMACEUTICAL INC.,
                             a Delaware corporation

                                       and

                            BIOMARIN PEDIATRICS INC.,
                             a Delaware corporation

                          ----------------------------

                           Dated as of April 20, 2004

                           ---------------------------

- --------------------------------------------------------------------------------


                                TABLE OF CONTENTS




                                                                                              PAGE
                                                                                           
1.  PURCHASE AND SALE OF ASSETS; RELATED TRANSACTIONS.....................................      1

    1.1      Sale of Assets...............................................................      1

    1.2      Assignment of Contracts......................................................      2

    1.3      Consideration for the Sale of Acquired Assets................................      2

    1.4      Transition and Supply........................................................      3

    1.5      Closing......................................................................      3

    1.6      Post-Closing Adjusted Acquired Assets Payment Adjustment.....................      4

    1.7      Liability for Taxes..........................................................      5

    1.8      Substitute Arrangements......................................................      5

2.  REPRESENTATIONS AND WARRANTIES OF ASCENT AND MEDICIS..................................      5

    2.1      Due Organization; Foreign Qualifications.....................................      6

    2.2      Authority; Binding Nature of Agreements......................................      6

    2.3      Non Contravention; Consents..................................................      6

    2.4      Financial Information Statement..............................................      7

    2.5      Absence of Changes...........................................................      7

    2.6      Title to Assets..............................................................      8

    2.7      Customers; Distributors......................................................      8

    2.8      Suppliers....................................................................      8

    2.9      Research and Development Activities; FDA.....................................      9

    2.10     Inventory....................................................................      9

    2.11     Equipment, Etc...............................................................      9

    2.12     Intellectual Property........................................................     10

    2.13     Contracts....................................................................     11

    2.14     Liabilities..................................................................     12

    2.15     Compliance with Legal Requirements...........................................     12

    2.16     Governmental Authorizations..................................................     12

    2.17     Tax Matters..................................................................     13

    2.18     Employee and Labor Matters...................................................     14

    2.19     Benefit Plans; ERISA.........................................................     15

    2.20     Insurance....................................................................     16


                                       i


                                TABLE OF CONTENTS
                                  (continued)




                                                                                              PAGE
                                                                                           
    2.21     Proceedings; Orders..........................................................     16

    2.22     Fraudulent Transfers.........................................................     17

    2.23     Investment Banking Fees......................................................     17

3.  REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION...................     17

    3.1      Due Organization.............................................................     17

    3.2      Authority; Binding Nature of Agreements......................................     17

    3.3      Governmental and Other Authorizations........................................     17

    3.4      Non-Contravention............................................................     18

    3.5      Proceedings; Orders..........................................................     18

    3.6      Fraudulent Transfers.........................................................     18

    3.7      Investment Banking Fees......................................................     18

    3.8      Liabilities..................................................................     18

4.  PRE-CLOSING COVENANTS OF ASCENT, MEDICIS, BIOMARIN AND BIOMARIN ACQUISITION...........     18

    4.1      Access and Investigation.....................................................     19

    4.2      Operation of Business........................................................     19

    4.3      Operation of BioMarin Business...............................................     20

5.  OTHER AGREEMENTS......................................................................     21

    5.1      Reasonable Efforts; Filings and Consents.....................................     21

    5.2      Notification.................................................................     21

    5.3      No Solicitation or Negotiation...............................................     21

    5.4      Public Announcements.........................................................     22

    5.5      Further Actions..............................................................     22

    5.6      Employees, Employee Benefit Matters; Non-Solicitation........................     22

    5.7      Confidentiality..............................................................     24

    5.8      Purchase Price Allocation....................................................     24

    5.9      Governmental Authorizations..................................................     24

6.  CONDITIONS PRECEDENT TO BIOMARIN'S AND BIOMARIN ACQUISITION'S OBLIGATION TO CLOSE.....     24


                                       ii



                                TABLE OF CONTENTS
                                  (continued)




                                                                                              PAGE
                                                                                           
    6.1      Accuracy of Representations..................................................     24

    6.2      Governmental Approvals.......................................................     25

    6.3      No Restraints................................................................     25

    6.4      Performance of Obligations...................................................     25

    6.5      Additional Documents.........................................................     25

    6.6      Material Acquired Business Contracts.........................................     26

7.  CONDITIONS PRECEDENT TO MEDICIS' AND ASCENT'S OBLIGATION TO CLOSE.....................     26

    7.1      Accuracy of Representations..................................................     26

    7.2      Consents and Governmental Approvals..........................................     26

    7.3      No Restraints................................................................     26

    7.4      Performance of Obligations...................................................     27

    7.5      Additional Documents.........................................................     27

8.  TERMINATION...........................................................................     27

    8.1      Termination Events...........................................................     27

    8.2      Termination Procedures.......................................................     28

    8.3      Effect of Termination........................................................     28

9.  SURVIVAL AND INDEMNIFICATION..........................................................     28

    9.1      Survival of Representations and Covenants....................................     28

    9.2      Indemnification by Medicis...................................................     29

    9.3      Indemnification by BioMarin..................................................     30

    9.4      Procedures Relating to Indemnification for Third Party Claims................     32

    9.5      Other Claims.................................................................     33

    9.6      Settlements..................................................................     33

    9.7      No Consequential or Punitive Damages.........................................     33

10. MISCELLANEOUS PROVISIONS..............................................................     34

    10.1     Fees and Expenses; Investment Banking Fees...................................     34

    10.2     Attorney's Fees..............................................................     34

    10.3     Notices......................................................................     34

    10.4     Time of the Essence..........................................................     36


                                      iii



                                TABLE OF CONTENTS
                                  (continued)




                                                                                              PAGE
                                                                                           
    10.5     Headings.....................................................................     36

    10.6     Counterparts.................................................................     36

    10.7     Governing Law; Venue.........................................................     36

    10.8     Dispute Resolution Procedures................................................     37

    10.9     Successors and Assigns; Parties In Interest..................................     37

    10.10    Exclusive Remedies; Specific Performance.....................................     38

    10.11    Waiver.......................................................................     38

    10.12    Amendments...................................................................     38

    10.13    Severability.................................................................     38

    10.14    Entire Agreement.............................................................     38

    10.15    Performance Guarantee........................................................     39

    10.16    Construction.................................................................     39

    10.17    Bulk Transfer Laws...........................................................     40

    10.18    NO PROJECTION OR FINANCIAL FORECAST..........................................     40


                                       iv



                            ASSET PURCHASE AGREEMENT

      THIS ASSET PURCHASE AGREEMENT is entered into as of April 20, 2004, by and
among Medicis Pharmaceutical Corporation, a Delaware corporation ("MEDICIS"),
Ascent Pediatrics, Inc., a Delaware corporation ("ASCENT"), BioMarin
Pharmaceutical Inc., a Delaware corporation ("BIOMARIN"), and BioMarin
Pediatrics Inc., a Delaware corporation and wholly-owned subsidiary of BioMarin
("BIOMARIN ACQUISITION"). Capitalized terms used in this Agreement are defined
herein and in EXHIBIT A.

                                    RECITALS

      WHEREAS, Medicis owns, of record and beneficially, all of the issued and
outstanding capital stock of Ascent;

      WHEREAS, Ascent, Medicis and Medicis Manufacturing Corporation, a Delaware
corporation ("MEDICIS MANUFACTURING"), are engaged in the business of making,
manufacturing, marketing, selling, distributing and/or developing ORAPRED(R),
certain oral liquid prednisolone solution products and oral dissolving tablet
prednisolone products (the "PEDIATRICS BUSINESS");

      WHEREAS, each of Ascent, Medicis and Medicis Manufacturing wish to sell
and transfer to BioMarin Acquisition all of its ORAPRED(R) inventory, certain
raw materials and certain other assets used in the production of ORAPRED(R),
subject to the terms and conditions of this Agreement; and

      WHEREAS, BioMarin desires to employ certain employees of Ascent involved
in the marketing, distribution and sale of products in the Pediatrics Business.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:

1.    PURCHASE AND SALE OF ASSETS; RELATED TRANSACTIONS.

      1.1   SALE OF ASSETS. Each of Medicis and Ascent shall, or shall cause
Medicis Manufacturing to, sell, assign, transfer, convey and deliver to BioMarin
Acquisition, at the Closing (as defined below), good and valid title to the
Acquired Assets, free and clear of any Encumbrances other than Permitted
Encumbrances, on the terms and subject to the conditions set forth in this
Agreement, and, at the Closing, BioMarin Acquisition shall purchase the Acquired
Assets. For purposes of this Agreement, "ACQUIRED ASSETS" shall mean and
include:

            (a)   all ORAPRED(R) finished goods inventory (including samples)
owned by Ascent, Medicis or Medicis Manufacturing and all raw materials related
to ORAPRED(R) owned by Ascent, Medicis or Medicis Manufacturing that are subject
to the CIMA Contracts (the "PURCHASED INVENTORY");



            (b)   the equipment, supplies and other tangible assets listed on
Schedule 1.1(b) (the "TANGIBLE ASSETS"), which Tangible Assets are sold "as is,"
"where-is";

            (c)   all advertising and promotional materials, telephone numbers
and other sales-related materials, training materials and customer lists
possessed by Ascent directly related to ORAPRED(R);

            (d)   the Contracts, including any committed but unfilled purchase
orders existing on the Closing Date, listed on Schedule 1.1(d) (the "ACQUIRED
BUSINESS CONTRACTS"); and

            (e)   all copyrights, copyright registrations and applications
therefor and all other rights corresponding thereto throughout the world
currently owned by Medicis or Ascent and embodied in the marketing and sales
materials or training materials specifically directed to ORAPRED(R), including
without limitation the right to create derivative works and compilations
therefrom.

      1.2   ASSIGNMENT OF CONTRACTS.

            (a)   Subject to Section 1.8 and the other terms and conditions of
this Agreement and the need to obtain any required consent from any third party,
as of the Closing Date or such later date as may be specified in the applicable
assignment and assumption agreement with respect to the Lyne Contract, each of
Ascent, Medicis and Medicis Manufacturing, as applicable, will assign and
transfer to BioMarin Acquisition all of its right, title and interest in and to
the Acquired Business Contracts, and BioMarin shall assume all of the Assumed
Liabilities.

            (b)   On the Closing Date, BioMarin shall place a purchase order or
orders with Medicis Manufacturing under the Supply Agreement which orders shall
replicate the then committed but unfilled purchase orders of Medicis
Manufacturing with Lyne Laboratories Inc. Such purchase orders shall be limited
to those purchase orders set forth on Schedule 1.2(b) and those purchase orders
placed by Medics Manufacturing in the Ordinary Course of Business

      1.3   CONSIDERATION FOR THE SALE OF ACQUIRED ASSETS.

            (a)   The aggregate consideration for the Acquired Assets shall be
Seven Hundred Sixty-Five Thousand Five Hundred Eighty-Two Dollars ($765,582), as
adjusted as set forth in subsection (b) below, (as adjusted, the "ADJUSTED
ACQUIRED ASSETS PAYMENT") plus the assumption by BioMarin Acquisition of the
Assumed Liabilities.

            (b)   The parties agree that the Adjusted Acquired Assets Payment
has been adjusted by Seven Hundred Thousand Dollars ($700,000) to account for
the estimated dollar amount for product returns.

            (c)   For purposes of this Agreement, "ASSUMED LIABILITIES" shall
mean only the obligations of Ascent, Medicis or Medicis Manufacturing, as
applicable, under the Acquired Business Contracts listed on Schedule 1.1(d), but
only to the extent such obligations (A) arise after the Closing Date, (B) do not
arise from or relate to any Breach by Ascent, Medicis or

                                       2


Medicis Manufacturing prior to the Closing Date of any provision of any of such
Acquired Business Contracts, (C) do not arise from or relate to any event,
circumstance or condition occurring or existing on or prior to the Closing Date
that, with notice or lapse of time, would constitute or result in a Breach by
Ascent, Medicis or Medicis Manufacturing of any of such Acquired Business
Contracts, and (D) do not arise from the failure to obtain any required Consent
from any third party in connection with the assignment and transfer of such
Acquired Business Contracts to BioMarin Acquisition pursuant to this Agreement.

            (d)   Notwithstanding anything to the contrary contained in this
Agreement, the Assumed Liabilities shall not include, and BioMarin Acquisition
shall not be required to assume, perform or discharge, any other Liability of
Ascent or Medicis or any Liability of any Affiliate of Ascent or Medicis,
including, without limitation, any Liability under the Ascent Merger Agreement
or arising out of, under, or in connection with, the Triumph Proceeding. For
purposes of this Agreement, all Liabilities not expressly described in the
definition of Assumed Liabilities are referred to as "EXCLUDED LIABILITIES."

            (e)   METHOD OF PAYMENT. The Adjusted Acquired Assets Payment shall
be paid on the Closing Date in cash, by wire transfer of immediately available
funds, to an account designated by Ascent not less than five (5) Business Days
prior to the Closing Date.

      1.4   TRANSITION AND SUPPLY.

            (a)   Medicis and Ascent shall provide transition services to
BioMarin and BioMarin Acquisition pursuant to the terms and conditions of a
Transition Services Agreement, substantially in the form attached hereto as
EXHIBIT B (the "TRANSITION SERVICES AGREEMENT"). Notwithstanding anything
contained in this Agreement to the contrary, all Liabilities with respect to
product returns and Medicaid or Medicare reimbursements shall be governed by the
Transition Services Agreement.

            (b)   Medicis Manufacturing shall provide products to BioMarin
Acquisition pursuant to the terms and conditions of a Supply Agreement,
substantially in the form attached hereto as EXHIBIT C (the "SUPPLY AGREEMENT").

      1.5   CLOSING.

            (a)   The closing of the sale of the Acquired Assets to BioMarin
Acquisition (the "CLOSING") shall take place at the offices of Paul, Hastings,
Janofsky & Walker LLP, Twenty-Fourth Floor, 55 Second Street, San Francisco,
California, at 10:00 a.m. on the later of (i) May 7, 2004, or (ii) the second
Business Day after the last of the conditions set forth in Article 6 and Article
7 has been satisfied or waived (except for conditions which by their terms must
be satisfied as of the Closing). For purposes of this Agreement, "CLOSING DATE"
shall mean the date as of which the Closing actually takes place, and "EFFECTIVE
TIME" shall mean the time as of which the Closing actually takes place.

            (b)   At the Closing:

                  (i)   Ascent and Medicis shall execute and deliver or cause
Medicis Manufacturing to execute and deliver to BioMarin Acquisition such bills
of sale, endorsements,

                                       3


assignments and other documents, including the Bill of Sale in the form attached
hereto as EXHIBIT D (the "BILL OF SALE"), as may be reasonably necessary or
appropriate to assign, convey, transfer and deliver to BioMarin Acquisition good
and valid title to the Acquired Assets they own, free and clear of any
Encumbrances other than Permitted Encumbrances; and

                  (ii)  BioMarin Acquisition shall pay to Ascent the Adjusted
Acquired Assets Payment;

                  (iii) BioMarin Acquisition, Ascent and Medicis shall execute
and deliver and Ascent and Medicis shall cause Medicis Manufacturing to execute
and deliver an Assumption Agreement in substantially the form of EXHIBIT E (the
"ASSUMPTION AGREEMENT");

                  (iv)  BioMarin, BioMarin Acquisition, Medicis and Ascent shall
execute and deliver the Transition Services Agreement;

                  (v)   BioMarin Acquisition and Medicis Manufacturing shall
execute and deliver the Supply Agreement;

                  (vi)  Ascent and Medicis shall deliver to BioMarin Acquisition
at its headquarters in Novato, California within two (2) Business Days of the
Closing Date all the assets described in Section 1.1(c); and

                  (vii) BioMarin Acquisition shall cause each of the Business
Employees to return the computers in their possession within five (5) Business
Days after the Closing.

      1.6   POST-CLOSING ADJUSTED ACQUIRED ASSETS PAYMENT ADJUSTMENT.

            (a)   The parties have agreed that the Adjusted Acquired Assets
Payment (without regard to this adjustment contemplated in Section 1.3(b))
includes One Million Three Hundred Thirty Four Thousand Two Hundred Sixty
Dollars ($1,334,260) of Purchased Inventory (the "ESTIMATED INVENTORY VALUE"),
valued at Ascent's or Medicis', as applicable, actual cost for raw materials at
CIMA and carrying cost for finished goods (including samples) for Purchased
Inventory.

            (b)   Within five (5) Business Days after the Closing Date, BioMarin
Acquisition shall deliver to Ascent a statement (the "CLOSING INVENTORY
STATEMENT") prepared by KPMG LLP ("KPMG"), setting forth and certifying the
actual physical count and value of the Purchased Inventory (the "ACTUAL
INVENTORY VALUE") as of the Effective Time based on a physical count conducted
by KPMG and valued at Ascent's or Medicis', as applicable, actual cost for raw
materials at CIMA and carrying cost for finished goods for Purchased Inventory.
Each of BioMarin and Medicis shall have the right to have representatives or
advisers (including accountants) observe the inventory procedures conducted by
KPMG.

            (c)   The determination of KPMG of the Actual Inventory Value
contained in the Closing Inventory Statement shall be final, binding, conclusive
and nonappealable for all purposes under this Agreement. The costs associated
with the performance of the actual physical count and value of the Purchased
Inventory by KPMG shall be borne by BioMarin Acquisition.

                                       4


            (d)   Within twenty (20) days of the final determination of the
Actual Inventory Value as set forth above, the following payments shall be made:
(i) if the Actual Inventory Value is less than the Estimated Inventory Value,
the difference between the Estimated Inventory Value and the Actual Inventory
Value shall be paid in cash by Ascent to BioMarin Acquisition, and (ii) if the
Actual Inventory Value is greater than the Estimated Inventory Value, BioMarin
Acquisition shall pay in cash to Ascent the difference between the Actual
Inventory Value and the Estimated Inventory Value.

            (e)   Promptly following the Closing Date, BioMarin Acquisition
shall use commercially reasonable efforts to obtain a confirmation from each
Business Employee of the amount of samples that such Business Employee held as
of the Closing Date, and BioMarin Acquisition will promptly deliver to Medicis a
confirmation of the total amount of such samples. Within 10 days of providing
such confirmation to Medicis, (i) if the amount of samples reflected in the
notice from BioMarin Acquisition to Medicis is less than samples held by
representatives listed in Part 2.10 in the Ascent Disclosure Schedule, then the
value of such difference (calculated at carrying cost) shall be paid in
immediately available funds by Ascent to BioMarin Acquisition, and (ii) if the
amount of the samples reflect in the notice from BioMarin Acquisition to Medicis
is greater than samples held by representatives listed in Part 2.10 of the
Ascent Disclosure Schedule, then the value of such difference (calculated at
carrying cost) shall be paid in immediately available funds by BioMarin to
Ascent.

      1.7   LIABILITY FOR TAXES. Notwithstanding anything to the contrary
contained herein, each of Medicis and Ascent shall bear and pay, and shall
reimburse BioMarin Acquisition and BioMarin Acquisition's Affiliates for, any
sales taxes, use taxes, transfer taxes, documentary charges, recording fees or
similar taxes, charges, fees or expenses attributable to the transfer of the
Acquired Assets to BioMarin Acquisition. BioMarin Acquisition agrees to timely
sign and deliver such certificates or forms as may be necessary to establish an
exemption from (or otherwise reduce), or make a report with respect to such
taxes, charges, fees or expenses as reasonably requested by Ascent or Medicis.

      1.8   SUBSTITUTE ARRANGEMENTS. Notwithstanding any provision of this
Agreement to the contrary, nothing in this Agreement shall be deemed to
constitute an agreement to assign any claim, Contract, license, lease,
commitment, permit or any right or privilege arising thereunder if an attempted
assignment thereof, without the Consent of any Person, would constitute a Breach
of such Contract. Prior to the Closing, Ascent and Medicis will each use its
commercially reasonable efforts to obtain any Consents or waivers required to
assign to BioMarin Acquisition all rights, benefits and interests under each
Acquired Business Contract that requires the Consent of a third party, without
any material conditions to such transfer or material changes or modifications of
terms thereunder.

2.    REPRESENTATIONS AND WARRANTIES OF ASCENT AND MEDICIS.

      Each of Ascent and Medicis represents and warrants jointly and severally
as of the date of this Agreement and as of the Closing Date, to and for the
benefit of BioMarin and BioMarin Acquisition, that each of the following
representations and warranties is true and correct.

                                       5


      2.1   DUE ORGANIZATION; FOREIGN QUALIFICATIONS. Each of Medicis, Medicis
Manufacturing and Ascent is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Part 2.1 of the Ascent
Disclosure Schedule sets forth each jurisdiction where Ascent is qualified,
authorized, registered or licensed to do business as a foreign corporation.
Medicis Manufacturing is a wholly-owned Subsidiary of Medicis.

      2.2   AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of Ascent, Medicis
Manufacturing and Medicis has all corporate power and authority to enter into
and to perform its obligations under each of the Transaction Agreements to which
it is or will become a party. The execution, delivery and performance by each of
Ascent, Medicis Manufacturing and Medicis of the Transaction Agreements to which
it is a party have been duly authorized by all necessary action on the part of
Ascent, Medicis Manufacturing, Medicis and their stockholders, boards of
directors and officers. Each Transaction Agreement to which Ascent, Medicis
Manufacturing or Medicis is a party, assuming the due authorization, execution
and delivery by the other parties hereto and thereto, constitutes the legal,
valid and binding obligation of Ascent, Medicis Manufacturing or Medicis, as
applicable, enforceable against Ascent, Medicis Manufacturing or Medicis, as
applicable, in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
now or hereinafter in effect relating to creditors' rights generally or to
general principles of equity (the "ENFORCEABILITY EXCEPTION").

      2.3   NON CONTRAVENTION; CONSENTS. The execution and delivery of the
Transaction Agreements, the License Agreement, the Security Agreement and the
Escrow Agreement, and the consummation or performance by Medicis Manufacturing,
Medicis or Ascent, as applicable, of their respective obligations hereunder and
thereunder, do not and will not:

            (a)   contravene, conflict with or result in a violation of any
Legal Requirement or any Order to which Medicis, Medicis Manufacturing, Ascent,
any of the Acquired Assets or any of the Intellectual Property is subject;

            (b)   contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
applicable solely to the Pediatrics Business;

            (c)   contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any (i) loan, credit or note
agreement, mortgage, security agreement, promissory note, license or other
agreement to which Medicis, Medicis Manufacturing or Ascent is bound or
affected, the contravention or conflict with or violation of which would have an
Ascent Material Adverse Effect, or (ii) Material Acquired Business Contract,
subject to obtaining the Consent required thereunder listed on Part 2.3 of the
Ascent Disclosure Schedule;

            (d)   give any Person the right to (i) declare a default or exercise
any remedy under any Material Acquired Business Contract, (ii) accelerate the
maturity or performance of any Material Acquired Business Contract, or (iii)
cancel, terminate or modify any Material

                                       6


Acquired Business Contract, subject in each case to obtaining the Consent
required thereunder listed on Part 2.3 of the Ascent Disclosure Schedule;

            (e)   result in the imposition or creation of any Encumbrance upon
or with respect to any of the Acquired Assets or the Intellectual Property,
other than Permitted Encumbrances; or

            (f)   contravene or conflict with the certificate of incorporation
or bylaws of Medicis, Medicis Manufacturing or Ascent.

      Except as set forth on Part 2.3 of the Ascent Disclosure Schedule and
except with respect to the Acquired Business Contracts that are not required to
be listed in Part 2.13(a) of the Ascent Disclosure Schedule, no filing with or
notice to, or Consent from, any Person is or will be required in connection with
the execution and delivery of any of the Transaction Agreements or the
consummation or performance of any of the Transactions.

      2.4   FINANCIAL INFORMATION STATEMENT.

            (a)   Ascent has delivered to BioMarin Acquisition the Schedule of
the "Net Sales," "Cost of Sales," "Gross Profit," "Personnel," "Promotion,"
"Professional," "Travel and Entertainment" and "Other" and "Orapred
Contribution" items with respect to the ORAPRED(R) product for Ascent's fiscal
year ended June 30, 2003 and for Ascent's nine months ended March 31, 2004 as
Part 2.4(a) of the Ascent Disclosure Schedule.

            (b)   The Schedule contained in Part 2.4(a) of the Ascent Disclosure
Schedule is accurate and complete in all material respects.

      2.5   ABSENCE OF CHANGES. Since December 31, 2003:

            (a)   no event has occurred that would reasonably be expected to
have an Ascent Material Adverse Effect;

            (b)   Ascent has not sold or otherwise transferred, or leased or
licensed, any portion of the Acquired Assets or any of the Intellectual Property
to any other Person, except for sales of inventory in the Ordinary Course of
Business;

            (c)   Ascent has not forgiven any debt or otherwise released or
waived any right or claim related to the Pediatrics Business, the Acquired
Assets or the Intellectual Property that individually or in the aggregate would
reasonably be expected to have an Ascent Material Adverse Effect;

            (d)   neither Ascent nor Medicis has entered into any transaction or
taken any material action, in each case related to the Pediatrics Business,
other than in the Ordinary Course of Business; and

            (e)   except as set forth on Part 2.5(e) of the Ascent Disclosure
Schedule, neither Ascent, Medicis Manufacturing nor Medicis has agreed,
committed (in writing or otherwise) to take any of the actions referred to in
clauses "(b)" through "(d)" above.

                                       7


      2.6   TITLE TO ASSETS.

            (a)   Ascent, Medicis Manufacturing or Medicis, as applicable, has
good and valid title to all of the Acquired Assets. Except as set forth in Part
2.6(a) of the Ascent Disclosure Schedule, none of the Acquired Assets is subject
to any Encumbrance other than Permitted Encumbrances. As of the Effective Time,
none of the Acquired Assets will be subject to any Encumbrance other than
Permitted Encumbrances.

            (b)   Except as provided in Section 2.6(a), the Tangible Assets are
sold "as is, where is". The representations and warranties set forth in this
Section 2.6 are exclusive and in lieu of all other warranties of Medicis or
Ascent, whether written, oral or implied regarding the Tangible Assets. Medicis
or Ascent shall not, by virtue of having sold the Tangible Assets, be deemed to
have made any other representation or warranty with respect to the Tangible
Assets, including, but not limited to, any representation or warranty as to the
merchantability, fitness for any use, design, condition, value or operation, as
to the absence of any obligations based on strict liability in tort or as to the
quality of the material or workmanship or the absence of any latent, inherent or
other defect in the Tangible Assets or any part thereof, infringement of any
patent, trademark or copyright, compliance of the Tangible Assets or any part
thereof with any applicable laws or regulations or any other matter, whether
similar or dissimilar to the foregoing, and that neither BioMarin nor BioMarin
Acquisition has relied on any representation or warranty not set forth herein
with respect to the Tangible Assets.

            (c)   The Acquired Assets and the Intellectual Property, together
with BioMarin Acquisition's rights under this Agreement, the License Agreement
and the Supply Agreement, constitute all the tangible assets and intellectual
property rights necessary, in all material respects, to market, sell and
manufacture ORAPRED(R) (as supported by the Transition Services Agreement) as
conducted on the date hereof and on the Closing Date.

            (d)   None of Medicis, Medicis Manufacturing, Ascent or any of their
Affiliates has any agreement, absolute or contingent, written or oral, with any
other Person to effect any Acquisition Transaction or to sell or otherwise
transfer any of the Acquired Assets, except for sales of inventory in the
Ordinary Course of Business.

      2.7   CUSTOMERS; DISTRIBUTORS. Part 2.7 of the Ascent Disclosure Schedule
provides an accurate and complete list of the revenues received from each Person
that accounted for more than 5% of the gross revenues of the Pediatrics Business
in fiscal 2003 or during the nine month period ended March 31, 2004. To the
Knowledge of Medicis and Ascent, neither Medicis, Medicis Manufacturing nor
Ascent has received any notice or other communication (in writing or otherwise),
or any other information, indicating that any distributor of any of the Products
intends to cease acting as a distributor of such Products or otherwise dealing
with Ascent or Medicis.

      2.8   SUPPLIERS. Part 2.8 of the Ascent Disclosure Schedule accurately
identifies and provides an accurate and complete list of each supplier of
materials or services to Ascent, Medicis Manufacturing or Medicis in connection
with the Pediatrics Business to which Ascent, Medicis Manufacturing or Medicis
paid in excess of $10,000 during fiscal 2003 and the nine month period ended
March 31, 2004. To the Knowledge of Medicis and Ascent, neither Ascent,

                                       8


Medicis Manufacturing nor Medicis has received any notice or other communication
(in writing or otherwise), or any other information, indicating that any such
supplier identified in Part 2.8 of the Ascent Disclosure Schedule intends to
cease dealing with Ascent, Medicis Manufacturing or Medicis.

      2.9   RESEARCH AND DEVELOPMENT ACTIVITIES; FDA.

            (a)   Since November 15, 2001, neither Ascent nor any of its
Representatives has received any written notices or correspondence from the
United States Food and Drug Administration (the "FDA") or any other Governmental
Body requiring the delay, termination, or suspension of any clinical trials
conducted by or on behalf of Ascent or in which Ascent has participated, or any
disqualification of testing facilities used by Ascent. To the Knowledge of
Ascent and Medicis, since November 15, 2001, no clinical investigator acting for
Ascent has been, is or is threatened to become, the subject of any disbarment or
disqualification proceedings by any regulatory agency or has been terminated or
threatened to be terminated from any such investigation.

            (b)   Ascent's activities related to research, development,
manufacture, testing, distribution, holding, sales or marketing of each product
or product candidate subject to the jurisdiction of the FDA under the Federal
Food, Drug and Cosmetics Act (the "FDCA") relating to the Pediatrics Business
are in compliance in all material respects with all applicable requirements
under the FDCA and any other applicable Legal Requirements including, (i)
applicable Legal Requirements relating to good manufacturing practices,
labeling, advertising, record keeping or filing of reports including 21 CFR Part
203 (Prescription Drug Marketing Act), or (ii) applicable Legal Requirements
relating to sponsor obligations for products under an investigational new drug
application, a new drug application or an abbreviated new drug application.

            (c)   Except as set forth in Part 2.9(c) of the Ascent Disclosure
Schedule, Ascent has, prior to the execution of this Agreement, made available
to BioMarin Acquisition copies of all documents in its possession material to
assessing compliance of Ascent relating to the Pediatrics Business since
November 15, 2001 with the FDCA and its implementing regulations, including
copies of (i) all warning letters, notices of adverse findings and similar
correspondence received since November 15, 2001, and (ii) any document
concerning any significant oral or written communication received from the FDA
since November 15, 2001.

      2.10  INVENTORY. Part 2.10 of the Ascent Disclosure Schedule provides an
accurate and complete breakdown of (i) all of the ORAPRED(R) finished goods
inventory (including samples) that was owned by Ascent, Medicis or Medicis
Manufacturing as of April 18, 2004, and (ii) all raw materials related to
ORAPRED(R) that was owned by Ascent, Medicis or Medicis Manufacturing that were
subject to the CIMA Contracts as of April 18, 2004, in each case including
Ascent's or Medicis', as applicable, actual cost for raw materials and carrying
cost for finished goods. All of the Purchased Inventory (a) is of such quality
as to be usable and saleable in the Ordinary Course of Business, and (b) is free
of any material defect or deficiency.

      2.11  EQUIPMENT, ETC. Part 2.11 of the Ascent Disclosure Schedule
accurately identifies all material equipment owned or used by Medicis solely in
the Pediatrics Business or

                                       9


owned or used by Ascent, and accurately sets forth the original cost and
carrying cost of each such asset owned by Ascent or Medicis.

      2.12  INTELLECTUAL PROPERTY.

            (a)   Ascent is the sole and exclusive owner or has authority to
license and/or sell the Intellectual Property and the Development Technology;

            (b)   Except as identified in Part 2.12(b) of the Ascent Disclosure
Schedule, Ascent has the right, power and authority to grant licenses under the
Intellectual Property and the Development Technology to BioMarin Acquisition in
accordance with the terms and conditions of the License Agreement, free and
clear of any Encumbrances, other than the Lyne License, the Supply Agreement and
Permitted Liens;

            (c)   Ascent has not specifically admitted that any claim of an
issued and unexpired patent or pending patent application included within the
Taste Masking Related Patents is invalid or unenforceable through reissue or
disclaimer (other than to the extent that any terminal disclaimer has been
filed);

            (d)   (i) neither Ascent nor its Affiliates has granted to any third
party or Affiliate any rights or licenses or has otherwise taken any action that
materially and adversely affects the rights and licenses granted to BioMarin
Acquisition under the License Agreement and (ii) neither Ascent nor its
Affiliates has granted to any third party or Affiliate any rights or licenses
that conflict with or materially and adversely affects the rights and licenses
granted to BioMarin Acquisition under the License Agreement;

            (e)   To Ascent's and Medicis' Knowledge, the issued Taste Masking
Related Patents are valid and enforceable and the manufacture, development,
marketing, distribution, importation, sale, offer for sale, disposition or use
of ORAPRED(R) as carried out by Ascent or its Affiliates immediately prior to
the Effective Time does not and will not infringe any patent rights, trade
secrets or other industrial or intellectual property rights of any third party
or Affiliate of Ascent, excluding any Medicis corporate identifier or mark used
therewith;

            (f)   To Ascent's and Medicis' Knowledge, (i) no issued patent or
patent application within the Taste Masking Related Patents or (ii) except as
identified in Part 2.12(b) of the Ascent Disclosure Schedule, Trademark is
involved in or is threatened to be involved in, any court proceeding,
arbitration, interference, reissue, re-examination or opposition;

            (g)   Except as identified in Part 2.12(b) of the Ascent Disclosure
Schedule, there are no claims, judgments or settlements, either actual or, to
Ascent's and Medicis' Knowledge, threatened, relating to the Taste Masking
Related Patents, Trademarks and/or the Know-How;

            (h)   Except as identified in Part 2.12(b) of the Ascent Disclosure
Schedule, since November 15, 2001, to Ascent's and Medicis' Knowledge, no Person
has infringed or misappropriated, and no Person is currently infringing or
misappropriating, any Technology or Trademark;

                                       10


            (i)   Except as identified in Part 2.12(i) of the Ascent Disclosure
Schedule, to Ascent's and Medicis' Knowledge, all filings and registrations
related to the Trademarks are in good standing and all maintenance and renewal
fees necessary to preserve the rights of Ascent in respect of the Trademarks
have been paid;

            (j)   As of the Effective Date, to Ascent's and Medicis' Knowledge,
since November 15, 2001, there has been (a) no misappropriation of any material
trade secrets used in connection with the Pediatrics Business, (b) no current
employee, independent contractor or agent of Ascent or Medicis employed in the
Pediatrics Business has misappropriated any material trade secrets of any other
Person in the course of the performance of its duties as an employee,
independent contractor or agent of Ascent or Medicis employed in the Pediatrics
Business, and (c) no current employee, independent contractor or agent of Ascent
or Medicis is in default or breach of any non-disclosure agreement, assignment
of invention agreement or similar agreement or contract regarding the
protection, ownership, development, use or transfer of the Intellectual
Property;

            (k)   Ascent has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of its material trade secrets
related to the Pediatrics Business; and

            (l)   Each current employee and current independent contractor of
Ascent or Medicis who contributed to the conception or development of the Taste
Masking Related Patents and Development Patents has executed a valid and binding
assignment to Ascent or Medicis of all rights they may hold therein.

      2.13  CONTRACTS.

            (a)   Part 2.13(a) of the Ascent Disclosure Schedule identifies each
material Contract to which Ascent, Medicis or Medicis Manufacturing is a party
and used in the Pediatrics Business (each a "BUSINESS CONTRACT" and collectively
the "BUSINESS CONTRACTS"). Ascent and Medicis have delivered or made available
to BioMarin Acquisition accurate and complete copies of all Business Contracts,
including all amendments thereto. No Acquired Business Contract is oral. Each
Material Acquired Business Contract is valid and in full force and effect and is
enforceable against Ascent, Medicis or Medicis Manufacturing and, to the
Knowledge of Medicis and Ascent, on the other parties thereto (subject, in each
case, to the Enforceability Exception) in accordance with its terms.

            (b)   Neither Medicis, Medicis Manufacturing nor Ascent has
materially violated or breached or declared or committed any material default
under any Acquired Business Contract. To the Knowledge of Medicis and Ascent, no
Person (not including Medicis, Medicis Manufacturing and Ascent) has violated or
breached in any material way, or declared or committed any material default
under, any Acquired Business Contract and to the Knowledge of Medicis and Ascent
no event has occurred, and no circumstance or condition exists, that might (with
or without notice or lapse of time): (i) result in a violation or breach of any
provisions of any Acquired Business Contract, (ii) give any Person the right to
declare a default or exercise any remedy under any Acquired Business Contract,
(iii) give any Person the right to accelerate the maturity or performance of any
Acquired Business Contract, or (iv) give any Person the right

                                       11


to cancel, terminate or modify any Acquired Business Contract. To the Knowledge
of Medicis and Ascent, neither Medicis, Medicis Manufacturing nor Ascent has
received any notice or other communication (in writing or otherwise) regarding
any actual or alleged violation or breach of, or default under, any Acquired
Business Contract. Neither Medicis, Medicis Manufacturing nor Ascent has waived
any material right under any Acquired Business Contract.

            (c)   The assignment to BioMarin Acquisition and assumption by
BioMarin Acquisition of each Material Acquired Business Contract and, to the
Knowledge of Medicis and Ascent, each Acquired Business Contract which is not a
Material Acquired Business Contract requires the Consent of any third party to
such Contract.

      2.14  LIABILITIES. Neither Medicis, Medicis Manufacturing nor Ascent has,
since November 15, 2001, (i) made a general assignment for the benefit of
creditors, (ii) filed, or had filed against it, any bankruptcy petition or
similar filing, (iii) suffered the attachment or other judicial seizure of all
or a substantial portion of its assets, (iv) admitted in writing its inability
to pay its debts as they become due, (v) been convicted of, or pleaded guilty or
no contest to, any felony, or (vi) taken or been the subject of any action that
may have an adverse effect on its ability to comply with or perform any of its
covenants or obligations under any of the Transaction Agreements.

      2.15  COMPLIANCE WITH LEGAL REQUIREMENTS. Each of Medicis, Medicis
Manufacturing and Ascent is in compliance with each Legal Requirement that is
applicable to the conduct of the Pediatrics Business or the ownership or use of
any of the Acquired Assets or the Intellectual Property, except to the extent
any such noncompliance, individually or in the aggregate, would not reasonably
be expected to have an Ascent Material Adverse Effect. To the Knowledge of
Medicis and Ascent, no event has occurred, and no condition or circumstance
exists, that could (with or without notice or lapse of time) constitute or
result in a violation by Medicis, Medicis Manufacturing or Ascent of, or a
failure on the part of Medicis, Medicis Manufacturing or Ascent to comply with,
any Legal Requirement, except to the extent any such noncompliance, individually
or in the aggregate, would not reasonably be expected to have an Ascent Material
Adverse Effect. Neither Medicis, Medicis Manufacturing nor Ascent has received
any notice or other communication (in writing or otherwise) from any
Governmental Body or any other Person regarding any actual or alleged violation
of, or failure to comply with, any Legal Requirement that would reasonably be
expected to have an Ascent Material Adverse Effect.

      2.16  GOVERNMENTAL AUTHORIZATIONS. Part 2.16 of the Ascent Disclosure
Schedule identifies each material Governmental Authorization that is held by
Medicis or Medicis Manufacturing and related solely to the Pediatrics Business
or held by Ascent. Ascent, Medicis Manufacturing and Medicis have delivered to
BioMarin Acquisition accurate and complete copies of such Governmental
Authorizations, including all renewals thereof and all amendments thereto.
Neither Medicis, Medicis Manufacturing nor Ascent has received any notice or
other communication (in writing or otherwise) from any Person regarding (a) any
actual, alleged or potential violation of or failure to comply with any term or
requirement of any such Governmental Authorization or (b) any actual, proposed
or potential revocation, withdrawal, suspension, cancellation, termination or
modification of any such Governmental Authorization.

                                       12


      2.17  TAX MATTERS.

            (a)   All material Tax Returns required to be filed by or on behalf
of Medicis or Medicis Manufacturing with respect to the Pediatrics Business or
Ascent with any Governmental Body with respect to any taxable period ending on
or before the Closing Date (the "PEDIATRICS BUSINESS RETURNS") have been or will
be filed on or before the applicable due date (including any extensions of such
due date). The information contained in such Tax Returns is accurate and
complete in all material respects. All amounts shown on the Pediatrics Business
Returns to be due on or before the Closing Date have been or will be paid on or
before the Closing Date. Ascent and Medicis have delivered to (or made available
for inspection by) BioMarin Acquisition accurate and complete copies of all
material Pediatrics Business Returns that have been filed by or on behalf of
Ascent since December 31, 2002.

            (b)   There are no unsatisfied liabilities for material Taxes
(including liabilities for interest, additions to tax and penalties thereon and
related expenses) with respect to any notice of deficiency or similar document
received by Medicis or Medicis Manufacturing in connection with the Pediatrics
Business or Ascent with respect to any material Tax (other than liabilities for
Taxes asserted under any such notice of deficiency or similar document which are
being contested in good faith by Medicis, Medicis Manufacturing or Ascent and
with respect to which adequate reserves for payment have been established).
There are no liens for Taxes upon any of the Acquired Assets or the Intellectual
Property except liens for current Taxes not yet due and payable. No extension or
waiver of the limitation period applicable to any of the Pediatrics Business
Returns has been granted (by Medicis, Medicis Manufacturing or Ascent or any
other Person), and no such extension or waiver has been requested from Medicis,
Medicis Manufacturing or Ascent other than an extension resulting from the
filing of a Tax Return after its due date in the Ordinary Course of Business.
Neither Medicis, Medicis Manufacturing nor Ascent has entered into a closing
agreement pursuant to Section 7121 of the Code, or any predecessor provisions
thereof or any similar provision of state or other law. No claim or Proceeding
is pending or, to Medicis' and Ascent's Knowledge, has been threatened against
or with respect to Medicis or Medicis Manufacturing in connection with the
Pediatrics Business or Ascent in respect of any material Tax.

            (c)   Except as set forth in Part 2.17 of the Ascent Disclosure
Schedule, no powers of attorney or other authorizations are in effect that grant
to any Person the authority to represent Medicis with respect to the Pediatrics
Business or Ascent in connection with any Tax matter or Proceeding.

            (d)   Medicis and Medicis Manufacturing with respect to the
Pediatrics Business and Ascent have properly withheld and paid all material
Taxes required to be withheld and paid in connection with any amounts paid or
owing to any employee, independent contractor, creditor, stockholder or other
third party.

            (e)   None of the Acquired Assets or the Intellectual Property are
subject to, or constitute, a safe harbor lease within the meaning of former
Section 168(f) of the Code.

            (f)   There is no proposal for increasing the assessed value of any
of the Acquired Assets or the Intellectual Property for Tax purposes and there
are no pending

                                       13


Proceedings or public improvements which would result in the levy of any
material special Tax or assessment against any of such assets.

            (g)   Neither Medicis, Medicis Manufacturing nor Ascent is a
"foreign person" within the meaning of Section 1445 of the Code.

            (h)   Neither Medicis, Medicis Manufacturing nor Ascent has been, a
"reporting corporation" subject to the information and reporting and record
maintenance requirements of Section 6038A and the regulations thereunder.

      2.18  EMPLOYEE AND LABOR MATTERS.

            (a)   Part 2.18(a) of the Ascent Disclosure Schedule accurately sets
forth, with respect to each field sales force employee of Ascent whose services
are related to the Pediatrics Business (including any employee who is on a leave
of absence or on layoff status) (such individuals, collectively, "BUSINESS
EMPLOYEES"): the name, title and date of hire of such employee. Medicis and
Ascent have delivered to BioMarin pursuant to written communications dated April
8, 2004 and April 14, 2004: (i) the aggregate dollar amounts of the compensation
(including wages, salary, commissions, director's fees, fringe benefits,
bonuses, profit sharing payments and other payments or benefits of any type)
paid or payable to such employee from Ascent with respect to services performed
in fiscal 2003 and with respect to services performed in fiscal 2004, through
March 31, 2004; (ii) such employee's annualized compensation as of the date of
this Agreement; and (iii) with respect to each such employee on a leave of
absence, whether the leave was approved by Ascent and, if so, the date of
commencement thereof and the scheduled termination date thereof, if any. Since
March 31, 2004, there has been no change in the base compensation amounts per
Business Employee contained in the April 2004 communications described above or
in the bonuses payable to such Business Employees other than normal fluctuations
associated with quarter to quarter bonuses.

            (b)   Ascent is not a party to or bound by and since November 15,
2001 has not been a party to or bound by any union contract, collective
bargaining agreement or similar Contract related to any Business Employee or the
Pediatrics Business. Part 2.18(b) of the Ascent Disclosure Schedule identifies
each employment contract between Ascent and a Business Employee. Except as set
forth on Part 2.18(b) of the Ascent Disclosure Schedule, Ascent is not a party
to any agreement for the provision of labor from any outside agency.

            (c)   Except as otherwise disclosed on Part 2.18(c) of the Ascent
Disclosure Schedule, the employment of the Business Employees is terminable by
Ascent at will and no employee is entitled to severance pay or other benefits
(including acceleration of stock options or other stock acquisition rights)
following termination or resignation. Ascent has delivered or made available to
BioMarin Acquisition accurate and complete copies of all employee manuals and
handbooks, disclosure materials, policy statements and documents used by Medicis
or Ascent in the administration of personnel policies and other documents
relating to the employment of (or benefits available to) the current Business
Employees.

            (d)   Except as set forth in Part 2.18(d) of the Ascent Disclosure
Schedule, to the Knowledge of Ascent and Medicis: (i) no Business Employee
intends to terminate his or her

                                       14


employment; (ii) no Business Employee is a party to or is bound by any
confidentiality agreement, noncompetition agreement or other Contract (with
Ascent and/or Medicis) that may have an adverse effect on the performance by
such employee of any of his duties or responsibilities as an employee of Ascent
or as an employee of BioMarin; and (iii) no Business Employee has received a
written offer from Medicis or any of its Subsidiaries to transfer to Medicis'
other businesses, Subsidiaries or Affiliates.

            (e)   (i) Neither Ascent with respect to any of its employees nor
Medicis with respect to the Pediatrics Business or the Business Employees, have
been found to have engaged in any unfair labor practice by the National Labor
Relations Board, (ii) since November 15, 2001 there has not been any slowdown,
work stoppage, labor dispute or union organizing activity involving any Business
Employee and, to the Knowledge of Ascent and Medicis, no Person or union has
threatened to commence any such slowdown, work stoppage, labor dispute or union
organizing activity, (iii) to the Knowledge of Ascent and Medicis, no officer or
employee of Medicis or Ascent is obligated under any Contract or subject to any
Order or Legal Requirement that would interfere with the Pediatrics Business as
currently conducted or proposed to be conducted, and (iv) neither the execution
nor delivery of this Agreement, nor the carrying on of the Pediatrics Business
as presently conducted nor to the Knowledge of Medicis and Ascent any activity
of any officer of Medicis or Ascent or any Business Employee will conflict with
or result in a breach of the terms, conditions or provisions of, constitute a
default under, or trigger a condition precedent to any rights under any Contract
or Employee Benefit Plan.

            (f)   Part 2.18(f) of the Ascent Disclosure Schedule sets forth the
name of, and a general description of the services performed by, each
independent contractor to whom Ascent has paid or owes amounts exceeding $35,000
in the aggregate for personal services in the past 12 months.

            (g)   Ascent has not incurred any liability under the Worker
Adjustment Retraining and Notification Act (the "WARN ACT") (29 USC Sections
2101, et seq.) or any similar state law or statute relating to employment
termination in connection with a mass layoff, plant closing or similar event
(such as California Labor Code Section 1400, et seq.), in the six months
preceding the Closing Date, and the transactions contemplated hereby will not
give rise to any such liability. Ascent has complied in all material respects
with all Legal Requirements related to the employment of the Business Employees.

      2.19  BENEFIT PLANS; ERISA.

            (a)   Part 2.19(a) of the Ascent Disclosure Schedule identifies each
Employee Benefit Plan maintained or contributed to or required to be contributed
to by Medicis, Ascent or any of their respective Affiliates with respect to any
Business Employee or the Pediatrics Business ("BUSINESS EMPLOYEE BENEFITS
PLAN"). Each Employee Benefit Plan is in writing.

            (b)   Neither Medicis, Ascent nor any of their Affiliates (nor any
ERISA Affiliates) has any liability with respect to any Employee Benefit Plan
that, and since November 15, 2001, neither Medicis, Ascent, nor any of their
Affiliates (nor any ERISA Affiliates) have established, adopted, maintained,
sponsored, contributed to, had any obligation to contribute to, participated in,
or incurred any Liability with respect to any Employee Benefit Plan that: (i) is
or

                                       15


was a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA; (ii) is or
was a "multiple employer plan" (within the meaning of the Code or ERISA); (iii)
is or was subject to Section 412 of the Code or Section 302 or Title IV of
ERISA. No Business Employee Benefit Plan provides for post-employment health or
welfare benefits (except as required by Code Section 4980B).

            (c)   Ascent has made available or caused to be delivered to
BioMarin Acquisition with respect to each Business Employee Benefits Plan: (i)
an accurate and complete copy of such plan and all amendments thereto (including
any amendment that is scheduled to take effect in the future); (ii) an accurate
and complete copy of each Contract (including any trust agreement, funding
agreement, service provider agreement, insurance agreement, investment
management agreement or recordkeeping agreement) relating to such plan; (iii) an
accurate and complete copy of any description, summary, notification, report or
other document that has been furnished to any employee of Ascent with respect to
such plan; (iv) an accurate and complete copy of any form, report, registration
statement or other document that has been filed with or submitted to any
Governmental Body with respect to such plan; and (v) an accurate and complete
copy of any determination letter, notice or other document that has been issued
by, or that has been received by Medicis or Ascent from, any Governmental Body
with respect to such plan.

            (d)   With respect to any Group Health Plan (as defined in Section
5000(b)(1) of the Code) maintained by Ascent, Ascent and each such Group Health
Plan have complied in all material respects with the provisions of Part 6 of
Title I of ERISA and Sections 4980B ("COBRA"), 9801 and 9802 of the Code.

      2.20  INSURANCE.

            (a)   Part 2.20(a) of the Ascent Disclosure Schedule accurately sets
forth, with respect to each material insurance policy maintained by or at the
expense of, or for the direct or indirect benefit of, the Pediatrics Business:
(i) the name of the insurance carrier that issued such policy; and (ii) a
description of the type of coverage provided by such policy

            (b)   Part 2.20(b) of the Ascent Disclosure Schedule identifies each
insurance claim made by Medicis or Medicis Manufacturing in connection with the
Pediatrics Business or Ascent since December 31, 2002. To the Knowledge of
Medicis and Ascent, no event has occurred, and no condition or circumstance
exists, that would (with or without notice or lapse of time) give rise to or
serve as a basis for any insurance claim.

      2.21  PROCEEDINGS; ORDERS. Except as set forth in Part 2.21 (items 1-6) of
the Ascent Disclosure Schedule, there is no pending Proceeding, and to the
Knowledge of Ascent and Medicis, no Person has threatened to commence any
Proceeding involving (a) Ascent, the Acquired Assets or the Intellectual
Property, or (b) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, any of the transactions
contemplated hereby. To the Knowledge of Ascent and Medicis, no event has
occurred, and no claim, dispute or except as set forth in Part 2.21 (item 7) of
the Ascent Disclosure Schedule, other condition or circumstance exists, that
would give rise to or serve as a basis for the commencement of any such
Proceeding. Medicis and Ascent have delivered or made available to BioMarin
Acquisition accurate and complete copies of all pleadings (to which Medicis or

                                       16


Ascent has access) that relate to the Proceedings identified in Part 2.21 of the
Ascent Disclosure Schedule. To the Knowledge of Ascent and Medicis, there is no
Order to which Ascent or any of the Acquired Assets, the Intellectual Property
or the Pediatrics Business is subject. To the Knowledge of Ascent and Medicis,
no Business Employee of Ascent is subject to any Order that may prohibit such
Business Employee from engaging in or continuing any conduct, activity or
practice relating to the Pediatrics Business.

      2.22  FRAUDULENT TRANSFERS. Neither Medicis, Medicis Manufacturing nor
Ascent is insolvent, nor will be rendered insolvent by any of the Transactions.
Immediately after consummation of the transactions contemplated hereby, (i) each
of Medicis, Medicis Manufacturing and Ascent will be able to pay its debts as
they become due; (ii) neither Medicis, Medicis Manufacturing nor Ascent will
have unreasonably small assets with which to conduct its present or proposed
business. As used in this Section 2.22, "insolvent" means that the sum of the
Person's assets does not and will not exceed its debts and other liabilities at
a fair valuation.

      2.23  INVESTMENT BANKING FEES. Neither Medicis, Ascent nor any of their
Affiliates has incurred any investment banking, broker or finder fees that will
become the responsibility of BioMarin or BioMarin Acquisition before or after
the Effective Time.

3.    REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION.

      Each of BioMarin and BioMarin Acquisition represents and warrants jointly
and severally as of the date of this Agreement and as of the Closing Date, to
and for the benefit of Medicis and Ascent, that each of the following
representations and warranties is true and correct.

      3.1   DUE ORGANIZATION. Each of BioMarin and BioMarin Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.

      3.2   AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of BioMarin and
BioMarin Acquisition has all corporate power and authority to enter into and
perform its obligations under each of the Transaction Agreements to which it is
or will become a party. The execution, delivery and performance by each of
BioMarin and BioMarin Acquisition of the Transaction Agreements to which it is a
party have been duly authorized by all necessary action on the part of BioMarin
and BioMarin Acquisition and their stockholders, boards of directors and
officers. Each Transaction Agreement to which BioMarin or BioMarin Acquisition
is a party, assuming the due authorization, execution and delivery by the other
parties hereto and thereto, constitutes the legal, valid and binding obligation
of BioMarin or BioMarin Acquisition, as applicable, enforceable against BioMarin
or BioMarin Acquisition, as applicable, in accordance with its terms, subject to
the Enforceability Exception.

      3.3   GOVERNMENTAL AND OTHER AUTHORIZATIONS. The execution and delivery of
the Transaction Agreements and the consummation or performance by BioMarin or
BioMarin Acquisition, as applicable, of their respective obligations hereunder
and thereunder, do not and will not require any approval of any Governmental
Body on the part of BioMarin or BioMarin Acquisition or any material consent,
waiver or approval of any other Person on the part of

                                       17


BioMarin or BioMarin Acquisition, other than the filing of a report and
notification pursuant to the HSR Act and the expiration of all waiting periods
thereunder.

      3.4   NON-CONTRAVENTION. The execution and delivery of the Transaction
Agreements, License Agreement, Security Agreement and Escrow Agreement and the
consummation or performance by BioMarin or BioMarin Acquisition, as applicable,
of their respective obligations hereunder and thereunder, do not and will not
(a) contravene, conflict with or result in a violation or breach of, or result
in a default under, any provision of any loan, credit or note agreement,
mortgage, security agreement, promissory note, license, contract or other
agreement to which BioMarin or BioMarin Acquisition is bound or affected, the
contravention or conflict with or violation of which would have a BioMarin
Material Adverse Effect, (b) contravene or conflict with the certificate of
incorporation or bylaws of BioMarin or BioMarin Acquisition, or (c) contravene,
conflict with or result in a violation of, any Legal Requirement or any Order to
which BioMarin, BioMarin Acquisition, or any of the assets of BioMarin or
BioMarin Acquisition, is subject.

      3.5   PROCEEDINGS; ORDERS. There is no pending Proceeding, and to the
Knowledge of BioMarin or BioMarin Acquisition, no Person has threatened to
commence any Proceeding involving (a) BioMarin which would reasonably be
expected to have a BioMarin Material Adverse Effect or BioMarin Acquisition, or
(b) that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. To the Knowledge of BioMarin and BioMarin Acquisition, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
would give rise to or serve as a basis for the commencement of any such
Proceeding.

      3.6   FRAUDULENT TRANSFERS. Neither BioMarin nor BioMarin Acquisition is
insolvent, nor will be rendered insolvent by any of the Transactions.
Immediately after consummation of the Transactions, (i) each of BioMarin and
BioMarin Acquisition will be able to pay its debts as they become due; (ii)
neither BioMarin nor BioMarin Acquisition will have unreasonably small assets
with which to conduct its present or proposed business. As used in this Section
3.6, "insolvent" means that the sum of the Person's assets does not and will not
exceed its debts and other liabilities at a fair valuation.

      3.7   INVESTMENT BANKING FEES. BioMarin Acquisition and its Affiliates
have not incurred any investment banking, broker or finder fees which will
become the responsibility of Medicis or Ascent before or after the Effective
Time.

      3.8   LIABILITIES. Neither BioMarin nor BioMarin Acquisition has, since
November 15, 2001, (i) made a general assignment for the benefit of creditors,
(ii) filed, or had filed against it, any bankruptcy petition or similar filing,
(iii) suffered the attachment or other judicial seizure of all or a substantial
portion of its assets, (iv) admitted in writing its inability to pay its debts
as they become due, (v) been convicted of, or pleaded guilty or no contest to,
any felony, or (vi) taken or been the subject of any action that may have an
adverse effect on its ability to comply with or perform any of its covenants or
obligations under any of the Transaction Agreements.

4.    PRE-CLOSING COVENANTS OF ASCENT, MEDICIS, BIOMARIN AND BIOMARIN
      ACQUISITION.

                                       18


      4.1   ACCESS AND INVESTIGATION. Each party shall, and shall cause its
Subsidiaries to, each afford to the other parties and to each other parties'
Representatives access during normal business hours upon reasonable notice
throughout the period prior to the Effective Time to all the books and records,
Contracts, and personnel relating to the Pediatrics Business as the other party
may reasonably request and, during such period, each shall furnish promptly to
the other all other information as such other party reasonably may request,
related to integration planning provided that no investigation pursuant to this
Section 4.1 shall affect any representations or warranties made herein or the
conditions to the obligations of the respective parties to consummate the
Transactions.

      4.2   OPERATION OF BUSINESS.

            (a)   Each of Medicis and Ascent agrees that, during the Pre-Closing
Period, it will, and Medicis will cause Medicis Manufacturing to:

                  (i)   conduct the operations of the Pediatrics Business
exclusively in the Ordinary Course of Business; and

                  (ii)  use commercially reasonable efforts to (i) preserve
intact the current business organization of the Pediatrics Business, (ii) keep
available the services of the current Business Employees of the Pediatrics
Business, and (iii) maintain the relations and good will with all suppliers,
distributors, manufacturers, customers, landlords, creditors, licensors,
licensees and independent contractors related to the Pediatrics Business;

            (b)   Without limiting Section 4.2(a), each of Medicis and Ascent
agrees that, during the Pre-Closing Period, it will not, and Medicis will cause
Medicis Manufacturing not to, in each case without the prior written consent of
BioMarin Acquisition (which consent solely with respect to clause (xiii) shall
not be unreasonably withheld or delayed):

                  (i)   in a single transaction or series of related
transactions, sell (including any sale leaseback), lease, license, pledge,
transfer or otherwise dispose of (including through a dividend or distribution
to any Person), or discontinue, all or any portion of the Acquired Assets
(except in the Ordinary Course of Business with respect to the Purchased
Inventory);

                  (ii)  terminate, amend, modify or waive any material right
under any Acquired Business Contract (other than in the Ordinary Course of
Business) or the Lyne License;

                  (iii) dismiss any Business Employee other than for cause;

                  (iv)  except in an amount, individually or in the aggregate,
not to exceed $10,000, commit to make any capital expenditure or acquire any
property or assets to the extent the commitment will be an Assumed Liability or
the property or asset will be an Acquired Asset other than inventory and raw
materials in the Ordinary Course of Business;

                  (v)   permit or allow any of the Acquired Assets to be subject
to any Encumbrance which cannot be removed or satisfied prior to the Effective
Time;

                                       19


                  (vi)  grant any increase in the compensation or benefits of
any Business Employee (excluding any increase (not including any increase in
base compensation) specifically provided for in the terms of, or legally
required by, any bonus, pension, profit sharing or other plan or commitment) or
any increase in the compensation (not including any increase in base
compensation) or benefits payable, or to become payable, to any Business
Employee, except for (A) increases in the Ordinary Course of Business to
Business Employees in terms of proportion and timing, and (B) other changes that
are required by applicable Legal Requirements;

                  (vii) adopt, enter into or amend, or become obligated under,
any employment, severance, bonus, profit sharing, compensation, equity interest,
option, pension, retirement, deferred compensation, health care, employment or
other employee benefit plan, agreement, trust, fund or arrangement for the
benefit or welfare of any Business Employee (including any new employee of the
Pediatrics Business), except as required to comply with changes in applicable
Legal Requirements;

                  (viii) solely with respect to Ascent, commence, undertake or
engage in any new and material line of business or commit to open or open a new
office (or move or close any existing office);

                  (ix)  solely with respect to Ascent, amend its certificate of
incorporation, bylaws or similar constituent documents;

                  (x)   adopt a plan or resolution to dissolve or liquidate
Medicis, Medicis Manufacturing or Ascent;

                  (xi)  take any action that, or omit to take any action not
otherwise prohibited by the terms of this Agreement the omission of which,
would, or is reasonably likely to, (A) result in failure to satisfy the
condition contained in Section 6.1 or (B) result in failure to satisfy the
condition contained in Section 6.4;

                  (xii) recognize any labor union or enter into any collective
bargaining agreement that includes any Business Employee;

                  (xiii) settle or compromise any pending Proceeding on a basis
requiring any agreement that would adversely affect the Acquired Assets or
increase the Assumed Liabilities; or

                  (xiv) authorize, commit, enter into, or offer to enter into,
any Contract to take any of the actions referred to in this Section 4.2(b).

      4.3   OPERATION OF BIOMARIN BUSINESS. Each of BioMarin and BioMarin
Acquisition agrees that, unless BioMarin or BioMarin Acquisition receives the
prior written consent of Medicis, during the Pre-Closing Period neither BioMarin
nor BioMarin Acquisition shall:

            (a)   adopt a plan or resolution to dissolve or liquidate BioMarin
or BioMarin Acquisition;

                                       20


            (b)   take any action that, or omit to take any action not otherwise
prohibited by the terms of this Agreement the omission of which, would, or is
reasonably likely to, (i) result in failure to satisfy the condition contained
in Section 7.1 or (ii) result in failure to satisfy the condition contained in
Section 7.4; or

            (C)   authorize, commit, enter into, or offer to enter into, any
Contract to take any of the actions referred to in this Section 4.3.

5.    OTHER AGREEMENTS.

      5.1   REASONABLE EFFORTS; FILINGS AND CONSENTS. Subject to the terms and
conditions of this Agreement, each of the parties to this Agreement will use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary under applicable Legal Requirements, so
as to permit consummation of the Transactions as promptly as reasonably
practicable and in any event prior to the Termination Date and will use
reasonable efforts to cooperate fully with the other parties hereto to that end.
Without limiting the foregoing, each of BioMarin and Medicis agrees to file a
notification and report form under the HSR Act with the appropriate Governmental
Bodies, not later than the second Business Day following the date hereof.

      5.2   NOTIFICATION. During the Pre-Closing Period, each party shall
promptly notify the other in writing of, and shall subsequently keep such other
party updated on a current basis regarding any event, condition, fact or
circumstance that would reasonably be expected to adversely affect the timely
satisfaction of any of the conditions set forth in Article 6 or Article 7.

      5.3   NO SOLICITATION OR NEGOTIATION. Each of Medicis and Ascent shall
ensure that, during the Pre-Closing Period, neither it nor any of its
Representatives, directly or indirectly, shall: (a) solicit, initiate, or
knowingly encourage or induce the making, submission or announcement of any
inquiries or the making of any proposal or offer related to an Acquisition
Transaction or take any action that could reasonably be expected to lead to any
such inquiries or the making of any such proposal or offer, (b) furnish any
information regarding Ascent to any Person in connection with or in response to
an Acquisition Transaction or an inquiry or indication of interest that could
reasonably be expected to lead to an Acquisition Transaction, (c) engage in
discussions or negotiations with any Person with respect to any Acquisition
Transaction, (d) approve, endorse or recommend any Acquisition Transaction, (e)
make or authorize any statement, recommendation or solicitation in support of
any possible Acquisition Transaction, or (f) enter into any letter of intent or
similar document or any Contract having a primary purpose of effectuating, or
which would effect, any Acquisition Transaction. Each of Medicis and Ascent
shall immediately cease and cause to be terminated any Contract or discussions
with any Person (other than BioMarin Acquisition) related to an Acquisition
Transaction. In addition, if during the Pre-Closing Period Medicis or Ascent
receives an offer or proposal (formal, informal, oral, written or otherwise)
relating to, or any inquiry or contact from any Person with respect to, an
Acquisition Transaction, such party shall immediately notify BioMarin thereof
and provide BioMarin with details thereof, including the identity of the Person
or Persons making such offer or proposal, and will keep BioMarin informed on a
current basis of the status and details of any such offer or proposal and any
modification to the terms thereof. Medicis and Ascent will promptly request each
Person that has executed, within 12 months prior

                                       21


to the date of this Agreement, a confidentiality, standstill or similar
agreement in connection with its consideration of a possible Acquisition
Transaction to return all confidential information heretofore furnished to such
Person by or on behalf of Medicis or Ascent.

      5.4   PUBLIC ANNOUNCEMENTS. BioMarin, BioMarin Acquisition, Medicis and
Ascent will consult with each other before issuing any press release or
otherwise making any public statement with respect to this Agreement, the
transactions contemplated hereby or in any of the documents executed in
connection herewith. Without limiting the generality of the foregoing, none of
Medicis, Ascent, BioMarin or BioMarin Acquisition shall, and none of Medicis,
Ascent, BioMarin or BioMarin Acquisition shall permit any of their respective
Representatives to, make any disclosure regarding this Agreement, the
transactions contemplated hereby or in any of the documents executed in
connection herewith unless (a) the other parties shall have approved such
disclosure, or (b) such disclosure is required by applicable Legal Requirements
(including requirements of the Commission, the New York Stock Exchange or
NASDAQ) and the disclosing party has provided the other parties hereto with a
copy of the proposed release or statement no less than two (2) Business Days
prior to its release or publication. In the event that a party receives any
inquiry regarding any other party, the receiving party shall refer such inquiry
to such other party.

      5.5   FURTHER ACTIONS.

            (a)   From and after the Effective Time, each party hereto shall
execute and deliver such documents and take such other actions as the other
party may reasonably request for the purpose of carrying out or evidencing any
of the transactions contemplated hereby.

            (b)   Ascent and BioMarin Acquisition will cooperate in good faith
in connection with the filing of Tax Returns, any audit or Proceeding with
respect to Taxes and in connection with any other Proceeding in each case
relating to the Acquired Assets or the Pediatrics Business, as and to the extent
reasonably requested by BioMarin Acquisition or Ascent. Such cooperation shall
include (i) the retention and (upon a party's request) the provision of records
and information which are reasonably relevant to the preparation of Tax Returns
or to any such Proceeding and (ii) making relevant employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Ascent and BioMarin Acquisition shall (i)
retain all Tax records and Tax Returns related to the Pediatrics Business
relating to any period beginning before the Effective Time until the expiration
of all relevant statutes of limitations (and, to the extent notified by Ascent
or BioMarin Acquisition, any extensions thereof), and abide by all record
retention agreements entered into with any Governmental Authority with respect
to Taxes and (ii) give the other parties to this Agreement reasonable written
notice prior to transferring, destroying or discarding any such Tax records and
Tax Returns.

            (c)   Without limiting the foregoing, the parties acknowledge and
agree that accounts receivable booked prior to the Effective Time shall be for
the benefit of Ascent and that accounts receivable booked after the Effective
Time shall be for the benefit of BioMarin Acquisition.

      5.6   EMPLOYEES, EMPLOYEE BENEFIT MATTERS; NON-SOLICITATION.

                                       22


            (a)   As of the Effective Time, Ascent shall terminate all of the
Business Employees of Ascent; prior to the Effective Time, BioMarin shall offer
employment, conditional on Closing and commencing as of the Effective Time, to
the Business Employees with base compensation (without regard to bonuses) not
less than the base compensation (without regard to bonuses) paid to them by
Ascent as provided in the April 2004 communications described in Section
2.18(a). Additionally, BioMarin may, at its option, at any time prior to the
Effective Time, offer employment to the individuals listed on EXHIBIT F. Ascent
and Medicis shall use their reasonable best efforts to cause each Business
Employee to commence employment with BioMarin. The employees that accept
BioMarin's offer of employment will be hired by BioMarin in connection with the
Transactions (the "TRANSFERRED EMPLOYEES"). As to any Person listed on EXHIBIT F
who does not accept employment with BioMarin, Medicis or Ascent may, at their
option, continue to employ such persons notwithstanding subsection (e) hereof.

            (b)   BioMarin (or any of its Affiliates) may terminate each
Transferred Employee's employment at will at any time and for any reason with or
without cause and may modify each Transferred Employee's compensation and
employee benefits at any time. Nothing in this Agreement shall create any right
in favor of any of the Transferred Employees or Business Employees with respect
to BioMarin or its Affiliates. For a period of 36 months following the Closing
Date, Ascent and Medicis shall continue to maintain and sponsor at least one
Group Health Plan and Ascent and Medicis shall be solely responsible for
providing continuation coverage (and all required actions including, but not
limited to, providing required notices) pursuant to COBRA for any current or
former employee and associated qualified beneficiaries who incur a qualifying
event (as described in Section 4980B(3) of the Code) at any time prior to or in
connection with the Closing and who elect COBRA continuation coverage.

            (c)   As of the Closing, Ascent and Medicis shall be responsible for
and shall discharge and satisfy in full all amounts owed to any Transferred
Employee including, but not limited to, wages, salaries, accrued vacation and
employment, incentive, compensation, or bonus agreements or payments on account
of termination and all amounts due and owing to each Transferred Employee with
respect to and in accordance with the terms of each Business Employee Benefit
Plan that have accrued on or prior to the Closing. Medicis or Ascent shall
retain liability for all Liabilities with respect to the Business Employee
Benefit Plans and their related trusts, if any.

            (d)   Ascent shall not effect a "plant closing" or "mass layoff", as
those terms are defined in the WARN or any similar state Legal Requirement at
any time between the date hereof and the Effective Time, affecting in whole or
in part any site of employment, facility, operating unit or Business Employee,
without notifying BioMarin Acquisition in advance and obtaining the advance
approval of BioMarin Acquisition, and complying with all provisions of WARN or
any similar state Legal Requirement. Medicis and Ascent agrees that any and all
liabilities with respect to any current or former employees of Ascent under WARN
or any similar state Legal Requirement that arose on or before the Closing Date
or on account of the Transactions, including without limitation liabilities
attributable to any employee or former employee of Ascent who is terminated from
employment or otherwise suffers an employment loss on or before the Closing
Date, and any such liabilities to any individual who does not become a
Transferred Employee, whenever the liabilities arose, shall be the sole
obligation of Ascent and Medicis.

                                       23


            (e)   For a period of two (2) years following the Effective Time,
(i) each of Medicis and Ascent will not knowingly and will cause its Affiliates
not to knowingly hire any Person then employed by BioMarin or its Affiliates,
and (ii) each of Medicis and Ascent will not hire and will cause its Affiliates
not to hire any Transferred Employees or any other Business Employee.

            (f)   For a period of two (2) years following the Effective Time,
each of BioMarin and BioMarin Acquisition will not knowingly and will cause its
Affiliates not to knowingly hire any Person then employed by Medicis or its
Affiliates, other than any Business Employee.

      5.7   CONFIDENTIALITY. Each party will hold, and will cause its
consultants and advisers to hold, in confidence all documents and information
furnished to it by or on behalf of the other party in connection with the
Transactions pursuant to the terms of that certain Nondisclosure Agreement
entered into between Medicis and BioMarin dated January 21, 2004 (the
"BIOMARIN/MEDICIS CDA").

      5.8   PURCHASE PRICE ALLOCATION. The Parties shall allocate the purchase
price consideration set forth in Section 1.3 (and all other capitalized costs)
among the Acquired Assets (the "PURCHASE PRICE ALLOCATION") as set forth in
EXHIBIT G hereto. Each of the Parties hereto agrees to report the transaction
contemplated by this Agreement as the sale and purchase of the Acquired Assets
for all state and federal Tax purposes and neither party shall take any position
in any tax audits or tax returns which is inconsistent with such
characterization or the Purchase Price Allocation.

      5.9   GOVERNMENTAL AUTHORIZATIONS. Prior to the Effective Time, Medicis
shall use commercially reasonable efforts to identify for BioMarin and BioMarin
Acquisition all material Governmental Authorizations held by Medicis and
necessary for the Pediatrics Business, other than any Governmental
Authorizations listed on Part 2.16 of the Ascent Disclosure Schedule.

6.    CONDITIONS PRECEDENT TO BIOMARIN'S AND BIOMARIN ACQUISITION'S OBLIGATION
      TO CLOSE.

      BioMarin's and BioMarin Acquisition's obligations to purchase the Acquired
Assets, and to take the other actions required to be taken by BioMarin and
BioMarin Acquisition at the Closing are subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by BioMarin and/or BioMarin Acquisition, in whole or in part, in writing):

      6.1   ACCURACY OF REPRESENTATIONS. The representations and warranties made
by Medicis and Ascent in this Agreement that are qualified by materiality or
Ascent Material Adverse Effect shall be true and complete as of the Closing Date
as if made on the Closing Date (except for representations and warranties made
as of a specified date, which need be true only as of the specified date). The
representations and warranties made by Medicis and Ascent in this Agreement that
are not so qualified shall be true and complete in all material respects as of
the Closing Date as if made on the Closing Date (except for representations and
warranties made as of a specified date, which need be true in all material
respects only as of the specified date). The

                                       24


closing conditions set forth in Section 6.1 shall not apply to the
representations and warranties contained in Section 2.5(a) as a result of the
occurrence of an event described in Part 6.1 of the Ascent Disclosure Schedule.

      6.2   GOVERNMENTAL APPROVALS. All Consents required from any Governmental
Body in order to consummate the Transactions shall have been obtained and shall
be in full force and effect, and all waiting periods under the HSR Act shall
have expired.

      6.3   NO RESTRAINTS.

            (a)   No preliminary injunction or other order, decree or ruling
issued by a court of competent jurisdiction or other Governmental Body having
jurisdiction, nor any statute, rule, regulation, or executive order promulgated
or enacted by any Governmental Body shall be in effect that would make any of
the transactions contemplated hereby illegal or otherwise prohibit the
consummation of the transactions contemplated hereby.

            (b)   There shall not be pending any Proceeding in which a
Governmental Body is a party challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated hereby or contemplated in the
documents executed in connection herewith.

      6.4   PERFORMANCE OF OBLIGATIONS. Each of the covenants and obligations
that Medicis and Ascent are required to comply with or to perform at or prior to
the Closing shall have been duly complied with and performed in all material
respects.

      6.5   ADDITIONAL DOCUMENTS. BioMarin and BioMarin Acquisition shall have
received the following documents:

            (a)   a certificate executed by a duly authorized officer not less
senior than vice president of Ascent to the effect that Ascent has satisfied
each of the conditions set forth in Sections 6.1 and 6.4; and

            (b)   a certificate executed by a duly authorized officer not less
senior than vice president of Medicis to the effect that Medicis has satisfied
each of the conditions set forth in Sections 6.1 and 6.4.

            (c)   an opinion letter from Akin Gump Strauss Hauer & Feld LLP,
dated the Closing Date, in the form of EXHIBIT H;

            (d)   Medicis, Ascent and the Escrow Agent shall have executed and
delivered an Escrow Agreement in substantially the form of EXHIBIT I (the
"ESCROW AGREEMENT");

            (e)   Medicis and Ascent shall have executed and delivered the
License Agreement in substantially the form of EXHIBIT J (the "LICENSE
AGREEMENT") and the Trademark Security Agreement in substantially the form
attached to the License Agreement (the "SECURITY AGREEMENT");

                                       25


            (f)   Medicis and Ascent shall have executed and delivered the
Securities Purchase Agreement in substantially the form of EXHIBIT K (the
"SECURITIES PURCHASE AGREEMENT");

            (g)   Medicis and Ascent shall have executed and delivered a
Confidentiality Agreement in a form agreed upon by Medicis and BioMarin (the
"CONFIDENTIALITY AGREEMENT"); and

            (h)   Each of the documents referred to in Section 1.5(b) shall have
been executed by each of the parties thereto (not including, for this purpose,
BioMarin and BioMarin Acquisition) and delivered to BioMarin Acquisition.

      6.6   MATERIAL ACQUIRED BUSINESS CONTRACTS. All Consents of all Persons
necessary to validly assign the Material Acquired Business Contracts to BioMarin
Acquisition shall have been obtained and shall be in full force and effect.

7.    CONDITIONS PRECEDENT TO MEDICIS' AND ASCENT'S OBLIGATION TO CLOSE.

      Medicis' and Ascent's obligations to sell and transfer the Acquired Assets
and to take the other actions required to be taken by Medicis and Ascent at the
Closing are subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Medicis and/or Ascent,
in whole or in part, in writing):

      7.1   ACCURACY OF REPRESENTATIONS. The representations and warranties made
by BioMarin and BioMarin Acquisition in this Agreement that are qualified by
materiality or BioMarin Material Adverse Effect shall be true and complete as of
the Closing Date as if made on the Closing Date (except for representations and
warranties made as of a specified date, which need be true only as of the
specified date). The representations and warranties made by BioMarin and
BioMarin Acquisition in this Agreement that are not so qualified shall be true
and complete in all material respects as of the Closing Date as if made on the
Closing Date (except for representations and warranties made as of a specified
date, which need be true only in all material respects as of the specified
date).

      7.2   CONSENTS AND GOVERNMENTAL APPROVALS. All Consents required to be
obtained by BioMarin or BioMarin Acquisition from any Governmental Body in order
to consummate the Transactions shall have been obtained and shall be in full
force and effect and all waiting periods under the HSR Act shall have expired.

      7.3   NO RESTRAINTS.

            (a)   No preliminary injunction or other order, decree or ruling
issued by a court of competent jurisdiction or other Governmental Body having
jurisdiction, nor any statute, rule, regulation, or executive order promulgated
or enacted by any Governmental Body shall be in effect that would make any of
the transactions contemplated hereby illegal or otherwise prohibit the
consummation of the transactions contemplated hereby.

                                       26


            (b)   There shall not be pending any Proceeding in which a
Governmental Body is a party challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated hereby or contemplated in the
documents executed in connection herewith.

      7.4   PERFORMANCE OF OBLIGATIONS. Each of the covenants and obligations
that BioMarin and BioMarin Acquisition are required to comply with or to perform
at or prior to the Closing shall have been duly complied with and performed in
all material respects.

      7.5   ADDITIONAL DOCUMENTS. Ascent shall have received the following
documents:

            (a)   an opinion letter from Paul, Hastings, Janofsky & Walker LLP
dated the Closing Date, in the form of EXHIBIT L;

            (b)   a certificate executed by a duly authorized officer not less
senior than vice president of BioMarin Acquisition to the effect that BioMarin
Acquisition has satisfied each of the conditions set forth in Sections 7.1 and
7.4.

            (c)   a certificate executed by a duly authorized officer not less
senior than vice president of BioMarin to the effect that BioMarin has satisfied
each of the conditions set forth in Section 7.1 and 7.4.

            (d)   BioMarin, BioMarin Acquisition and the Escrow Agent shall have
executed and delivered the Escrow Agreement;

            (e)   BioMarin and BioMarin Acquisition shall have executed and
delivered the License Agreement and the Security Agreement;

            (f)   BioMarin and BioMarin Acquisition shall have executed and
delivered the Securities Purchase Agreement;

            (g)   BioMarin and BioMarin Acquisition shall have executed and
delivered the Confidentiality Agreement; and

            (h)   Each of the documents referred to in Section 1.5(b) shall have
been executed by each of the parties thereto (not including, for this purpose,
Medicis, Ascent and Medicis Manufacturing) and delivered to Ascent.

8.    TERMINATION.

      8.1   TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:

            (a)   by BioMarin Acquisition if there is a Breach of any
representation, warranty, covenant or obligation of Medicis or Ascent set forth
in this Agreement which Breach (i) would give rise to the failure of a condition
set forth in Section 6.1 or Section 6.4 and (ii) (if susceptible to cure) has
not been cured within 20 Business Days following receipt by Medicis and Ascent
of notice of such Breach (an "ASCENT BREACH");

                                       27


            (b)   by Ascent if there is a Breach of any representation,
warranty, covenant or obligation of BioMarin or BioMarin Acquisition set forth
in this Agreement which Breach (i) would give rise to the failure of a condition
set forth in Section 7.1 or Section 7.4 and (ii) (if susceptible to cure) has
not been cured within 20 Business Days following receipt by BioMarin Acquisition
and BioMarin of notice of such Breach (a "BIOMARIN BREACH");

            (c)   by either BioMarin Acquisition or Ascent if the Closing has
not taken place on or before July 31, 2004 (the "TERMINATION DATE") (other than
as a result of any failure on the part of the terminating party to comply with
or perform its covenants and obligations under this Agreement);

            (d)   by the mutual written consent of the parties hereto; and

            (e)   by either Ascent or BioMarin Acquisition, if any Order by any
Governmental Body of competent jurisdiction preventing or prohibiting
consummation of any of the transactions contemplated hereby shall have become
final and nonappealable.

      8.2   TERMINATION PROCEDURES. If BioMarin Acquisition wishes to terminate
this Agreement pursuant to Section 8.1, BioMarin Acquisition shall deliver to
Ascent a written notice stating that BioMarin Acquisition is terminating this
Agreement and setting forth a brief description of the basis on which BioMarin
Acquisition is terminating this Agreement. If Ascent wishes to terminate this
Agreement pursuant to Section 8.1, Ascent shall deliver to BioMarin Acquisition
a written notice stating that Ascent is terminating this Agreement and setting
forth a brief description of the basis on which Ascent is terminating this
Agreement.

      8.3   EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, this Agreement shall become wholly void and of no further force and
effect, without liability to BioMarin, BioMarin Acquisition, Medicis, Ascent or
any of their respective Representatives or Affiliates, except that (a) the
provisions set forth in Sections 5.4, 5.7, 8.3, 10.1, 10.2, 10.7 and 10.10 shall
remain in full force and effect, and the provisions of Section 5.6(e)(i) and (f)
shall remain in full force and effect, provided that the reference in such
sections to "Effective Time" shall be deemed to mean the date of this Agreement
and the phrase "other than any Business Employee" in Section 5.6(f) shall be
deemed to be deleted, and (b) if this Agreement is terminated by BioMarin
Acquisition pursuant to Section 8.1(a) due to a Breach of Section 5.3 and if
either Medicis or Ascent enters into a Contract for an Acquisition Transaction
within twelve (12) months of the date of termination of this Agreement, then
Medicis and Ascent, jointly and severally, shall pay to BioMarin Acquisition in
cash a fee in the amount of $10.0 million, together with all fees, costs and
expenses incurred by or on behalf of BioMarin or BioMarin Acquisition as
described in Section 10.1, within two (2) Business Days after the execution of
such Contract. Notwithstanding anything to the contrary contained herein,
nothing in this Section 8.3 shall be deemed to release any party from liability
for any Breach under this Agreement.

9.    SURVIVAL AND INDEMNIFICATION

      9.1   SURVIVAL OF REPRESENTATIONS AND COVENANTS.

                                       28


            (a)   All representations and warranties contained in this
Agreement, the assignment documents described in Section 1.5(b)(i) and the
Assumption Agreement shall survive the Closing Date and shall expire at 11:59
p.m. (Pacific Time) on the eighteen-month anniversary of the Closing Date and
shall thereafter be of no further force or effect, except (i) the
representations and warranties set forth in Sections 2.2, 2.6, 2.17, and 3.2
shall expire on the expiration of the relevant statute of limitations, and (ii)
to the extent required to enforce the parties' rights and obligations hereunder
following the end of such period for any claims for which a Claim Notice (as
defined below) has properly been made prior to the expiration of such period.
All of the covenants, agreements and obligations of the parties contained in
this Agreement, in the assignment documents described in Section 1.5(b)(i) and
the Assumption Agreement shall survive (i) until fully performed or fulfilled,
unless non-compliance with such covenants, agreements or obligations is waived
in writing by the party or parties entitled to such performance or (ii) if not
fully performed or fulfilled, until the expiration of the relevant statute of
limitations. Notwithstanding anything in this Agreement to the contrary, if this
Agreement is terminated pursuant to Section 8.1(c), (d) or (e), the
representations and warranties contained in this Agreement shall thereafter be
of no further force or effect.

            (b)   For purposes of this Agreement, a "Claim Notice" relating to a
particular representation or warranty or covenant shall be deemed to have been
given if any Indemnified Party, acting in good faith, delivers to the
Indemnifying Party a written notice stating that such Indemnified Party
reasonably believes that there is or has been a possible Breach of such
representation or warranty or covenant and containing (i) a brief description of
the circumstances supporting such Indemnified Party's reasonable belief that
there is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct or indirect result of such possible
Breach.

            (c)   Notwithstanding that the accuracy and performance of only
certain representations, warranties and covenants are conditions to the
obligations of the parties hereto to consummate the transactions contemplated
hereby, any party may pursue claims for indemnification with respect to Damages
that arise from the Breach of any representation, warranty or covenant contained
in this Agreement, regardless of whether the party asserting a claim for
indemnification had knowledge of such Breach prior to the Closing.

      9.2   INDEMNIFICATION BY MEDICIS.

            (a)   From and after the Effective Time, Medicis shall hold harmless
and indemnify each of the BioMarin Indemnitees from and against, and shall
compensate and reimburse each of the BioMarin Indemnitees for, any Damages that
are suffered or incurred by any of the BioMarin Indemnitees or to which any of
the BioMarin Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any Third-Party Claim) and that arise from
or as a result of:

                  (i)   any Breach of any of the representations or warranties
made by Medicis or Ascent in this Agreement, the assignment documents described
in Section 1.5(b)(i) or the Assumption Agreement;

                                       29


                  (ii)  any Breach of any covenant or obligation of Medicis or
Ascent contained in this Agreement, the assignment documents described in
Section 1.5(b)(i) or the Assumption Agreement;

                  (iii) any Third Party Claim arising from the conduct or
operation of the Pediatrics Business prior to the Effective Time;

                  (iv)  any Excluded Liability; or

                  (v)   any Proceeding relating directly or indirectly to any
Breach, Liability or Third-Party Claim of the type referred to in clause (i)
through (iv) above (including any Proceeding commenced by any BioMarin
Indemnitee for the purpose of enforcing any of its rights under this Section
9.2).

            (b)   Subject to Section 9.2(d), Medicis shall not be required to
make any indemnification payment pursuant to Section 9.2(a)(i) of this
Agreement, Section 8.2(a)(i) of the Securities Purchase Agreement or Section
12.2(a)(i) of the License Agreement, until such time as and to the extent that
the total amount of all Damages (including the Damages arising from such Breach
and all other Damages arising from any other Breaches of any representations or
warranties) that have been directly or indirectly suffered or incurred by any
one or more of the BioMarin Indemnitees, or to which any one or more of the
BioMarin Indemnitees has or have otherwise become subject, exceeds, in the
aggregate, $250,000 and then only to the extent of such excess.

            (c)   Notwithstanding anything in this Agreement to the contrary,
but subject to Section 9.2(d), the aggregate liability for any indemnification
payments pursuant to Section 9.2(a)(i) of this Agreement, Section 8.2(a)(i) of
the Securities Purchase Agreement and Section 12.2(a)(i) of the License
Agreement, will be limited to, and shall not exceed, in the aggregate, $66.5
million (the "MEDICIS CAP"); provided, however, that the Medicis Cap shall not
apply to any indemnification obligation of Medicis arising out of any Breach of
Section 2.2 or 2.6.

            (d)   The limitations on the indemnification obligations of Medicis
set forth in each of Section 9.2(b) and Section 9.2(c) shall not apply to any
willful Breach, intentional misrepresentation or fraud by Medicis or Ascent.

            (e)   To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the License Agreement and/or the Securities Purchase
Agreement, such party shall be entitled to only one recovery of the Damages
resulting from such actions, failures to act or other circumstances giving rise
to the right of indemnification, regardless of whether the actions, failures to
act or other circumstances giving rise to the right of indemnification
constitute a breach of more than one agreement. The parties acknowledge that the
purpose of this provision is to prevent duplicative recovery for the same
Damages, and not to preclude the recovery of Damages for separate and
independent indemnity claims that may arise under the various agreements.

      9.3   INDEMNIFICATION BY BIOMARIN.

                                       30


            (a)   From and after the Effective Time, BioMarin shall hold
harmless and indemnify the Medicis Indemnitees from and against, and shall
compensate and reimburse each of the Medicis Indemnitees for, any Damages that
are suffered or incurred by any of the Medicis Indemnitees or to which any of
the Medicis Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any Third Party Claim) and that arise
from:

                  (i)   any Breach of any representation or warranty made by
BioMarin or BioMarin Acquisition in this Agreement, the assignment documents
described in Section 1.5(b)(i) or the Assumption Agreement;

                  (ii)  any Breach of any covenant or obligation of BioMarin or
BioMarin Acquisition in this Agreement, the assignment documents described in
Section 1.5(b)(i) or the Assumption Agreement;

                  (iii) any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing the Products following the Effective Time, except
Damages suffered or incurred or arising from the Breach of Medicis, Ascent or
Medicis Manufacturing, as applicable, under the Supply Agreement, the Transition
Services Agreement or the License Agreement;

                  (iv)  any Assumed Liability; or

                  (v)   any Proceeding relating directly or indirectly to any
Breach, Liability or Third-Party Claim of the type referred to in clauses (i)
through (iv) above (including any Proceeding commenced by any Medicis Indemnitee
for the purpose of enforcing its rights under this Section 9.3).

            (b)   Subject to Section 9.3(d), BioMarin shall not be required to
make any indemnification payment pursuant to Section 9.3(a)(i) of this
Agreement, Section 8.3(a)(i) of the Securities Purchase Agreement or Section
12.3(a)(i) of the License Agreement, until such time as and to the extent that
the total amount of all Damages (including the Damages arising from such Breach
and all other Damages arising from any other Breaches of its representations or
warranties) that have been directly or indirectly suffered or incurred by the
Medicis Indemnitees, or to which the Medicis Indemnitees have otherwise become
subject, exceeds, in the aggregate, $250,000 and then only to the extent of such
excess.

            (c)   Notwithstanding anything in this Agreement to the contrary,
but subject to Section 9.3(d), the aggregate liability for any indemnification
payments pursuant to Section 9.3(a)(i) of this Agreement, Section 8.3(a)(i) of
the Securities Purchase Agreement and Section 12.3(a)(i) of the License
Agreement, will be limited to, and shall not exceed, in the aggregate, $66.5
million (the "BIOMARIN CAP"); provided, however, that the BioMarin Cap shall not
apply to any indemnification obligation of BioMarin arising out of any Breach of
Section 3.2.

            (d)   The limitations on the indemnification obligations of BioMarin
set forth in each of Section 9.3(b) and Section 9.3(c) shall not apply to any
willful Breach, intentional misrepresentation or fraud by BioMarin or BioMarin
Acquisition.

                                       31


            (e)   To the extent that any actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the License Agreement and/or the Securities Purchase
Agreement, such party shall be entitled to only one recovery of the Damages
resulting from such actions, failures to act or other circumstances giving rise
to the right of indemnification, regardless of whether the actions, failures to
act or other circumstances giving rise to the right of indemnification
constitute a breach of more than one agreement. The parties acknowledge that the
purpose of this provision is to prevent duplicative recovery for the same
Damages, and not to preclude the recovery of Damages for separate and
independent indemnity claims that may arise under the various agreements.

      9.4   PROCEDURES RELATING TO INDEMNIFICATION FOR THIRD PARTY CLAIMS.

            (a)   Within ten (10) Business Days after a BioMarin Indemnitee or
Medicis Indemnitee obtains Knowledge of the commencement of any third-party
claim, action, suit or proceeding (a "THIRD PARTY CLAIM") or the occurrence of
any fact which may become the basis of a Third Party Claim in respect of which
an Indemnified Party is entitled to indemnification under this Agreement, such
Indemnified Party shall notify in writing the Indemnifying Party of such Third
Party Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been materially prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice). Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, within five (5) Business Days after the Indemnified Party's receipt
thereof, copies of all notices and non-privileged documents (including court
papers) received by the Indemnified Party relating to the Third Party Claim.

            (b)   If a Third Party Claim is made against an Indemnified Party,
the Indemnifying Party shall be entitled to participate at its expense in the
defense thereof and, if it so chooses within thirty (30) days after receipt of
notice of such claim to assume the defense thereof at the Indemnifying Party's
expense, with counsel selected by the Indemnifying Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall be permitted to participate in the defense thereof and to employ
counsel (not reasonably objected to by the Indemnifying Party), at its own
expense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnified Party (i) for any period during which the
Indemnifying Party has not assumed the defense thereof or is not using
commercially reasonable efforts to pursue the defense thereof (other than during
the period in which the Indemnified Party failed to give notice of the Third
Party Claim as provided above), or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the
Indemnifying Party and the Indemnified Party in defending such claim or action,
or (y) that there may be legal defenses available to the Indemnified Party
different from or in addition to those available to the Indemnifying Party.

                                       32


            (c)   If the Indemnifying Party so elects to assume the defense of
any Third Party Claim, all of the Indemnified Parties shall reasonably cooperate
with the Indemnifying Party, at the expense of the Indemnifying Party, in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying Party
of non-privileged records and information which are reasonably relevant to such
Third Party Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent (which consent shall not be
unreasonably withheld). If the Indemnifying Party shall have assumed the defense
of a Third Party Claim, the Indemnified Party shall agree to any settlement,
compromise or discharge of a Third Party Claim for monetary Damages which the
Indemnifying Party may recommend and which by its terms obligates the
Indemnifying Party to pay the full amount of the monetary Damages in connection
with such Third Party Claim and which releases the Indemnifying Party and the
Indemnified Party completely in connection with such Third Party Claim and does
not impose any covenant or commitment on the Indemnified Party.

      9.5   OTHER CLAIMS. In the event any Indemnified Party should have a claim
against any Indemnifying Party under Section 9.2 or 9.3 that does not involve a
Third Party Claim being asserted against or sought to be collected from such
Indemnified Party, the Indemnified Party shall deliver notice to the
Indemnifying Party of such claim within 15 Business Days of obtaining Knowledge
of the occurrence of such claim. The failure by any Indemnified Party so to
notify the Indemnifying Party within this time period shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party under Section 9.2 or 9.3, except to the extent that the Indemnifying Party
is materially prejudiced by such failure. If the Indemnifying Party does not
notify the Indemnified Party within 15 Business Days following its receipt of
such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under Section 9.2 or 9.3, such claim specified by the
Indemnified Party in such notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 9.2 or 9.3 and the Indemnifying Party shall pay
the amount of such liability to the Indemnified Party on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined by agreement between the Indemnifying Party
and the Indemnified Party or by judgment or decree of a court of competent
jurisdiction. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall attempt to resolve such claim in accordance with Section
10.8.

      9.6   SETTLEMENTS. No party may settle any claim, action or proceeding
related to a liability to a third party without the consent of the other
parties, if such settlement would impose any monetary obligation on the other
parties or require the other parties to submit to an injunction or impose any
covenant or commitment on the other party or otherwise limit the other party's
rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.

      9.7   NO CONSEQUENTIAL OR PUNITIVE DAMAGES. No party hereto (or its
Affiliates) shall, under any circumstance, be liable to any other party (or its
Affiliates) for any

                                       33


consequential, exemplary, special, incidental or punitive Damages claimed by
such other party under the terms of or due to any Breach of this Agreement.

10.   MISCELLANEOUS PROVISIONS.

      10.1  FEES AND EXPENSES; INVESTMENT BANKING FEES.

            (a)   Except as provided in Section 8.3, each party to this
Agreement shall bear and pay all fees, costs and expenses (including all legal
fees and expenses, that have been incurred or that are in the future incurred
by, on behalf of or for the benefit of such party in connection with: (i) the
negotiation, preparation and review of any letter of intent or similar document
relating to any of the Transactions; (ii) the investigation and review conducted
by such party and its Representatives with respect to the Transactions; (iii)
the negotiation, preparation and review of this Agreement, the other Transaction
Agreements and all bills of sale, assignments, certificates, opinions and other
instruments and documents delivered or to be delivered in connection with the
Transactions; (iv) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions, and the
obtaining of any Consent required to be obtained in connection with any of the
Transactions; and (v) the consummation and performance of the Transactions.

            (b)   Notwithstanding anything to the contrary contained elsewhere
in this Agreement, and regardless of whether or not the Closing takes place,
each party to this Agreement shall pay its own investment banking, broker or
finder fees, if any, incurred in connection with the Transactions.

      10.2  ATTORNEY'S FEES. If any legal action or other legal proceeding
relating to any of the Transaction Agreements or the enforcement of any
provision of any of the Transaction Agreements is brought by one party against
any other party to this Agreement, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to any
other relief to which the prevailing party may be entitled).

      10.3  NOTICES. All notices, demands and other communications under or in
connection with this Agreement shall be in writing and shall be deemed properly
delivered, given and received (a) if delivered personally, upon delivery, (b) if
delivered by registered or certified mail (return receipt requested) from the
United States, upon the earlier of actual delivery or three Business Days after
being mailed, (c) if sent by overnight delivery by a recognized overnight
delivery service for overnight delivery, upon the earlier of actual delivery or
one Business Day after being sent, or (d) if given by facsimile, upon
confirmation of transmission by facsimile (or, if such confirmation does not
occur during normal business hours on a Business Day then on the next Business
Day), in each case to the parties at the following addresses or facsimile
numbers or to such other address or facsimile numbers as each party may
designate for itself by like notice to the other parties:

      if to Medicis:

                  Medicis Pharmaceutical Corporation
                  8125 N. Hayden Road
                  Scottsdale, Arizona  85258

                                       34


                  Facsimile: (602) 778-6007
                  Attn: Jonah Shacknai

      if to Ascent:

                  Ascent Pediatrics, Inc.
                  8125 N. Hayden Road
                  Scottsdale, Arizona  85258
                  Facsimile: (602) 778-6007
                  Attn: Jonah Shacknai

      With a copy to each of (which copies shall not constitute notice):

                  Medicis Pharmaceutical Corporation
                  8125 N. Hayden Road
                  Scottsdale, Arizona 85258
                  Facsimile: (602) 808-3881
                  Attn: General Counsel

                  and

                  Akin Gump Strauss Hauer & Feld LLP
                  1700 Pacific Ave., Suite 4100
                  Dallas, Texas 75201
                  Facsimile: (214) 969-4343
                  Attention: Michael E. Dillard, P.C.

      if to BioMarin:

                  BioMarin Pharmaceutical Inc.
                  371 Bel Marin Keys Blvd., Suite 210
                  Novato, California 94949
                  Facsimile: (415) 382-7889
                  Attention: Fredric D. Price

                                       35


      if to BioMarin Acquisition:

                  BioMarin Pharmaceutical Inc.
                  371 Bel Marin Keys Blvd., Suite 210
                  Novato, California 94949
                  Facsimile: (415) 382-7889
                  Attention: Fredric D. Price

      With a copy (which copies shall not constitute notice) to:

                  BioMarin Pediatrics Inc.
                  371 Bel Marin Keys Blvd., Suite 210
                  Novato, California 94949
                  Facsimile: (415) 382-7889
                  Attention: Fredric D. Price

                  Paul, Hastings, Janofsky & Walker LLP
                  515 South Flower Street, 25th Floor
                  Los Angeles, California 90071
                  Attention: Siobhan McBreen Burke, Esq.
                  Telephone: (213) 683-6000
                  Facsimile: (213) 627-0705

      10.4  TIME OF THE ESSENCE. Time is of the essence of this Agreement.

      10.5  HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

      10.6  COUNTERPARTS. This Agreement may be executed in several counterparts
(including by facsimile), each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.

      10.7  GOVERNING LAW; VENUE.

            (a)   This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of New York (without
giving effect to principles of conflicts of laws).

            (b)   Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in New York, New
York in the Borough of Manhattan. Each party to this Agreement:

                  (i)   expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in New York, New York in
the Borough of Manhattan (and each appellate court located in the State of New
York) in connection with any such legal proceeding;

                                       36


                  (ii)  agrees that each state and federal court located in New
York, New York in the Borough of Manhattan shall be deemed to be a convenient
forum; and

                  (iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in New York, New York in the Borough of Manhattan, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.

            (c)   The parties hereto agree that, if any Proceeding is commenced
against any Indemnified Party by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnified Party may proceed against
the Indemnifying Party in or before such court or other tribunal with respect to
any indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.

      10.8  DISPUTE RESOLUTION PROCEDURES. In the event any dispute arises
between the parties with respect to the interpretation of this Agreement or with
respect to the performance of either party, the parties shall first seek to
resolve such dispute by negotiations between senior executives who have
authority to settle the dispute. When a party believes there is a dispute
relating to the Agreement, such party shall give written notice of the dispute
to the other party or parties subject to the dispute. The senior executives
shall meet promptly after the date of such notice and shall attempt in good
faith within 45 days after the date of such notice to resolve the dispute prior
to initiating litigation with respect to such matter. Notwithstanding the
foregoing, if no such resolution is reached within such 45 days, then any party
may initiate any proceeding or pursue any remedy it deems appropriate and that
is not prohibited hereby.

      10.9  SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.

            (a)   This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, the other Indemnified Parties, and the respective
successors and assigns (if any) of the foregoing. No Person (including any
creditor of Medicis or Ascent or any Business Employee, Transferred Employee or
any other former or current employee of Ascent) who is not a party to this
Agreement shall have any rights hereunder as a third-party beneficiary or
otherwise.

            (b)   Neither this Agreement nor the rights and obligations of any
party hereunder shall be assigned without the prior written consent of the other
parties, which consent may be given or withheld in such party's sole discretion.
If Medicis or BioMarin or any of their respective successors (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
Medicis or BioMarin, as the case may be, shall assume the obligations set forth
in this Agreement.

                                       37


      10.10 EXCLUSIVE REMEDIES; SPECIFIC PERFORMANCE. Except as expressly
provided herein or in any Transaction Agreement, from and after the Effective
Time, the remedies provided in Article 9 shall constitute the sole and exclusive
remedy available to each party hereto for recovery against another party for
Breaches of the representations, warranties, covenants and agreements in this
Agreement. The parties hereto acknowledge that the material covenants,
obligations and other provisions to be performed under this Agreement are of a
special, unique and extraordinary character, and that irreparable injury will
result from any violation or continuing violation of the provisions of this
Agreement for which money damages may not be an adequate remedy. Accordingly,
the parties agree that in the event of any Breach or threatened Breach by any
party hereto of any material covenant, obligation or other provision set forth
in this Agreement, the other party or parties shall be entitled (in addition to
any other remedy that may be available to it) to seek in accordance with
applicable law, (i) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (ii) an injunction restraining such Breach or threatened Breach.

      10.11 WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.

      10.12 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of BioMarin, BioMarin Acquisition, Medicis and Ascent.

      10.13 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.

      10.14 ENTIRE AGREEMENT. The Transaction Agreements and the
BioMarin/Medicis CDA set forth the entire understanding of the parties relating
to the subject matter thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter thereof. This Agreement supercedes in its entirety that certain
Memorandum of Understanding for the Licensing of Oral Liquid Solution
Prednisolone Products among BioMarin, Medicis and Ascent, dated March 2, 2004.

                                       38


      10.15 PERFORMANCE GUARANTEE.

            (a)   BioMarin hereby unconditionally, irrevocably and absolutely
guarantees to Medicis and Ascent the due and punctual performance and discharge
of all of BioMarin Acquisition's obligations under this Agreement, including,
without limitation, the due and punctual payment of the Adjusted Acquired Assets
Payment and any other amount that BioMarin Acquisition is or may become
obligated to pay pursuant to this Agreement (collectively, the "OBLIGATIONS").
The guarantee under this Section 10.15 is a guarantee of timely payment and
performance of the Obligations and not merely of collection.

            (b)   To the fullest extent permitted by applicable law, the
obligations of BioMarin hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of BioMarin Acquisition or the bankruptcy,
insolvency, reorganization, dissolution, liquidation, or other similar
proceeding relating to BioMarin Acquisition or any Affiliate or Subsidiary of
either BioMarin Acquisition or BioMarin or (ii) any neglect, delay, omission,
failure or refusal of BioMarin to take or prosecute any action in connection
with this Agreement or any other agreement, delivered in connection herewith. In
connection with this Section 10.15, BioMarin unconditionally waives: (i) any
right to receive demands, protests, or other notices of any kind or character
whatsoever provided that the same has been delivered to BioMarin Acquisition;
(ii) any right to require Medicis or Ascent to proceed first against BioMarin
Acquisition or to exhaust any security held by Medicis or Ascent or to pursue
any other remedy; (iii) any defense based upon an election of remedies by
Medicis or Ascent; (iv) any duty of Medicis or Ascent to advise BioMarin of any
information known to Medicis or Ascent regarding BioMarin Acquisition or its
ability to perform under this Agreement; and (v) all suretyship and other
defenses of every kind and nature.

            (c)   The obligations of BioMarin under this Section 10.15 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of BioMarin Acquisition in respect of the
Obligations are rescinded or must be otherwise restored, and BioMarin agrees
that it will indemnify Medicis and Ascent on demand for all costs and expenses
(including reasonable attorneys fees and expenses) incurred by Medicis or Ascent
in connection with such rescission or restoration. If in connection with the
foregoing, Medicis or Ascent is required to refund part or all of any payment of
BioMarin Acquisition, such payment by Medicis or Ascent shall not constitute a
release of BioMarin from any liability hereunder, and BioMarin's liability
hereunder shall be reinstated to the fullest extent allowed under applicable law
and shall not be construed to be diminished in any manner.

            (d)   This Section 10.15 shall survive the Closing and shall remain
in full force and effect, subject to the provisions of Section 10.15(c).

      10.16 CONSTRUCTION.

            (a)   For purposes of this Agreement, including the Exhibits hereto,
whenever the context requires: the singular number shall include the plural, and
vice versa; the masculine gender shall include the feminine and neuter genders;
the feminine gender shall include the

                                       39


masculine and neuter genders; and the neuter gender shall include the masculine
and feminine genders.

            (b)   The parties hereto agree that 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 Agreement.

            (c)   As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."

            (d)   Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.

      10.17 BULK TRANSFER LAWS. Each of BioMarin and BioMarin Acquisition
acknowledges that neither Medicis nor Ascent will comply with the provisions of
any bulk transfer laws of any jurisdiction in connection with the transactions
contemplated by this Agreement.

      10.18 NO PROJECTION OR FINANCIAL FORECAST. MEDICIS IS NOT MAKING ANY
REPRESENTATION OR WARRANTY TO BIOMARIN AND BIOMARIN ACQUISITION WITH RESPECT TO
(I) ANY FINANCIAL PROJECTION OR FORECAST RELATING TO THE PEDIATRICS BUSINESS,
THE ACQUIRED ASSETS OR LIABILITIES OF MEDICIS OR ASCENT OR RELATED TO THE
PHARMACEUTICAL MARKET AS A WHOLE OR THE MARKET FOR ORAL LIQUID PREDNISOLONE
SOLUTION PRODUCTS OR ORAL DISSOLVING TABLET PREDNISOLONE PRODUCTS SPECIFICALLY,
INCLUDING BUT NOT LIMITED TO ANY PROJECTIONS INCLUDING FUTURE SALES OF SUCH
PRODUCTS, OR THE INTRODUCTION OF ANY COMPETITIVE PRODUCTS (WHETHER GENERIC OR
NAME BRAND).

                            [SIGNATURE PAGE FOLLOWS]

                                       40


                  [SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

      The parties to this Agreement have caused this Agreement to be executed
and delivered by their duly authorized representatives as of April 20, 2004.

                                MEDICIS PHARMACEUTICAL CORPORATION,
                                a Delaware corporation

                                By:    _________________________________________
                                Name:  _________________________________________
                                Title: _________________________________________

                                ASCENT PEDIATRICS, INC.,
                                a Delaware corporation

                                By:    _________________________________________
                                Name:  _________________________________________
                                Title: _________________________________________

                                BIOMARIN PHARMACEUTICAL INC.,
                                a Delaware corporation

                                By:    _________________________________________
                                Name:  _________________________________________
                                Title: _________________________________________

                                BIOMARIN PEDIATRICS INC.,
                                a Delaware corporation

                                By:    _________________________________________
                                Name:  _________________________________________
                                Title: _________________________________________



                                    EXHIBIT A

                               CERTAIN DEFINITIONS

      For purposes of the Agreement (including this EXHIBIT A):

      "ACQUISITION TRANSACTION" shall mean any transaction or series of
transactions (other than the transactions contemplated hereby and in the
documents executed in connection herewith) involving:

            (a)   any merger, consolidation, share exchange, business
combination, issuance of securities, direct or indirect acquisition of
securities, recapitalization, tender offer, exchange offer or other similar
transaction in which (i) Ascent is a constituent corporation, (ii) a Person or
"group" (as defined in the Exchange Act and the rules promulgated thereunder) of
Persons directly or indirectly acquires any of the outstanding securities of any
class of Ascent (other than in connection with the acquisition of Medicis), or
(iii) Ascent issues any securities;

            (b)   any direct or indirect sale, lease, exchange, transfer,
license, acquisition or disposition of any business or businesses or of all or
substantially all of the assets or rights that are part of the Pediatrics
Business; or

            (c)   any liquidation or dissolution of Medicis or Ascent.

      "AFFILIATE" shall mean with respect to any Person, any other Person
controlling, controlled by or within common control with such Person. Without
limiting the foregoing, Ascent is an Affiliate of Medicis and Medicis is an
Affiliate of Ascent, and BioMarin is an Affiliate of BioMarin Acquisition and
BioMarin Acquisition is an Affiliate of BioMarin.

      "AGREEMENT" shall mean the Asset Purchase Agreement to which this EXHIBIT
A is attached (including the Ascent Disclosure Schedule), as it may be amended
from time to time in accordance herewith.

      "ASCENT DISCLOSURE SCHEDULE" shall mean the schedule (dated as of the date
of the Agreement) delivered to BioMarin Acquisition on behalf of Ascent, a copy
of which is attached to the Agreement and incorporated in the Agreement by
reference.

      "ASCENT MERGER AGREEMENT" shall mean that certain Agreement and Plan of
Merger among Medicis, MPC Merger Corp. and Ascent, dated October 1, 2001.

      "BIOMARIN INDEMNITEES" shall mean BioMarin Acquisition and BioMarin.

      "BIOMARIN/MEDICIS CDA" means that certain Nondisclosure Agreement entered
into between Medicis and BioMarin dated January 21, 2004.

      "BREACH" means an inaccuracy in or breach of, or any failure to comply
with or perform, a representation, warranty, covenant, obligation or other
provision.

                                      A-1


      "BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any day
which shall be in the State of New York a legal holiday or a day on which
banking institutions are authorized by law to close.

      "CIMA CONTRACTS" means the following contracts: (a) that certain Supply
and Manufacture Agreement between Medicis Manufacturing Corporation, a wholly
owned subsidiary of Medicis, and CIMA Labs Inc. ("CIMA") effective as of June
26, 2003; and (b) that certain Development, Commercialization and License
Agreement between Ascent and CIMA Labs, Inc. effective as of June 26, 2003.

      "CODE" shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.

      "COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act of 1933, as
amended.

      "CONSENT" shall mean any approval, consent, ratification, permission,
waiver, authorization, filing, registration or notification (including any
Governmental Authorization).

      "CONTRACT" shall mean any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
deed, assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance or undertaking
of any nature.

      "DAMAGES" shall include any loss, damage, injury, Liability, claim,
demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable legal fees, expert fees, accounting fees or advisory fees), charge,
cost (including reasonable costs of investigation) or expense of any nature.

      "DEVELOPMENT PATENTS" shall mean all the United States and foreign patents
and utility models, invention registrations, supplementary protection
certificates and applications therefor listed in Part L-1.1(t) of the Ascent
Disclosure Schedule and all reissues, divisionals, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof.

      "DEVELOPMENT TECHNOLOGY" shall mean the Development Patents and the
Development Know How.

      "DUAL USE KNOW HOW" shall mean technical, scientific and medical
information, knowledge, know-how, inventions and trade secrets, which (a) (i) is
owned by Ascent or its Affiliates and pertain or relate to both oral liquid
prednisolone solution products and the Primsol product previously marketed by
Ascent under Abbreviated New Drug Application 74-973 or (ii) is controlled by or
licensed to Ascent or its Affiliates on a non-exclusive basis, and is
sublicensable to a third party by Ascent or its Affiliates but is not owned by
Ascent or its Affiliates and (b) is necessary for, used in or related to the
development, registration, manufacturing, formulation, sale, use and
commercialization of oral liquid prednisolone solution products.

                                      A-2


      "EMPLOYEE BENEFIT PLAN" shall have the meaning specified in Section 3(3)
of ERISA and each other employee benefit plan, program or arrangement at any
time maintained, sponsored or contributed to (or required to be contributed to)
by Medicis or any of its Affiliates or ERISA Affiliates or with respect to which
Medicis or any of its Affiliates has any liability or potential liability.

      "ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, equitable interest, claim, preference,
right of possession, lease, license, covenant, infringement, Order, proxy,
option, right of first refusal, preemptive right, legend, defect, impediment,
exception, reservation, limitation, impairment, imperfection of title, condition
or restriction of any nature (including any restriction on the transfer of any
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).

      "ENTITY" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and any regulations promulgated thereunder.

      "ERISA AFFILIATE" shall mean any Person that is, was or would be treated
as a single employer with Medicis, Ascent or any of their Affiliates under
Section 414 of the Code.

      "ESCROW AGENT" means U.S. Bank, N.A. or such other escrow agent as
mutually agreed to by Medicis and BioMarin.

      "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and any regulations promulgated thereunder.

      "GOVERNMENTAL AUTHORIZATION" shall mean any permit, license, certificate,
franchise, concession, approval, consent, ratification, permission, clearance,
confirmation, endorsement, waiver, certification, designation, rating,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.

      "GOVERNMENTAL BODY" shall mean any United States federal, state or local
judicial, legislative, executive or other regulatory authority.

      "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and any regulations promulgated thereunder.

      "IMPROVEMENTS" means any and all inventions, improvements, discoveries,
enhancements, extensions, replacements, developments, refinements, or
modifications to the Technology or the Development Technology, or utilizing the
Technology or the Development Technology, or the respective use or the
manufacturing processes therefor, whether or not

                                      A-3


patentable, which may be conceived, made, developed or otherwise controlled by
BioMarin Acquisition or its Affiliates during the term of the License Agreement
including, without limitation, modifications in size, package forms, dosage
strength, methods for administration, methods for delivering, or changes in the
formulation including the addition of actives to products.

      "INDEMNIFIED PARTIES" shall mean the Medicis Indemnitees or the BioMarin
Indemnitees, as the case may be.

      "INDEMNIFYING PARTIES" shall mean Medicis or BioMarin, as the case may be.

      "INTELLECTUAL PROPERTY" shall mean the Trademarks and the Technology.

      "INTELLECTUAL PROPERTY ASSETS" means the Technology, the Development
Technology, the Trademarks and the Improvements.

      "KNOW HOW" shall mean technical, scientific and medical information,
knowledge, know-how, inventions and trade secrets, that are necessary for the
development, registration, manufacturing, packaging, stability, bioavailability,
formulation, sale, use or commercialization of ORAPRED(R) and the "Licensed
Products" (as defined in the Development, Commercialization and License
Agreement between Ascent Pediatrics Inc. and Cima Labs Inc.), as the case may
be, including, without limitation: (a) physiochemical data, specifications,
quality control information and procedures; (b) market research data solely to
the extent Ascent has the right to assign such data to BioMarin Acquisition; and
(c) information concerning the clinical, toxicological and pharmacological
properties with respect to all of the foregoing, owned by Ascent or its
Affiliates, as of the Effective Time; provided that Know How shall not include
Dual Use Know How.

      "KNOWLEDGE" An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. Each of Ascent or Medicis shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or individual
identified on EXHIBIT M hereto has Knowledge of such fact or other matter. Each
of BioMarin Acquisition or BioMarin shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or individual identified on
EXHIBIT N hereto has Knowledge of such fact or other matter.

      "LEGAL REQUIREMENT" shall mean any applicable order, writ, injunction,
judgment, decree, statute, rule or regulation of any Governmental Body.

      "LIABILITY" shall mean any debt, obligation, liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation or liability is immediately due and payable.

      "LITIGATION MATTERS" shall mean those matters set forth on EXHIBIT O
hereto.

                                      A-4


      "LYNE CONTRACT" means that certain Manufacturing Agreement between Medicis
Manufacturing Corporation, a wholly owned subsidiary of Medicis and Lyne
Laboratories Incorporated effective as of March 15, 2004.

      "LYNE LICENSE" shall mean that certain License Agreement between Ascent
and Lyne Laboratories, Inc. dated May 21, 2001 (without regard to any amendment
or modification thereof subsequent to the date hereof).

      "MATERIAL ACQUIRED BUSINESS CONTRACT" means the CIMA Contracts and the
Lyne Contract.

      "MATERIAL ADVERSE EFFECT" With respect to Medicis, Medicis Manufacturing
and/or Ascent, an "ASCENT MATERIAL ADVERSE EFFECT" means any event,
circumstance, condition, development or occurrence causing, resulting in or
having a material adverse effect on Ascent, the Intellectual Property, or the
Pediatrics Business, taken as a whole; provided that in no event shall any of
the following be deemed to constitute or be taken into account in determining an
Ascent Material Adverse Effect: any event, circumstance, change or effect that
results from (A) changes affecting the economy generally, (B) changes in the
pharmaceutical industry as a whole or in the market for oral liquid prednisolone
solution products or oral dissolving tablet prednisolone products, (C) the
public announcement or pending nature of the Transactions, or (D) any adverse
judgment, verdict or Order relating to the Litigation Matters (provided that
this clause (D) shall not restrict or modify the conditions set forth in
Sections 6.1, 6.3 and 6.4). With respect to BioMarin and/or BioMarin
Acquisition, a "BIOMARIN MATERIAL ADVERSE EFFECT" means any event, circumstance,
condition, development or occurrence causing, resulting in or having a material
adverse effect on the business, condition, capitalization, assets, liabilities,
operations or financial performance of BioMarin, taken as a whole; provided that
in no event shall any of the following be deemed to constitute or be taken into
account in determining a BioMarin Material Adverse Effect: any event,
circumstance, change or effect that results from (x) changes affecting the
economy generally, (y) changes in the pharmaceutical industry as a whole, or (z)
the public announcement or pending nature of the Transactions.

      "MEDICIS INDEMNITEES" means Medicis, Medicis Manufacturing and Ascent.

      "ORAPRED(R)" means a product having the approved prednisolone sodium
phosphate oral solution formulation, 15mg (base)/5ml as set forth under
Abbreviated New Drug Application 75-117.

      "ORDER" shall mean any order, judgment, injunction, decree, ruling,
decision, opinion, verdict, sentence, writ or award issued, made, entered,
rendered or otherwise put into effect by or under the authority of any court,
administrative agency or other Governmental Body or any arbitrator or
arbitration panel.

      "ORDINARY COURSE OF BUSINESS" An action taken by or on behalf of Ascent or
Medicis shall not be deemed to have been taken in the "Ordinary Course of
Business" unless such action is regularly recurring in nature and is consistent
with the past practices of Ascent or Medicis in the conduct of the Pediatrics
Business.

                                      A-5


      "PERMITTED ENCUMBRANCES" shall mean (a) contractual rights of the other
parties to the Acquired Business Contracts under the Acquired Business
Contracts, and (b) Permitted Liens.

      "PERMITTED LIENS" shall mean liens for Taxes, assessments and other
governmental charges which are not due and payable or which may hereafter be
paid without penalty or which are being contested in good faith by appropriate
proceedings.

      "PERSON" shall mean any individual, Entity or Governmental Body.

      "PRE-CLOSING PERIOD" shall mean the period from the date of the Agreement
through the Effective Time.

      "PROCEEDING" shall mean any claim, action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), or investigation commenced, brought, conducted or heard
by or before, or otherwise involving, any Governmental Body or any arbitrator or
arbitration panel.

      "PRODUCTS" shall mean any product or method made, used, imported, offered
for sale, distributed or sold which, if in the course of such manufacture, use,
importation, offer for sale, distribution or sale, would, in the absence of the
License Agreement, infringe or misappropriate one or more of the Intellectual
Property Assets.

      "REPRESENTATIVES" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.

      "SUBSIDIARY" shall mean with respect to any Person, any other Person (a)
of which the initial Person directly or indirectly owns or controls more than
50% of the voting equity interests or has the power to elect or direct the
election of a majority of the members of the governing body of such Person or
(b) which is required to be consolidated with such Person under generally
accepted accounting principles.

      "TASTE MASKING RELATED PATENTS" shall mean all the United States and
foreign patents and utility models, invention registrations, supplementary
protection certificates and applications therefor listed in Part L-1.1(jjj) of
the Ascent Disclosure Schedule and all reissues, divisionals, renewals,
extensions, provisionals, continuations, and continuations-in-part thereof.

      "TAX" shall mean any tax (including any income tax, franchise tax, capital
gains tax, estimated tax, gross receipts tax, value added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, occupation tax, inventory tax, occupancy tax, withholding tax or
payroll tax), levy, assessment, tariff, impost, imposition, toll, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), that is, has been or may in
the future be (a) imposed, assessed or collected by or under the authority of
any Governmental Body, or (b) payable pursuant to any tax sharing agreement or
similar Contract.

      "TAX RETURN" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to

                                      A-6


be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.

      "TECHNOLOGY" shall mean the Taste Masking Related Patents and the Know
How.

      "TRADEMARKS" shall mean all business names, trade names, logos, common law
trademarks and service trademarks, trademark and service mark registrations and
applications therefor as set forth in Part L-1.1(oo) of the Ascent Disclosure
Schedule.

      "TRANSACTION AGREEMENTS" shall mean: (a) this Agreement; (b) the
Assumption Agreement; (c) the Transition Services Agreement; (d) the Supply
Agreement; and (e) the transfer documents contemplated by Section 1.5(b)(i).

      "TRANSACTIONS" shall mean (a) the execution and delivery of the respective
Transaction Agreements, and (b) all of the transactions contemplated by the
respective Transaction Agreements, including: (i) the sale of the Acquired
Assets to BioMarin Acquisition in accordance with this Agreement; and (ii) the
assumption of the Assumed Liabilities by BioMarin Acquisition pursuant to the
Assumption Agreement.

      "TRIUMPH PROCEEDING" shall mean that certain action brought by
Triumph-Connecticut Limited Partnership and related parties against Ascent on
November 9, 2001 in the Superior Court, Suffolk County of Massachusetts
captioned Triumph Connecticut Limited Partnership et al. v. Ascent Pediatrics,
Inc., Civil Action No. 01-5159-BLS2 and all Proceedings arising out of, in
connection with or relating to such action.

                                      A-7


          Other defined terms are located in the Agreement as follows:



DEFINED TERM                                                       PAGE NO.
- ------------                                                       --------
                                                                
ACQUIRED ASSETS..................................................      1
ACQUIRED BUSINESS CONTRACTS......................................      2
ACTUAL INVENTORY VALUE...........................................      4
ADJUSTED ACQUIRED ASSETS PAYMENT.................................      2
ASCENT...........................................................      1
ASCENT BREACH....................................................     28
ASSUMED LIABILITIES..............................................      3
ASSUMPTION AGREEMENT.............................................      4
BILL OF SALE.....................................................      4
BIOMARIN.........................................................      1
BIOMARIN ACQUISITION.............................................      1
BIOMARIN BREACH..................................................     28
BIOMARIN CAP.....................................................     32
BIOMARIN/MEDICIS CDA.............................................     24
BUSINESS EMPLOYEE BENEFITS PLAN..................................     16
BUSINESS EMPLOYEES...............................................     14
CLOSING..........................................................      3
CLOSING DATE.....................................................      3
CLOSING INVENTORY STATEMENT......................................      4
COBRA............................................................     16
CONFIDENTIALITY AGREEMENT........................................     26
EFFECTIVE TIME...................................................      4
ENFORCEABILITY EXCEPTION.........................................      6
ESCROW AGREEMENT.................................................     26
ESTIMATED INVENTORY VALUE........................................      4
EXCLUDED LIABILITIES.............................................      3
FDA..............................................................      9
FDCA.............................................................      9
KPMG.............................................................      4
LICENSE AGREEMENT................................................     26
MEDICIS..........................................................      1
MEDICIS CAP......................................................     30
OBLIGATIONS......................................................     39
PEDIATRICS BUSINESS..............................................      1
PEDIATRICS BUSINESS RETURNS......................................     13
PURCHASE PRICE ALLOCATION........................................     24
PURCHASED INVENTORY..............................................      2
SECURITIES PURCHASE AGREEMENT....................................     26
SECURITY AGREEMENT...............................................     26
SUPPLY AGREEMENT.................................................      3
TERMINATION DATE.................................................     28
THIRD PARTY CLAIM................................................     32
TRANSFERRED EMPLOYEES............................................     23


                                      A-8


                                                                
TRANSITION SERVICES AGREEMENT....................................      3
WARN ACT.........................................................     15



                                      A-9

EX-10.2

                                                                    EXHIBIT 10.2

- --------------------------------------------------------------------------------

                          SECURITIES PURCHASE AGREEMENT

                                      among

                       MEDICIS PHARMACEUTICAL CORPORATION,
                             a Delaware corporation,

                            ASCENT PEDIATRICS, INC.,
                             a Delaware corporation,

                          BIOMARIN PHARMACEUTICAL INC.,
                             a Delaware corporation

                                       and

                            BIOMARIN PEDIATRICS INC.,
                             a Delaware corporation

                            Dated as of May 18, 2004

- --------------------------------------------------------------------------------



                                TABLE OF CONTENTS



                                                                                                       Page
                                                                                                       ----
                                                                                                    
1.    OPTION TO ACQUIRE ASCENT......................................................................     1

      1.1      Option Grant.........................................................................     1

      1.2      Option Exercise......................................................................     1

      1.3      Option Exercise Price................................................................     3

      1.4      Option Closing.......................................................................     4

      1.5      Escrow for Discovered Liabilities....................................................     5

      1.6      Alternative Structure................................................................     6

2.    REPRESENTATIONS AND WARRANTIES OF MEDICIS.....................................................     6

      2.1      Due Organization; No Subsidiaries; Etc...............................................     6

      2.2      Capitalization.......................................................................     6

      2.3      Authority; Binding Nature of Agreements..............................................     7

      2.4      Governmental and Other Authorizations................................................     7

      2.5      Non-Contravention; Consents..........................................................     7

      2.6      Title to Option Shares; Acquisition Transaction......................................     8

      2.7      Liabilities..........................................................................     8

      2.8      Tax Matters..........................................................................     8

      2.9      Proceedings; Orders..................................................................    10

      2.10     Fraudulent Transfers.................................................................    10

      2.11     Real Property........................................................................    10

      2.12     Investment Banking Fees..............................................................    10

      2.13     Investment Representations of Medicis................................................    10

      2.14     Compliance with Legal Requirements...................................................    12

3.    REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION...........................    12

      3.1      Due Organization; Etc................................................................    12

      3.2      Capitalization.......................................................................    13

      3.3      Authority; Binding Nature of Agreements..............................................    13

      3.4      Governmental and Other Authorizations................................................    13

      3.5      Non-Contravention....................................................................    13

      3.6      Filings with the Commission..........................................................    14


                                       i



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                       Page
                                                                                                       ----
                                                                                                    
      3.7      Liabilities..........................................................................    14

      3.8      Compliance with Legal Requirements...................................................    14

      3.9      Proceedings; Orders..................................................................    14

      3.10     Fraudulent Transfers.................................................................    15

      3.11     Investment Banking Fees..............................................................    15

      3.12     Nasdaq Listing Compliance............................................................    15

      3.13     Investment Representations of BioMarin...............................................    15

      3.14     Absence of Changes...................................................................    16

4.    OTHER AGREEMENTS..............................................................................    16

      4.1      Operation of Medicis and Ascent......................................................    16

      4.2      Operation of BioMarin and BioMarin Acquisition.......................................    19

      4.3      No Disposition or Encumbrance of Option Shares.......................................    19

      4.4      Access and Investigation.............................................................    19

      4.5      Notification.........................................................................    20

      4.6      Noncompetition by Medicis............................................................    20

      4.7      Public Announcements.................................................................    20

      4.8      Registration of Shares...............................................................    21

      4.9      Additional Tax Matters...............................................................    25

      4.10     Update of "Knowledge" Definition.....................................................    26

      4.11     Confidentiality......................................................................    26

      4.12     Reasonable Efforts; Filings and Consents.............................................    26

5.    CONDITIONS PRECEDENT TO BIOMARIN ACQUISITION'S OBLIGATION TO EXERCISE OPTION..................    26

      5.1      Accuracy of Representations..........................................................    26

      5.2      Consents and Governmental Approvals..................................................    27

      5.3      No Restraints........................................................................    27

      5.4      Performance of Obligations...........................................................    27

      5.5      Additional Documents.................................................................    27

      5.6      Release..............................................................................    27

6.    CONDITIONS PRECEDENT TO MEDICIS' OBLIGATION TO CLOSE..........................................    27


                                       ii



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                       Page
                                                                                                       ----
                                                                                                    
      6.1      Accuracy of Representations..........................................................    28

      6.2      Consents and Governmental Approvals..................................................    28

      6.3      No Restraints........................................................................    28

      6.4      Performance of Obligations...........................................................    28

      6.5      Additional Documents; Payments.......................................................    28

7.    TERMINATION...................................................................................    29

      7.1      Termination Events...................................................................    29

      7.2      Termination Procedures...............................................................    29

      7.3      Effect of Termination................................................................    29

8.    SURVIVAL AND INDEMNIFICATION..................................................................    29

      8.1      Survival of Representations and Covenants............................................    29

      8.2      Indemnification by Medicis...........................................................    30

      8.3      Indemnification by BioMarin..........................................................    32

      8.4      Procedures Relating to Indemnification for Third Party Claims........................    33

      8.5      Other Claims.........................................................................    34

      8.6      Settlements..........................................................................    34

      8.7      No Consequential or Punitive Damages.................................................    34

9.    MISCELLANEOUS PROVISIONS......................................................................    35

      9.1      Further Assurances...................................................................    35

      9.2      Fees and Expenses; Investment Banking Fees...........................................    35

      9.3      Attorneys' Fees......................................................................    35

      9.4      Notices..............................................................................    35

      9.5      Time of the Essence..................................................................    37

      9.6      Headings.............................................................................    37

      9.7      Counterparts.........................................................................    37

      9.8      Governing Law; Venue.................................................................    37

      9.9      Dispute Resolution Procedures........................................................    38

      9.10     Successors and Assigns; Parties In Interest..........................................    38

      9.11     Exclusive Remedies; Specific Performance.............................................    38

      9.12     Waiver...............................................................................    39


                                      iii



                                TABLE OF CONTENTS
                                   (continued)



                                                                                                       Page
                                                                                                       ----
                                                                                                    
      9.13     Amendments...........................................................................    39

      9.14     Severability.........................................................................    39

      9.15     Entire Agreement.....................................................................    39

      9.16     Performance Guarantee................................................................    39

      9.17     Construction.........................................................................    40

      9.18     Consistency..........................................................................    41

      9.19     NO PROJECTION OR FINANCIAL FORECAST..................................................    41

      9.20     Noncompetition by BioMarin...........................................................    41


                                       iv



                          SECURITIES PURCHASE AGREEMENT

      THIS SECURITIES PURCHASE AGREEMENT is entered into as of May 18, 2004 (the
"EFFECTIVE DATE"), by and among Medicis Pharmaceutical Corporation, a Delaware
corporation ("MEDICIS"), Ascent Pediatrics, Inc., a Delaware corporation
("ASCENT"), BioMarin Pharmaceutical Inc., a Delaware corporation ("BIOMARIN"),
and BioMarin Pediatrics Inc., a Delaware corporation and wholly-owned subsidiary
of BioMarin ("BIOMARIN ACQUISITION"). Capitalized terms used in this Agreement
are defined herein and in EXHIBIT A.

                                    RECITALS

      WHEREAS, Medicis owns, of record and beneficially, all of the issued and
outstanding capital stock of Ascent; and

      WHEREAS, Medicis desires to grant to BioMarin Acquisition an option to
purchase all of the issued and outstanding capital stock of Ascent, pursuant to
and subject to the terms of this Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
hereby agree as follows:

1.    OPTION TO ACQUIRE ASCENT.

      1.1 OPTION GRANT. Medicis hereby grants to BioMarin Acquisition an
exclusive option (the "OPTION") to acquire good and valid title to all of the
issued and outstanding shares of capital stock of Ascent, free and clear of all
Encumbrances (the "OPTION SHARES"), the purchase and sale of which shall be
pursuant to the terms and conditions of this Agreement.

      1.2 OPTION EXERCISE.

            (a) The Option shall be exercised by BioMarin Acquisition and
concurrently therewith the purchase and sale of the Option Shares shall occur,
subject to Section 1.2(b), (c), (d), (e), and 1.5(b) on the later of August 17,
2009 (the "TARGET CLOSING DATE"), or the fifth (5th) Business Day after the last
of the conditions set forth in Article 5 and Article 6 shall have been satisfied
or waived, except for conditions which by their terms must be satisfied as of
the date of consummation of the purchase and sale of the Option Shares (the
"OPTION CLOSING Date"); provided, however, that if the aggregate number of
prescriptions for products with an equivalent or greater economic value per
prescription using ORAPRED(R), oral liquid prednisolone solution products and
oral dissolving tablet prednisolone products that are sold by BioMarin
Acquisition or its Affiliates or licensees during the period from, April 1, 2008
to March 31, 2009 exceeds 150% of the aggregate number of prescriptions for
products using ORAPRED(R), oral liquid prednisolone solution products and oral
dissolving tablet prednisolone products that were sold by Medicis, Ascent or
their Affiliates or licensees during the twelve month period ending on March 31,
2004, as reported by IMS Health Incorporated, then BioMarin Acquisition may
elect, in its sole and absolute discretion, not to exercise the Option, in which
case it shall deliver to Medicis, on or prior to the Option Closing Date, a
notice that it declines to exercise the Option (the


"NOTICE OF NON-EXERCISE"). The Notice of Non-Exercise shall be given by the
delivery of written notice to such effect to Medicis on or before the Option
Closing Date.

            (b) Medicis may, in its sole discretion, accelerate the Option
Closing Date if BioMarin Acquisition fails to timely make any License Payment or
Contingent Payments Reimbursement Payment (as such terms are defined in the
License Agreement) pursuant to the terms of the License Agreement and such
failure is not cured within twenty (20) Business Days of the due date thereof,
including the payment of accrued interest. If Medicis elects to accelerate the
Option Closing Date pursuant to this Section 1.2(b): (i) Medicis shall deliver
notice of such election (a "NOTICE OF ACCELERATION") to BioMarin Acquisition
within sixty (60) days of the end of the cure period specified in the
immediately preceding sentence; and (ii) the Option Closing Date shall occur
twenty (20) Business Days after receipt by BioMarin Acquisition of the Notice of
Acceleration and the Option Closing shall occur on such Option Closing Date in
accordance with Section 1.4. BioMarin's right to deliver a Notice of
Non-Exercise pursuant to Section 1.2(a) shall immediately terminate upon receipt
of a Notice of Acceleration from Medicis delivered in accordance herewith.

            (c) BioMarin Acquisition may, in its sole discretion, accelerate the
Option Closing Date if either Ascent or Medicis is in material Breach of any its
obligations under the License Agreement and BioMarin Acquisition gives Medicis
written notice of such Breach, specifying in reasonable detail the particulars
of the alleged Breach, and such Breach has not been cured within twenty (20)
Business Days after Medicis' receipt of such notice. If BioMarin Acquisition
elects to accelerate the Option Closing Date pursuant to this Section 1.2(c):
(i) BioMarin Acquisition shall deliver a Notice of Acceleration to Medicis
within sixty (60) days of the end of the cure period specified in the
immediately preceding sentence; and (ii) the Option Closing Date shall occur
twenty (20) Business Days after receipt by Medicis of the Notice of Acceleration
and the Option Closing shall occur on such Option Closing Date in accordance
with Section 1.4; provided, however, that the payment of the Cash Option Payment
by BioMarin Acquisition to Medicis pursuant to Section 1.4(b)(ii) and the
delivery of the BioMarin Payment Shares by BioMarin to Medicis pursuant to
Section 1.4(b)(iii) shall not occur until the Target Closing Date.

            (d) In the event that a case is commenced by or against Ascent to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or there is appointed a trustee, receiver, conservator,
assignee, sequestrator, custodian, liquidator (or other similar official) with
respect to Ascent or with respect to all or any substantial part of its
properties or assets, or Ascent makes an assignment for the benefit of
creditors, or Ascent admits in writing its inability to pay its debts generally
as they become due, or Ascent declares or effects a moratorium on its debt or
takes any corporate action in furtherance of any of the foregoing, then BioMarin
Acquisition may, in its sole discretion, accelerate the Option Closing Date. If
BioMarin Acquisition elects to accelerate the Option Closing Date pursuant to
this Section 1.2(d): (i) BioMarin Acquisition shall deliver a Notice of
Acceleration to Medicis within sixty (60) days of any filing, consent,
admission, declaration or action specified in the immediately preceding
sentence; and (ii) the Option Closing Date shall occur twenty (20) Business Days
after receipt by Medicis of the Notice of Acceleration and the Option Closing
shall occur on such Option Closing Date in accordance with Section 1.4;
provided, however, that the payment of the Cash Option Payment by BioMarin
Acquisition to Medicis pursuant to

                                       2


Section 1.4(b)(ii) and the delivery of the BioMarin Payment Shares by BioMarin
to Medicis pursuant to Section 1.4(b)(iii) shall not occur until the Target
Closing Date.

            (e) In the event that a case is commenced by or against Medicis to
take advantage of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or there is appointed a trustee, receiver, conservator,
assignee, sequestrator, custodian, liquidator (or other similar official) with
respect to Medicis or with respect to all or any substantial part of its
properties or assets, or Medicis makes an assignment for the benefit of
creditors, or Medicis admits in writing its inability to pay its debts generally
as they become due, or Medicis declares or effects a moratorium on its debt or
takes any corporate action in furtherance of any of the foregoing, then the
Option Closing Date shall automatically accelerate to the date immediately prior
to any such commencement, filing, consent, appointment, admission, declaration
or action. If the Option Closing Date is accelerated pursuant to this Section
1.2(e) the parties shall immediately make the payments and deliveries specified
in Section 1.4(b); provided, however, that the payment of the Cash Option
Payment by BioMarin Acquisition to Medicis pursuant to Section 1.4(b)(ii) and
the delivery of the BioMarin Payment Shares by BioMarin to Medicis pursuant to
Section 1.4(b)(iii) shall not occur until the Target Closing Date.

      1.3 OPTION EXERCISE PRICE. The aggregate consideration for the Option
Shares shall be Eighty Two Million Dollars ($82,000,000) payable as follows:

            (a) Sixty Two Million Dollars ($62,000,000) (the "CASH OPTION
PAYMENT"), payable in cash at the Option Closing;

            (b) Twenty Million ($20,000,000), payable at the Option Closing in
that number of shares of BioMarin Common Stock with an aggregate value, as of
the Option Closing Date, of Twenty Million Dollars ($20,000,000), as measured by
the average closing sales price per share of BioMarin Common Stock over the
twenty trading days immediately preceding the Option Closing Date (or to the
extent the Option Closing Date is accelerated pursuant to Section 1.2(c), (d) or
(e), as measured by the average closing sales price per share of BioMarin Common
Stock over the twenty (20) trading days immediately preceding the Target Closing
Date) (the "BIOMARIN PAYMENT SHARES"); provided, however, (i) if BioMarin is
unable to deliver such BioMarin Payment Shares at the Option Closing, (ii) if
BioMarin determines that the representations and warranties in Section 3.12 or
3.14 are not accurate as of the Option Closing Date, or (iii) the registration
statement for BioMarin Payment Shares described in Section 4.8(a) is not
effective on the Option Closing Date, then in cash (and, in such event, BioMarin
shall have no further obligation under Section 4.8); and

            (c) In the event that the Option Closing Date is accelerated
pursuant to Section 1.2(b), (c), (d) or (e), the aggregate consideration for the
Option Shares shall be increased by an amount equal to the then remaining unpaid
License Payments and Contingent Payments Reimbursement Payments (each as defined
in the License Agreement) payable under the License Agreement (the "ADDITIONAL
CONSIDERATION). For avoidance of doubt, upon the Option Closing Date, neither
Medicis nor Ascent shall have any rights in or be entitled to receive any
remaining License Payments (as defined on the License Agreement) or Contingent
Payments Reimbursement Payments (as defined in the License Agreement) payable or
that become payable under the License Agreement.

                                       3


      1.4 OPTION CLOSING.

            (a) The closing of the sale of the Option Shares to BioMarin
Acquisition (the "OPTION CLOSING") shall take place at the offices of Paul,
Hastings, Janofsky & Walker LLP, Twenty-Fourth Floor, 55 Second Street, San
Francisco, California, at 10:00 a.m. on the Option Closing Date.

            (b) At the Option Closing:

                  (i) Medicis shall execute and deliver to BioMarin Acquisition
a certificate or certificates evidencing the Option Shares, properly endorsed
for transfer or with stock powers authorizing the transfer of the Option Shares
duly and validly executed in blank attached or otherwise in proper form for
transfer to BioMarin Acquisition, together with such other documents as BioMarin
Acquisition may reasonably request to evidence the transfer to BioMarin
Acquisition of good and valid title to the Option Shares, free and clear of all
Encumbrances;

                  (ii) BioMarin Acquisition shall pay to Medicis the Cash Option
Payment by wire transfer of immediately available funds, to an account
designated by Medicis not less than five (5) Business Days prior to the Option
Closing Date; provided, however, that in the event that the Option Closing Date
is accelerated pursuant to Section 1.2(c), (d) or (e), the payment of the Cash
Option Payment shall not occur until the Target Closing Date;

                  (iii) BioMarin shall deliver to Medicis a certificate or
certificates evidencing the BioMarin Payment Shares, each of which shall be
registered in the name of Medicis; provided, however, that in the event that the
Option Closing Date is accelerated pursuant to Section 1.2(c), (d) or (e), the
delivery of the BioMarin Payment Shares shall not occur until the Target Closing
Date;

                  (iv) Medicis shall deliver to BioMarin Acquisition all legal
analyses and opinions prepared for and in the name of Ascent related to the
Technology that are in the control and possession of Ascent;

                  (v) In the event that the Option Closing Date is accelerated
pursuant to Section 1.2(b), (c), (d) or (e), BioMarin Acquisition shall pay to
Medicis, by wire transfer of immediately available funds, to an account
designated by Medicis not less than five (5) Business Days prior to the Option
Closing Date, an amount equal to the Additional Consideration; and

                  (vi) In the event that the Option Closing Date is accelerated
pursuant to Section 1.2(b), (c), (d) or (e) prior to the termination of that
certain Escrow Agreement dated May 18, 2004 among BioMarin, BioMarin
Acquisition, Ascent and U.S. Bank, National Association, the parties shall, upon
payment by BioMarin or BioMarin Acquisition to Medicis of the amounts due to
Medicis under Section 1.4(b)(v), immediately deliver joint instructions to U.S.
Bank, National Association to terminate such Escrow Agreement and release all
remaining Escrow Assets (as defined in such Escrow Agreement) to BioMarin
Acquisition.

                                       4


      1.5 ESCROW FOR DISCOVERED LIABILITIES.

            (a) If, prior to the Option Closing Date, Medicis becomes aware of
any actual or potential Liability (including, without limitation, Third Party
Claims) of Ascent, except any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing of the Products, following the Effective Date, except
Damages suffered or incurred or arising from the Breach of Medicis, Ascent or
Medicis Manufacturing, as applicable, under the Supply Agreement, the Transition
Services Agreement or the License Agreement ("ASCENT LIABILITY"), then (i) at
least ninety (90) days prior to the Option Closing Date for each Ascent
Liability of which Medicis becomes aware prior to such ninety-day period, and
(ii) within at least two (2) Business Days for each Ascent Liability of which
Medicis becomes aware during such ninety-day period, Medicis shall notify (the
"LIABILITIES NOTICE") BioMarin Acquisition of such Ascent Liability.

            (b) BioMarin Acquisition shall have the right to conduct an
investigation into such Ascent Liabilities and the amount thereof and Medicis
shall afford BioMarin Acquisition such access and assistance as BioMarin
Acquisition may reasonably request as permitted under Section 4.4. If any
Liabilities Notice describes any Proceeding, Medicis will deliver or make
available to BioMarin Acquisition accurate and complete copies of all pleadings
(to which Medicis or Ascent has access) that relate to such Proceedings. The
senior executives of both Medicis and BioMarin Acquisition shall attempt in good
faith, within five (5) Business Days of receipt by BioMarin Acquisition of the
Liabilities Notice (the "RESOLUTION PERIOD"), to agree upon a reasonable
estimate of the potential Damages that BioMarin Acquisition would incur as a
result of such Ascent Liabilities if the Option Closing were consummated (the
"ESTIMATED DAMAGES"). If at the conclusion of the Resolution Period the parties
have not reached an agreement on the Estimated Damages, then Medicis and
BioMarin Acquisition shall engage an independent Entity expert in the type of
Liability that is the subject of the dispute (the "INDEPENDENT APPRAISER")
within five (5) Business Days of the end of the Resolution Period to determine
the Estimated Damages. Each party agrees to execute, if requested by the
Independent Appraiser, a reasonable engagement letter. The determination of the
Independent Appraiser of the Estimated Damages shall be made within sixty (60)
days after its engagement, shall be set forth in a written statement delivered
to Medicis and BioMarin Acquisition and shall be final, binding, conclusive and
nonappealable solely for the purpose of determining the amount of the Estimated
Damages under this Section 1.5. If the Option Closing Date would occur prior to
the final determination of the Estimated Damages, the Option Closing Date shall
be delayed until two (2) Business Days after such final determination. For
purposes of this Section 1.5(b), the Independent Appraiser will not be
considered "independent" if (A) it would not meet the independence requirements
set forth in Section 2-01(c) of Regulation S-X promulgated under the Exchange
Act, except substituting "Independent Appraiser" for "accountant" and "a party"
for "an audit client" as used therein, or (B) has been retained by either of the
parties within the preceding twelve month period.

            (c) The amount of the Estimated Damages as determined pursuant to
the procedures set forth in Section 1.5(b) shall be deducted from the Option
Shares deliverable at the Option Closing and the Cash Option Payment payable at
the Option Closing in the ratio of 20% of the Estimated Damages in Option Shares
and 80% of the Estimated Damages in Cash Option Payment (the "ESCROW CASH"). The
number of shares to be deducted from the Option Shares

                                      5


(the "ESCROW SHARES") shall be that number of BioMarin Shares (up to the total
number of Option Shares) with an aggregate value equal to 20% of the Estimated
Damages, as of the Option Closing Date, as measured by the average closing sales
price per BioMarin Share over the twenty (20) trading days immediately preceding
the Option Closing Date (such average closing sales price, as such amount shall
be appropriately adjusted to reflect stock splits, reverse stock splits, stock
dividends and similar events, being referred to as the "ESCROW SHARE PRICE").
The Escrow Shares and the Escrow Cash shall be deposited on the Option Closing
Date with an escrow agent mutually agreeable to the parties and on terms and
conditions substantially as set forth in the escrow agreement attached hereto as
EXHIBIT B (the "ESCROW AGREEMENT"). From and after the Option Closing Date, if
BioMarin Acquisition incurs any Damages in connection with any Ascent Liability,
the Escrow Shares (valued at the Escrow Share Price) and the Escrow Cash shall
be released to BioMarin Acquisition in the ratio of 20% of the Damages in Escrow
Shares and 80% of the Damages in Escrow Cash in satisfaction of such Damages up
to the amounts released from escrow. If after the Option Closing Date, BioMarin
Acquisition and Medicis agree in writing that the Ascent Liabilities cease to
exist, then the parties shall cause any Escrow Shares and Escrow Cash not
released to BioMarin in satisfaction of Damages to be released to Medicis.
Nothing contained in this Section 1.5 shall be deemed to limit or restrict the
rights of any BioMarin Indemnitee to pursue indemnification under Section 8.2.
Nothing herein shall be deemed an admission of liability as to any Third Party
by any party hereto with respect to any Ascent Liability. The parties hereto
agree that the receipt by a BioMarin Indemnitee of Escrow Shares shall be
treated as satisfaction of Damages as of the date of receipt thereof in an
amount equal to the product of the number of Escrow Shares received and the
Escrow Share Price.

      1.6 ALTERNATIVE STRUCTURE. In the event that any of the conditions set
forth in Article 5 are not satisfied on or prior to a date not later than 180
days prior to the sixth anniversary of the Effective Date, the parties shall
agree to and promptly thereafter shall consummate an alternative structure for
the transactions contemplated hereby so as to achieve the same result as
contemplated by this Agreement. For example, the parties shall consider a sale
of good and valid title to all of the assets of Ascent to BioMarin Acquisition
free and clear of all Encumbrances.

2.    REPRESENTATIONS AND WARRANTIES OF MEDICIS.

      Medicis represents and warrants as of the Effective Date and as of the
Option Closing Date, to and for the benefit of BioMarin and BioMarin
Acquisition, that each of the following representations and warranties is true
and correct.

      2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC. Each of Medicis and Ascent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Ascent is qualified, authorized, registered or
licensed to do business as a foreign corporation in each jurisdiction where its
business requires such qualification, except where the failure to be so
qualified, authorized, registered or licensed would not have an Ascent Material
Adverse Effect. Medicis has delivered to (or made available for inspection by)
BioMarin Acquisition accurate and complete copies of the certificate of
incorporation and bylaws of Ascent, including all amendments thereto. Ascent has
no Subsidiaries and does not hold any securities of any other Entity.

                                       6


      2.2 CAPITALIZATION. The authorized capital stock of Ascent consists solely
of (i) 60,000,000 shares of common stock, $0.0004 par value per share (the
"ASCENT COMMON STOCK"), and (ii) 5,000,000 shares of preferred stock, $0.01 par
value per share, none of which are issued and outstanding. Subject to a reverse
stock split as permitted under Section 4.1(a)(viii), there are 20,000,000 shares
of Ascent Common Stock issued and outstanding. All of the issued and outstanding
shares of capital stock of Ascent are owned of record and beneficially, solely
by Medicis and all such outstanding shares are duly authorized, validly issued,
fully paid and nonassessable. Such shares were issued in compliance with Federal
securities laws and applicable state securities laws. None of such outstanding
shares are subject to any Encumbrance of any kind. There are no restrictions on
or contractual or other provisions affecting the ability of Medicis to vote such
outstanding shares or to sell such shares pursuant to this Agreement. There are
no outstanding options, warrants, rights (including conversion or preemptive
rights or stock appreciation rights or rights to participate in Ascent's
profits) or agreements for the purchase or acquisition from Ascent of any shares
of its capital stock.

      2.3 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of Ascent and Medicis
has all corporate power and authority to enter into and to perform its
obligations under this Agreement. The execution, delivery and performance by
each of Ascent and Medicis of this Agreement have been duly authorized by all
necessary action on the part of each of Ascent and Medicis and its stockholders,
board of directors and officers. This Agreement, assuming the due authorization,
execution and delivery by the other parties hereto, constitutes the legal, valid
and binding obligation of each of Ascent and Medicis enforceable against it in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws now or hereinafter in
effect relating to creditors' rights generally or to general principles of
equity (the "ENFORCEABILITY EXCEPTION").

      2.4 GOVERNMENTAL AND OTHER AUTHORIZATIONS. The execution and delivery of
this Agreement and the consummation or performance by Medicis of its obligations
hereunder:

            (a) do not require any approval of any Governmental Body on the part
of Medicis or any material consent, waiver or approval of any other Person on
the part of Medicis, other than the filing of a report and notification pursuant
to the HSR Act and the expiration of all waiting periods thereunder; and

            (b) as of the date of this Agreement, do not give any Governmental
Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is part of the Intellectual Property.

      2.5 NON-CONTRAVENTION; CONSENTS. The execution and delivery of this
Agreement and the consummation or performance by Medicis or Ascent, as
applicable, of their respective obligations hereunder, do not and will not (a)
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any loan, credit or note agreement, mortgage,
security agreement, promissory note, license or other agreement to which Medicis
or Ascent is bound or affected, the contravention or conflict with or violation
of which would have an Ascent Material Adverse Effect, (b) contravene or
conflict with the certificate of incorporation or bylaws of Medicis or Ascent,
or (c) contravene, conflict with or result in a violation of any Legal
Requirement or any Order to which Medicis is subject, the contravention

                                       7


or conflict with or violation of which would have an Ascent Material Adverse
Effect, or to which Ascent or any of the Intellectual Property is subject.

      2.6 TITLE TO OPTION SHARES; ACQUISITION TRANSACTION.

            (a) Except as set forth in Part 2.6(a) of the Ascent Disclosure
Schedule, Ascent has good and valid title to all of the Intellectual Property
and the Development Technology.

            (b) None of the Intellectual Property or the Development Technology
is subject to any Encumbrance other than Permitted Encumbrances and the Supply
Agreement as of the Effective Date and the Permitted Encumbrances as of the
Option Closing Date.

            (c) Medicis has good and valid title to all of the Option Shares,
and none of the Option Shares is subject to any Encumbrance, and, on the Option
Closing Date, Medicis will transfer to BioMarin Acquisition good and valid title
to all of the Option Shares, free and clear of any and all Encumbrances.

            (d) Except for the License Agreement and the Lyne License, none of
Medicis, Ascent or any of their Affiliates has any agreement, absolute or
contingent, written or oral, with any other Person to effect any Acquisition
Transaction.

      2.7 LIABILITIES.

            (a) Neither Medicis nor Ascent has, since November 15, 2001 (i) made
a general assignment for the benefit of creditors, (ii) filed, or had filed
against it, any bankruptcy petition or similar filing, (iii) suffered the
attachment or other judicial seizure of all or a substantial portion of its
assets, (iv) admitted in writing its inability to pay its debts as they become
due, or (v) been convicted of, or pleaded guilty or no contest to, any felony.

            (b) As of the Option Closing Date, Ascent will have no assets or
properties, other than the assets and properties licensed under the License
Agreement and the Secondary ANDA, and will have no Liabilities (including for
Taxes), except Liabilities that may have arisen as a direct result of the Breach
of BioMarin Acquisition of its obligations under the License Agreement. As of
the Option Closing Date, Ascent will not have any employees or independent
contractors. As of the Option Closing Date, neither Medicis nor Ascent will be
in material Breach of any of the terms and conditions of the License Agreement.

      2.8 TAX MATTERS.

            (a) All material Tax Returns required to be filed by or on behalf of
Ascent with any Governmental Body with respect to any taxable period ending on
or before the Option Closing Date have been or will be filed on or before the
applicable due date (including any extensions of such due date). The information
contained in such Tax Returns is accurate and complete in all material respects.
All amounts shown on such Tax Returns to be due on or before the Option Closing
Date have been or will be paid on or before the Option Closing Date. Medicis has
delivered to (or made available for inspection by) BioMarin Acquisition accurate

                                       8


and complete copies of all material Tax Returns that have been filed by or on
behalf of Ascent since December 31, 2002.

            (b) There are no liens for Taxes upon any of the Intellectual
Property or Secondary ANDA, except liens for current Taxes not yet due and
payable. No extension or waiver of the limitation period applicable to any of
the Tax Returns has been granted (by Ascent or any other Person), and no such
extension or waiver has been requested from Ascent other than an extension
resulting from the filing of a Tax Return after its due date in the Ordinary
Course of Business. Ascent has not entered into a closing agreement pursuant to
Section 7121 of the Code, or any predecessor provisions thereof or any similar
provision of state or other law. No claim or Proceeding is pending or, to the
Knowledge of Ascent and Medicis, has been threatened against or with respect to
Ascent in respect of any material Tax.

            (c) On the Option Closing Date, no powers of attorney or other
authorizations will be in effect that grant to any Person the authority to
represent Ascent in connection with any Tax matter or Proceeding.

            (d) Medicis, with respect to the Pediatrics Business, and Ascent
have properly withheld and paid all material Taxes required to be withheld and
paid in connection with any amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.

            (e) Ascent is not, nor has ever been, a party to or bound by any Tax
indemnity agreement, Tax sharing agreement, Tax allocation agreement or similar
Contract, including any obligation arising by reason of Treasury Regulations
Section 1.1502-6, and Ascent has not or, by reason of the consummation of the
transactions contemplated hereby, will not have any liability or obligation
under any Tax indemnity agreement, Tax sharing agreement, Tax allocation
agreement or similar Contract.

            (f) None of the Intellectual Property is subject to, or constitutes,
a safe harbor lease within the meaning of former Section 168(f) of the Code.

            (g) There is no proposal for increasing the assessed value of any of
the Intellectual Property or Secondary ANDA for Tax purposes and there are no
pending Proceedings or public improvements which would result in the levy of any
material special Tax or assessment against any of such assets.

            (h) Neither Medicis nor Ascent is a "foreign person" within the
meaning of Section 1445 of the Code.

            (i) Ascent has never been a "reporting corporation" subject to the
information and reporting and record maintenance requirements of Section 6038A
and the regulations thereunder.

            (j) Medicis with respect to the Pediatrics Business and Ascent have
collected all material sales, use and value added Taxes required to be
collected, and have remitted, or will remit on a timely basis, such amounts to
the appropriate Governmental Body and have furnished properly completed
exemption certificates for all exempt transactions.

                                       9


            (k) Except as set forth in Part 2.8(k) of the Ascent Disclosure
Schedule, neither Medicis with respect to the Pediatrics Business nor Ascent has
been, and neither Medicis with respect to the Pediatrics Business nor Ascent
will be, required to include any material adjustment in taxable income for any
Tax period (or portion thereof) pursuant to Section 481 or 263A of the Code or
any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Option Closing Date.

      2.9 PROCEEDINGS; ORDERS. Except as set forth in Part 2.9 of the Ascent
Disclosure Schedule, there is no pending Proceeding, and to the Knowledge of
Ascent and Medicis, no Person has threatened to commence any Proceeding
involving (a) Ascent or the Intellectual Property or the Pediatrics Business; or
(b) that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. To the Knowledge of Ascent and Medicis, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that would reasonably
be expected to give rise to or serve as a basis for the commencement of any such
Proceeding. Except as set forth in Part 2.9 of the Ascent Disclosure Schedule,
to the Knowledge of Ascent and Medicis, there is no Order to which Ascent or any
of the Intellectual Property or the Pediatrics Business is subject.

      2.10 FRAUDULENT TRANSFERS. Medicis is not insolvent, nor will be rendered
insolvent by any of the transactions contemplated hereby. Immediately after the
Option Closing, (i) Medicis will be able to pay its debts as they become due,
and (ii) Medicis will not have unreasonably small assets with which to conduct
its present or proposed business. As used in this Section 2.10, "insolvent"
means that the sum of the Person's assets does not and will not exceed its debts
and other liabilities at a fair valuation.

      2.11 REAL PROPERTY. Ascent does not own any real property or lease any
material real property.

      2.12 INVESTMENT BANKING FEES. None of Medicis, Ascent or any of their
Affiliates has incurred any investment banking, broker or finder fees that will
become the responsibility of BioMarin or BioMarin Acquisition before or after
the Effective Date.

      2.13 INVESTMENT REPRESENTATIONS OF MEDICIS. With respect to the BioMarin
Payment Shares acquired by Medicis pursuant to this Agreement:

            (a) Medicis will acquire such BioMarin Payment Shares for investment
purposes only, for its own account and not as nominee or agent for any other
Person and not with a view to or for resale in connection with any distribution
thereof within the meaning of the Securities Act.

            (b) Medicis knows of no public solicitation or advertisement of an
offer in connection with such BioMarin Payment Shares.

            (c) Medicis has had the opportunity to ask questions of and receive
answers from BioMarin concerning the terms and conditions of the BioMarin
Payment Shares. Medicis has received all information that it has requested
regarding BioMarin and believes that such

                                       10


information is sufficient to make an informed decision with respect to the
acquisition of the BioMarin Payment Shares.

            (d) Medicis is able to bear the economic risk of its investment in
the BioMarin Payment Shares and has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
and protecting its interests with respect to its investment in the BioMarin
Payment Shares. Medicis is aware of the risk involved in its investment in the
BioMarin Payment Shares and has determined that such investment is suitable for
Medicis in light of its financial circumstances and available investment
opportunities.

            (e) Medicis is and will be an "accredited investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act.

            (f) Medicis hereby further agrees with BioMarin that the instruments
or certificates evidencing the BioMarin Payment Shares and each instrument or
certificate issued in transfer thereof will bear the following legend:

            "The securities evidenced by this certificate have not been
            registered under the Securities Act of 1933 and have been taken for
            investment purposes only and not with a view to the distribution
            thereof, and, except as stated in an agreement between the holder of
            this certificate or its predecessor in interest, and the issuer
            corporation, such securities may not be sold or transferred unless
            there is an effective registration statement under such Act covering
            such securities or the issuer corporation receives an opinion, in
            form and content reasonably satisfactory to the issuer corporation,
            of counsel reasonably acceptable to the issuer corporation (which
            may be counsel for the issuer corporation) stating that such sale or
            transfer is exempt from the registration and prospectus delivery
            requirements of such Act."

            (g) The instruments or certificates representing the BioMarin
Payment Shares and each instrument or certificate issued in transfer thereof
will also bear any legend required under any applicable state securities law.

            (h) Prior to any proposed sale, assignment, transfer or pledge of
any of the BioMarin Payment Shares by Medicis, unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
Medicis shall give written notice to BioMarin of Medicis' intention to effect
such transfer, sale, assignment or pledge. Each such notice shall describe the
manner and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail and shall be accompanied, at Medicis' expense, by an
unqualified written opinion of legal counsel, who shall and whose legal opinion
shall be reasonably satisfactory to BioMarin (which may be counsel for
BioMarin), addressed to BioMarin, to the effect that the proposed transfer of
the BioMarin Payment Shares may be effected without registration under the
Securities Act, whereupon Medicis shall be entitled to transfer such BioMarin
Payment Shares in accordance with the terms of the notice delivered by Medicis
to BioMarin.

                                       11


            (i) Medicis consents to BioMarin's making a notation on its records
or giving instructions to any transfer agent of the BioMarin Payment Shares in
order to implement the restrictions on transfer of the BioMarin Payment Shares.

            (j) Medicis is aware that the BioMarin Payment Shares will be issued
and sold in reliance on an exemption from the registration requirements of the
Securities Act and that such exemption is expressly conditioned on the accuracy
of the representations and warranties contained in this Section 2.13.

            (k) Medicis is not a company established solely to acquire the
BioMarin Payment Shares.

      2.14 COMPLIANCE WITH LEGAL REQUIREMENTS. Ascent is in compliance with each
Legal Requirement that is applicable to it or to the conduct of its business or
the ownership or use of any of its assets, except to the extent any such
noncompliance, individually or in the aggregate, would not reasonably be
expected to have an Ascent Material Adverse Effect. To the Knowledge of Medicis
and Ascent, no event has occurred, and no condition or circumstance exists, that
could (with or without notice or lapse of time) constitute or result in a
violation by Medicis or Ascent of, or a failure on the part of Ascent to comply
with, any Legal Requirement, except to the extent any such noncompliance,
individually or in the aggregate, would not reasonably be expected to have an
Ascent Material Adverse Effect. Neither Medicis nor Ascent has received any
notice or other communication (in writing or otherwise) from any Governmental
Body or any other Person regarding any actual or alleged violation of, or
failure to comply with, any Legal Requirement that would reasonably be expected
to have an Ascent Material Adverse Effect.

3.    REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION.

      Each of BioMarin and BioMarin Acquisition represents and warrants jointly
and severally as of the Effective Date and as of the Option Closing Date, to and
for the benefit of Medicis, that each of the following representations and
warranties is true and correct.

      3.1 DUE ORGANIZATION; ETC. Each of BioMarin and BioMarin Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of BioMarin and BioMarin Acquisition is
qualified, authorized, registered or licensed to do business as a foreign
corporation in each jurisdiction where its business requires such qualification,
except where the failure to be so qualified, authorized, registered or licensed
would not have a BioMarin Material Adverse Effect. Each of BioMarin and BioMarin
Acquisition has delivered to (or made available for inspection by) Medicis
accurate and complete copies of the certificate of incorporation and bylaws of
BioMarin and BioMarin Acquisition, as applicable, including all amendments
thereto.

      3.2 CAPITALIZATION.

            (a) As of the Effective Date, the authorized capital stock of
BioMarin consists solely of (i) 1,000,000 shares of preferred stock, $0.001 par
value per share; and (ii) 150,000,000 shares of common stock, $0.001 par value
per share (the "BIOMARIN COMMON STOCK"), and

                                       12


BioMarin has no authority to issue any other capital stock. All of the BioMarin
Payment Shares will be duly authorized, validly issued, fully paid and
nonassessable and will be issued in compliance with Federal securities laws and
applicable state securities laws

            (b) As of the Effective Date, (i) 64,364,988 shares of BioMarin
Common Stock are issued and outstanding, all of which are validly issued, fully
paid and nonassessable and free of preemptive rights, (ii) no shares of BioMarin
Common Stock are held in the treasury of BioMarin, and (iii) 18,392,703 shares
of BioMarin Common Stock are reserved for issuance upon exercise or conversion
of options, warrants or other rights to acquire shares of BioMarin Common Stock.

      3.3 AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of BioMarin and BioMarin
Acquisition has all corporate power and authority to enter into and perform its
obligations under this Agreement, and the execution and delivery by each of
BioMarin and BioMarin Acquisition of this Agreement have been duly authorized by
all necessary action on the part of each of BioMarin and BioMarin Acquisition
and its stockholders, board of directors and officers. This Agreement, assuming
the due authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of each of BioMarin and
BioMarin Acquisition, enforceable against it in accordance with its terms,
subject to the Enforceability Exception.

      3.4 GOVERNMENTAL AND OTHER AUTHORIZATIONS. The execution and delivery of
this Agreement and the consummation or performance by BioMarin or BioMarin
Acquisition, as applicable, of their respective obligations hereunder, do not
require any approval of any Governmental Body on the part of BioMarin or
BioMarin Acquisition or any material consent, waiver or approval of any other
Person on the part of BioMarin or BioMarin Acquisition, other than the filing of
a report and notification pursuant to the HSR Act and the expiration of all
waiting periods thereunder and the filing of a Form D with the Commission, "blue
sky" filings and the filings contemplated under Section 4.8.

      3.5 NON-CONTRAVENTION. The execution and delivery of this Agreement and
the consummation or performance by BioMarin or BioMarin Acquisition, as
applicable, of their respective obligations hereunder, do not and will not (a)
contravene, conflict with or result in a violation or breach of, or result in a
default under, any provision of any loan, credit or note agreement, mortgage,
security agreement, promissory note, license or other agreement or instrument to
which BioMarin or BioMarin Acquisition is bound or affected, the contravention
or conflict with which or violation of which would have a BioMarin Material
Adverse Effect, (b) contravene or conflict with the certificate of incorporation
or bylaws of BioMarin or BioMarin Acquisition, or (c) contravene, conflict with
or result in a violation of any Legal Requirement or any Order to which BioMarin
or BioMarin Acquisition, is subject, the contravention or conflict with which or
violation of which would have a BioMarin Material Adverse Effect.

      3.6 FILINGS WITH THE COMMISSION.

            (a) BioMarin's Annual Report on Form 10-K for its fiscal year ended
December 31, 2003, at the time it was filed with the Commission (or, if amended
or superseded

                                       13


by a filing prior to the date of this Agreement, then on the date of such
filing): (i) complied in all material respects with the applicable requirements
of the Exchange Act; and (ii) did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

            (b) With respect to such documents and reports as BioMarin may be
required to file with the Commission under Section 13 of the Exchange Act within
the twelve months preceding the Effective Date and within the twelve months
preceding the Option Closing Date (collectively, the "BIOMARIN FILINGS"), at the
respective dates they were filed (or if amended or superceded by a filing prior
to the date of this Agreement or prior to the Option Closing Date, then on the
date so amended or superceded), each such BioMarin Filing, including without
limitation any financial statements or schedules included therein, (i) complied
in all material respects with all applicable requirements of the Exchange Act
and the applicable rules and regulations promulgated thereunder, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

      3.7 LIABILITIES. Neither BioMarin nor BioMarin Acquisition has, since
November 15, 2001, (i) made a general assignment for the benefit of creditors,
(ii) filed, or had filed against it, any bankruptcy petition or similar filing,
(iii) suffered the attachment or other judicial seizure of all or a substantial
portion of its assets, (iv) admitted in writing its inability to pay its debts
as they become due, (v) been convicted of, or pleaded guilty or no contest to,
any felony, or (vi) taken or been the subject of any action that may have an
adverse effect on its ability to comply with or perform any of its covenants or
obligations under this Agreement.

      3.8 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of BioMarin and BioMarin
Acquisition is in compliance with each Legal Requirement that is applicable to
it or to the conduct of its business or the ownership or use of any of its
assets, except to the extent any such noncompliance, individually or in the
aggregate, would not reasonably be expected to have a BioMarin Material Adverse
Effect. To the Knowledge of BioMarin and BioMarin Acquisition, no event has
occurred, and no condition or circumstance exists, that could (with or without
notice or lapse of time) constitute or result in a violation by BioMarin or
BioMarin Acquisition of, or a failure on the part of BioMarin or BioMarin
Acquisition to comply with, any Legal Requirement, except to the extent any such
noncompliance, individually or in the aggregate, would not reasonably be
expected to have a BioMarin Material Adverse Effect.

      3.9 PROCEEDINGS; ORDERS. There is no pending Proceeding, and to the
Knowledge of BioMarin or BioMarin Acquisition, no Person has threatened to
commence any Proceeding involving (a) BioMarin or BioMarin Acquisition which
would reasonably be expected to have a BioMarin Material Adverse Effect; or (b)
that challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the transactions contemplated
hereby. To the Knowledge of BioMarin and BioMarin Acquisition, no event has
occurred, and no claim, dispute or other condition or circumstance exists, that
would reasonably be expected to give rise to or serve as a basis for the
commencement of any such Proceeding.

                                       14


      3.10 FRAUDULENT TRANSFERS. Neither BioMarin nor BioMarin Acquisition is
insolvent, nor will be rendered insolvent by any of the transactions
contemplated hereby. Immediately after the Option Closing, (i) each of BioMarin
and BioMarin Acquisition will be able to pay its debts as they become due, and
(ii) neither BioMarin nor BioMarin Acquisition will have unreasonably small
assets with which to conduct its present or proposed business. As used in this
Section 3.10, "insolvent" means that the sum of the Person's assets does not and
will not exceed its debts and other liabilities at a fair valuation.

      3.11 INVESTMENT BANKING FEES. None of BioMarin, BioMarin Acquisition or
any of their Affiliates has incurred any investment banking, broker or finder
fees that will become the responsibility of Medicis or Ascent before or after
the Effective Date.

      3.12 NASDAQ LISTING COMPLIANCE. The BioMarin Common Stock is registered
pursuant to Section 12(g) of the Exchange Act and is listed on the Nasdaq
National Market or any United States national securities exchange and BioMarin
has taken no action designed to, or likely to have the effect of, terminating
the registration of the BioMarin Common Stock under the Exchange Act or
de-listing the BioMarin Common Stock from the Nasdaq National Market or any
United States national securities exchange, nor has BioMarin received any
notification that the SEC or Nasdaq, Inc. is contemplating terminating such
registration or listing.

      3.13 INVESTMENT REPRESENTATIONS OF BIOMARIN.

            (a) BioMarin Acquisition will acquire the Option Shares for
investment purposes, for its own account and not as nominee or agent for any
other Person and not with a view to or for resale in connection with any
distribution thereof within the meaning of the Securities Act.

            (b) BioMarin Acquisition has had the opportunity to ask questions of
and receive answers from Medicis concerning the terms and conditions of the
Option Shares subject to this Agreement.

            (c) BioMarin Acquisition is able to bear the economic risk of its
investment in the Option Shares and has such knowledge and experience in
financial and business matters that it is capable of evaluating the merits and
risks of protecting its interests with respect to its investment in the Option
Shares.

            (d) BioMarin Acquisition is and will be an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated under the
Securities Act.

            (e) BioMarin Acquisition is aware that the Option Shares will be
issued and sold in reliance on an exemption from the registration requirements
of the Securities Act and that such exemption is expressly conditioned on the
accuracy of the representations and warranties contained in this Section 3.13.

            (f) BioMarin Acquisition is not a company established solely to
acquire the Option Shares.

                                       15


      3.14 ABSENCE OF CHANGES. For the period from the date of the filing by
BioMarin with the Commission of its Annual Report on Form 10-K or its Quarterly
Report on Form 10-Q, whichever is last filed with the Commission immediately
preceding the Effective Date, to the Effective Date, and for the period from the
date of the filing by BioMarin with the Commission of its Annual Report on Form
10-K or its Quarterly Report on Form 10-Q, whichever is last filed with the
Commission immediately preceding the Option Closing Date, to the Option Closing
Date, there will not have been any adverse change in, and no event shall have
occurred that could reasonably be expected to have a BioMarin Material Adverse
Effect, except as may be disclosed by BioMarin in any report or statement filed
with the Commission.

4.    OTHER AGREEMENTS.

      4.1 OPERATION OF MEDICIS AND ASCENT. Each of Medicis and Ascent shall
ensure that from and after the Effective Date (or, with respect to clauses (c)
and (k) below, from and after the third month anniversary of the Effective Date)
until the end of the Option Term, Ascent shall not, without the prior written
consent of BioMarin Acquisition:

            (a) engage in any business or activity other than the ownership,
operation and maintenance of the assets and properties licensed under the
License Agreement and Secondary ANDA, and activities incidental thereto except
for:

                  (i) the collection of accounts receivable outstanding as of
the Effective Date;

                  (ii) the exercise of the option granted under that certain
license agreement by and between Medicis and Taro Pharmaceuticals, North
America, Inc., January 14, 2003;

                  (iii) any actions reasonably required for Ascent to perform
its obligations under the Transition Services Agreement;

                  (iv) any actions reasonably required for Ascent to perform its
obligations under the Ascent Merger Agreement;

                  (v) any actions reasonably required for Ascent to perform its
obligations under this Agreement, the License Agreement, the Domain Name and Web
Site License Agreement, the Supply Agreement and the Lyne License;

                  (vi) any actions reasonably required as a party to the
Litigation Matters, and any litigation matter arising on or after the Effective
Date and prior to the Option Closing Date;

                  (vii) the issuance or payment of dividends or other
distributions to Medicis, including but not limited to the distribution of
equity securities of BioMarin, if any; and

                  (viii) any actions reasonably required to effect a reverse
stock split.

                                       16


            (b) acquire or own any material assets other than the Intellectual
Property and other than the Secondary ANDA;

            (c) adopt, maintain, sponsor, contribute to, or incur any Liability
with respect to, any Employee Benefit Plan other than as required by law or the
applicable Employee Benefit Plan or as may be required in connection with any
continuing obligations to former employees of Ascent;

            (d) merge into or consolidate with any other Entity or voluntarily
dissolve, liquidate or wind up in whole or in part (or adopt any resolution or
plan to do so), lease, license, transfer or otherwise dispose of any of the
Intellectual Property Assets or Secondary ANDA or all or substantially all of
its assets or change its legal structure;

            (e) fail to preserve its existence as an Entity duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization or formation, or, amend, modify or terminate the provisions of its
articles or certificate of incorporation and bylaws other than as permitted
under Section 4.1(a)(viii);

            (f) fail to observe corporate formalities in any material respect;

            (g) own any Subsidiary or make any investment in any Person other
than shares of BioMarin under the License Agreement;

            (h) commingle its assets with the assets of any other Entity;

            (i) fail to hold its assets or conduct its business in its own name;

            (j) become insolvent or fail to pay its debts and liabilities from
its assets as the same may become due;

            (k) fail to maintain its books and records and bank accounts
separate and apart from those of any other Entity;

            (l) have any of its obligations guaranteed by an Affiliate, except
for guarantees to BioMarin and BioMarin Acquisition;

            (m) enter into any Contract or agreement with any director or
officer other than ordinary and customary indemnification arrangements;

            (n) acquire obligations or securities of any stockholder, director,
officer, partner, member, principal, or Affiliate of itself or of any of its
Affiliates;

            (o) fail to correct any known misunderstanding regarding the
separate identity of Ascent or any stockholder, director, officer, partner,
member, principal, or Affiliate of itself or of any of its Affiliates;

            (p) assume or hold itself out to be responsible for the debts of any
other Person or hold out its credit as being available to satisfy the
obligations of any other Person;

                                       17


            (q) pledge its assets for the benefit of any other Person or make
any loans or advances to any other Person, including to any stockholder,
director, officer, partner, member, principal, or Affiliate of itself or of any
of its Affiliates;

            (r) permit or allow any Technology or Development Technology to be
subject to any Encumbrance (other than pursuant to a Permitted Encumbrance and
the Supply Agreement);

            (s) fail to file its own tax returns, to the extent it is required
to file any such tax returns, or file or permit the filing of a consolidated
federal income tax return with any other Person;

            (t) fail either to hold itself out to the public as a legal entity
separate and distinct from any other Entity or to conduct its own business
solely in its own name in order not (A) to mislead others as to the identity
with which such other party is transacting business or (B) to suggest that
Ascent or any Affiliate, as the case may be, is responsible for the debts of any
third party (including any stockholder, director, officer, partner, member,
principal, or Affiliate of Ascent or of any of its Affiliates);

            (u) retain any employee or consultant other than as necessary to
engage in the activities described in Section 4.1(a) or fail to pay the salaries
of such employees;

            (v) file or consent to the filing of any petition, either voluntary
or involuntary, to take advantage of any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or otherwise institute bankruptcy or
insolvency proceedings with respect to itself, or seek or consent to the
appointment of any trustee, receiver, conservator, assignee, sequestrator,
custodian, liquidator (or other similar official) with respect to itself or with
respect to all or any substantial part of its properties or assets or make an
assignment for the benefit of creditors, or admit in writing its inability to
pay its debts generally as they become due or declare or effect a moratorium on
its debt or take any corporate action in furtherance of such action; or

            (w) issue any capital stock or other security, any option or right
to acquire any capital stock or other security, or any instrument convertible or
exchangeable for any capital stock or other security;

            (x) borrow money or issue evidence of or maintain any indebtedness;

            (y) fail to maintain its financial statements separate and apart
from those of any other Entity (if it maintains, or is required by law to
maintain, financial statements), or otherwise permit its assets to be listed as
assets on the consolidated financial statements of any other Entity except as
required by GAAP;

            (z) take any action that, or omit to take any action not otherwise
prohibited by the terms of this Agreement the omission of which, would, or is
reasonably likely to, (A) result in failure to satisfy the condition contained
in Section 5.1 or (B) result in failure to satisfy the condition contained in
Section 5.4; or

                                       18


            (aa) authorize, commit, enter into, or offer to enter into, any
Contract to take any of the actions prohibited by this Section 4.1.

      In addition, prior to the Option Closing Date, Ascent shall own all right,
title and interest in and to the Secondary ANDA.

      4.2 OPERATION OF BIOMARIN AND BIOMARIN ACQUISITION. Each of BioMarin and
BioMarin Acquisition shall ensure that from and after the Effective Date until
the end of the Option Term, neither BioMarin nor BioMarin Acquisition shall,
without the prior written consent of Medicis:

            (a) adopt a plan or resolution to dissolve or liquidate BioMarin or
BioMarin Acquisition;

            (b) take any action that, or omit to take any action not otherwise
prohibited by the terms of this Agreement the omission of which, would, or is
reasonably likely to, (A) result in failure to satisfy the condition contained
in Section 6.1 or (B) result in failure to satisfy the condition contained in
Section 6.4; or

            (c) authorize, commit, enter into, or offer to enter into, any
Contract to take any of the actions referred to in this Section 4.2.

      4.3 NO DISPOSITION OR ENCUMBRANCE OF OPTION SHARES. During the Option
Term, Medicis shall not, directly or indirectly, (i) offer, sell, offer to sell,
contract to sell, grant any option to purchase or otherwise dispose of or
transfer (or announce any offer, sale, offer of sale, contract of sale or grant
of any option to purchase or other disposition or transfer of) any Option
Shares, or (ii) create or permit to exist any Encumbrance on any of the Option
Shares. During the Option Term, Medicis shall permit and Ascent shall stamp or
otherwise imprint on each certificate or instrument representing the Option
Shares the following legend:

                  "The securities evidenced by this certificate may not be sold
                  or otherwise transferred except in accordance with the terms
                  and conditions of that certain Securities Purchase Agreement
                  dated May 18, 2004 among the holder hereof, the issuer, and
                  the other parties thereto."

      4.4 ACCESS AND INVESTIGATION.

            (a) Ascent and Medicis shall afford to BioMarin Acquisition and to
BioMarin Acquisition's Representatives access, during normal business hours upon
reasonable notice throughout the period from the date hereof through the earlier
of the Option Closing Date or the termination of this Agreement, to all the
books, records, Contracts, and personnel relating to the Pediatrics Business as
BioMarin Acquisition may reasonably request and, during such period, Ascent and
Medicis shall furnish promptly to BioMarin Acquisition all other information
BioMarin Acquisition reasonably may request, provided that no investigation
pursuant to this Section 4.4 shall affect any representations or warranties made
herein or the conditions to the obligations of the respective parties to
consummate the transactions contemplated hereby.

                                       19


            (b) Not less than ten (10) Business Days prior to the Option Closing
Date, Medicis shall have provided to BioMarin Acquisition a schedule that
accurately reflects the following information as to Ascent immediately prior to
the Option Closing (i) Ascent's basis in all of its assets, (ii) the amount of
any of Ascent's net operating loss, net capital loss, unused investment,
foreign, or other Tax credit, and the amount of any limitation upon any of the
foregoing (including under Section 382, 383 or 384 or the consolidated returns
rules promulgated under Section 1502 of the Code); (iii) the amount of any
deferred gain or loss allocable to Ascent arising out of any deferred
intercompany transaction as defined in Treasury Regulations Section 1.1502-13 or
any similar provision of any applicable Legal Requirement.

      4.5 NOTIFICATION. During the Option Term, each party shall promptly notify
the other in writing of, and shall subsequently keep such other party updated on
a current basis regarding any event, condition, fact or circumstance that would
reasonably be expected to adversely affect the timely satisfaction of any of the
conditions set forth in Article 5 or 6.

      4.6 NONCOMPETITION BY MEDICIS. Medicis agrees that, if the Option Closing
occurs, in consideration of the consummation of the transactions contemplated
hereby by BioMarin Acquisition hereunder, it shall not and shall cause its
Subsidiaries not to, during the period from the Option Closing Date through the
fifth anniversary of the Option Closing Date, whether acting alone or as a
member of an Entity, and whether as an advisor, principal, consultant,
independent contractor, agent, partner, employee, officer, director, 5% or
greater equityholder or otherwise, anywhere in the world, (a) engage in, own,
operate, maintain or finance directly or indirectly any business or other
enterprise engaged in the development, distribution, sale or commercialization
of an oral liquid prednisolone sodium solution or oral dissolving tablet
prednisolone product, or (b) take any action that is designed or intended or
would reasonably be expected to have the effect of discouraging any customer,
supplier, lessor, licensor or other business associate of the Pediatrics
Business from maintaining a business relationship with BioMarin Acquisition
after the Option Closing Date as it maintained with the Pediatrics Business
prior to the Effective Date; provided, however, that, notwithstanding the
foregoing, (a) Medicis may enter into a transaction or series of transactions
that involves the acquisition by Medicis of another Entity whose activities, but
for this proviso would violate this Section 4.6 so long as such activities are
not primary but are merely ancillary to such Entity's activities and so long as
Medicis terminates or divests such activities within a reasonable period of time
following such acquisition not to exceed 180 days, and (b) Medicis may be
acquired by merger with another Entity, where the stockholders of Medicis
immediately prior to the merger own less than 50% of the surviving entity, whose
activities, but for this proviso, would violate this Section 4.6. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 4.6 is invalid or unenforceable, the parties agree
that the court making such determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of the term or provision,
to delete specific words or phrases, or to replace any invalid or unenforceable
term or provision with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the invalid or unenforceable
term or provision, and this Agreement shall be enforceable as so modified after
the expiration of the time within which the judgment may be appealed.

      4.7 PUBLIC ANNOUNCEMENTS. BioMarin, BioMarin Acquisition, Medicis and
Ascent will consult with each other before issuing any press release or
otherwise making any public

                                       20


statement with respect to this Agreement, the transactions contemplated hereby
or in any of the documents executed in connection herewith. Without limiting the
generality of the foregoing, none of Medicis, Ascent, BioMarin or BioMarin
Acquisition shall, and none of Medicis, Ascent, BioMarin or BioMarin Acquisition
shall permit any of their respective Representatives to, make any disclosure
regarding this Agreement, the transactions contemplated hereby or in any of the
documents executed in connection herewith unless (a) the other parties shall
have approved such disclosure, or (b) such disclosure is required by applicable
Legal Requirements (including requirements of the Commission, the New York Stock
Exchange or NASDAQ) and the disclosing party has provided the other parties
hereto with a copy of the proposed release or statement no later than
simultaneously with the required disclosure and has used commercially reasonable
efforts to provide a copy of the proposed release or statement no less than two
(2) Business Days prior to its release or publication. In the event that a party
receives any inquiry regarding any other party, the receiving party shall refer
such inquiry to such other party.

      4.8 REGISTRATION OF SHARES.

            (a) REGISTRATION. On or before the thirtieth day following the
Effective Date, BioMarin shall prepare and file a registration statement on Form
S-3 under the Securities Act, covering the BioMarin Payment Shares
(collectively, the "RESTRICTED STOCK") and shall use its best efforts to cause
such registration statement to become effective as expeditiously as possible and
to remain effective until the earliest to occur of (i) the date the Restricted
Stock covered thereby has been sold (but in any event not before the expiration
of any longer period required under the Securities Act) or (ii) the date by
which all Restricted Stock covered thereby may be sold under Rule 144 without
restriction as to volume.

            (b) SUSPENSION. Following the effectiveness of a registration
statement filed pursuant to this section, BioMarin may, at any time, suspend the
effectiveness of such registration for up to thirty (30) days, as appropriate (a
"SUSPENSION PERIOD"), by giving notice to Medicis, if BioMarin shall have
determined that BioMarin may be required to disclose any material corporate
development. Notwithstanding the foregoing, no more than two Suspension Periods
may occur during any twelve-month period. BioMarin shall use its best efforts to
limit the duration and number of any Suspension Periods. Medicis agrees that,
upon receipt of any notice from BioMarin of a Suspension Period, Medicis shall
forthwith discontinue disposition of Restricted Stock pursuant to such
registration statement or prospectus until the earlier of (A) Medicis (i) is
advised in writing by BioMarin that the use of the applicable prospectus may be
resumed, (ii) has received copies of a supplemental or amended prospectus, if
applicable, and (iii) has received copies of any additional or supplemental
filings which are incorporated or deemed to be incorporated by reference into
such prospectus, and (B) thirty (30) days after receipt of the notice concerning
the Suspension Period.

            (c) REGISTRATION PROCEDURES. When BioMarin effects the registration
of the Restricted Stock under the Securities Act pursuant to Section 4.8(a)
hereof, BioMarin will, at its expense, as expeditiously as possible:

                  (i) In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file in accordance with Section
4.8(a), with the Commission a registration statement with respect to the
Restricted Stock and use its best efforts to cause such

                                       21


registration statement to become and remain effective for the period described
herein, and prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective for such period
and such registration statement and prospectus accurate and complete for such
period (provided that, before filing a registration statement or prospectus or
any amendments or supplements thereto, BioMarin will furnish to the counsel
selected by Medicis copies of the plan of distribution section of such
prospectus proposed to be filed);

                  (ii) Furnish to Medicis such reasonable number of copies of
the registration statement, preliminary prospectus, final prospectus, each
amendment and supplement thereto and such other documents as Medicis may
reasonably request in order to facilitate the disposition of the Restricted
Stock;

                  (iii) Use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as Medicis may reasonably
request except that BioMarin shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction where it is not so qualified;

                  (iv) Notify Medicis promptly after it shall receive notice
thereof, of the date and time when such registration statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;

                  (v) Notify Medicis promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;

                  (vi) Prepare and file with the Commission, promptly upon the
request of Medicis, any amendments or supplements to such registration statement
or prospectus which, in the opinion of counsel for Medicis, is required under
the Securities Act or the rules and regulations thereunder in connection with
the distribution of the Restricted Stock by Medicis;

                  (vii) Prepare and promptly file with the Commission, and
promptly notify Medicis of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;

                  (viii) Advise Medicis, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;

                                       22


                  (ix) Cause all such Restricted Stock to be listed on each
securities exchange on which similar securities issued by BioMarin are then
listed and, if not so listed, to be listed on the Nasdaq National Market or any
United States national securities exchange;

                  (x) Provide a transfer agent and registrar for all such
Restricted Stock which shall be the transfer agent for the common stock of
BioMarin not later than the effective date of such registration statement; and

                  (xi) Otherwise use its reasonable best efforts to comply with
all applicable rules and regulations of the Commission, and make available to
its security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
BioMarin's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.

      With respect to any registration effected pursuant to Section 4.8(a)
hereof, all fees, costs and expenses of and incidental to such registration and
the public offering in connection therewith shall be borne by BioMarin;
provided, however, that Medicis shall bear its own legal fees, if any, and its
pro rata share of any underwriting discounts or commissions, if any.

            (d) INDEMNIFICATION.

                  (i) BioMarin will indemnify and hold harmless Medicis pursuant
to the provisions of this Section 4.8 and any underwriter (as defined in the
Securities Act) for Medicis, and any person who controls Medicis or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of Medicis (for purposes of this
Section 4.8(d), the "MEDICIS REGISTRATION INDEMNIFIED PARTIES"), from and
against, and will reimburse each such Medicis Registration Indemnified Party
with respect to, any and all claims, actions, demands, losses, damages,
liabilities, costs and expenses to which any such Medicis Registration
Indemnified Party may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs or
expenses arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that BioMarin will not be liable in
any such case to the extent that any such claim, action, demand, loss, damage,
liability, cost or expense is caused by an untrue statement or alleged untrue
statement or omission or alleged omission so made in strict conformity with
information furnished by such Medicis Registration Indemnified Party in writing
specifically for use in the preparation thereof.

                  (ii) Medicis will indemnify and hold harmless BioMarin
pursuant to the provisions of this Section 4.8, and any underwriter (as defined
in the Securities Act) for Medicis, and any person who controls BioMarin or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of BioMarin (for purposes of this
Section 4.8(d), the "BIOMARIN REGISTRATION INDEMNIFIED PARTIES", and together
with the Medicis Registration Indemnified Parties, the "REGISTRATION

                                       23


INDEMNIFIED PARTIES"), from and against, and will reimburse each such BioMarin
Registration Indemnified Party with respect to, any and all claims, actions,
demands, losses, damages, liabilities, costs or expenses to which any such
BioMarin Registration Indemnified Party may become subject under the Securities
Act or otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged untrue
statement of any material fact contained in such registration statement, any
prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made solely in reliance
upon and in strict conformity with written information furnished by such Medicis
Registration Indemnified Party specifically for use in the preparation thereof;
provided, however, that the liability of any such Medicis Registration
Indemnified Party pursuant to this subsection (ii) shall be limited to an amount
not to exceed the net proceeds received by any such Medicis Registration
Indemnified Party pursuant to the registration statement which gives rise to
such obligation to indemnify.

                  (iii) Promptly after receipt by a party indemnified pursuant
to the provisions of clause (i) or (ii) of this Section 4.8(d) of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such Registration Indemnified Party will, if a claim
thereof is to be made against the indemnifying party pursuant to the provisions
of clause (i) or (ii) of this Section 4.8(d), notify the indemnifying party of
the commencement thereof; but the omission so to notify the indemnifying party
will not relieve it from any liability which it may have to an Registration
Indemnified Party otherwise than under this Section 4.8(d) and shall not relieve
the indemnifying party from liability under this Section 4.8(d) unless such
indemnifying party is prejudiced by such omission. In case such action is
brought against any Registration Indemnified Party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Registration Indemnified
Party, and after notice from the indemnifying party to such Registration
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Registration Indemnified Party
pursuant to the provisions of such clause (i) or (ii) for any legal or other
expense subsequently incurred by such Registration Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to an Registration
Indemnified Party for any settlement of any action or claim without the consent
of the indemnifying party. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Registration
Indemnified Party of a release from all liability in respect to such claim or
litigation.

                  (iv) If the indemnification provided for in clause (i) or (ii)
of this Section 4.8(d) is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims, actions,
demands, losses, damages, liabilities, costs or expenses referred to therein,
then each indemnifying party under any such subsection, in lieu of indemnifying
such Registration Indemnified Party thereunder, hereby agrees to contribute to
the amount paid or payable by such Registration Indemnified Party as a result of
such claims, actions, demands, losses, damages, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the Registration Indemnified Party on
the other in connection with the statements or omissions which resulted in such
claims,

                                       24


actions, demands, losses, damages, liabilities, costs or expenses, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Registration Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the Registration Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount Medicis shall be obligated to contribute pursuant to this
clause (iv) shall be limited to an amount not to exceed the net proceeds
received by Medicis pursuant to the registration statement which gives rise to
such obligation to contribute. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution hereunder from any person who was not guilty of such fraudulent
misrepresentation.

            (e) REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. From and after
the Option Closing Date, BioMarin shall timely file such information, documents
and reports as the Commission may require or prescribe under Section 13 of the
Exchange Act. BioMarin acknowledges and agrees that the purposes of the
requirements contained in this Section 4.8(e) are to enable Medicis to comply
with the current public information requirement contained in paragraph (c) of
Rule 144 should Medicis ever wish to dispose of any of the Restricted Stock
without registration under the Securities Act in reliance upon Rule 144 (or any
other similar exemptive provision).

            (f) STOCKHOLDER INFORMATION. BioMarin may require Medicis to furnish
BioMarin such information with respect to Medicis and the distribution of its
Restricted Stock as BioMarin may from time to time reasonably request in writing
as shall be required by law or by the Commission in connection therewith.

      4.9 ADDITIONAL TAX MATTERS.

            (a) Medicis shall include the income of Ascent on Medicis'
consolidated federal Tax Returns for all periods through the end of the Option
Closing Date and pay all Taxes attributable to such income. After the Option
Closing Date, Ascent shall furnish Tax information to Medicis as Medicis shall
reasonably request for inclusion in Medicis' federal consolidated Tax Return for
the period which includes the Option Closing Date. The income of Ascent shall be
apportioned to the period up to and including the Option Closing Date and the
period after the Option Closing Date by closing the books of Ascent as of the
end of the Option Closing Date.

            (b) BioMarin and BioMarin Acquisition shall promptly pay or cause to
be paid to Medicis all refunds of Taxes and interest thereon received by
Biomarin or Biomarin Acquisition attributable to Taxes paid by Medicis or Ascent
with respect to any taxable period up to and including the Option Closing Date.

            (c) After the Option Closing Date, the Parties agree to furnish or
cause to be furnished to each other, upon reasonable request, as promptly as
practicable, such information

                                       25


(including access to books and records) and assistance relating to Ascent as is
reasonably necessary for filing any Tax Return, for the preparation for any
audit, and for the prosecution or defense of any claim, suit or proceeding
relating to any Tax Return. The Parties agree to cooperate with each other in
the conduct of any audit or other proceedings involving Ascent for any Tax
purposes as are reasonably necessary to carry out the intent of this subsection.

      4.10 UPDATE OF "KNOWLEDGE" DEFINITION. On or before the Option Closing
Date, if any individual listed on EXHIBIT F or EXHIBIT G hereto shall have
ceased to be employed by Medicis or BioMarin, or ceased to be employed in their
capacity on the Effective Date, as applicable, prior to the Option Closing Date,
the name of each such individual on EXHIBIT F or EXHIBIT G shall be replaced
with the name of another employee of Medicis or BioMarin, as applicable, that
has succeeded to any such individual's position, title or job functions and
responsibilities. EXHIBIT F as so updated shall be used for purposes of the
definition of "Knowledge" of Medicis and Ascent in this Agreement as of the
Option Closing Date. EXHIBIT G as so updated shall be used for purposes of the
definition of "Knowledge" of BioMarin and BioMarin Acquisition in this Agreement
as of the Option Closing Date.

      4.11 CONFIDENTIALITY. The Confidentiality Agreement is hereby incorporated
herein by reference.

      4.12 REASONABLE EFFORTS; FILINGS AND CONSENTS. Subject to the terms and
conditions of this Agreement, each of the parties to this Agreement will use its
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary under applicable Legal Requirements, so
as to permit consummation of the transactions contemplated hereby prior to the
Option Closing Date and will use reasonable efforts to cooperate fully with the
other parties hereto to that end. Without limiting the foregoing, if applicable,
each of BioMarin and Medicis agrees to file a notification and report form under
the HSR Act with the appropriate Governmental Bodies, not later than 180 days
prior to the Target Closing Date with respect to the transactions contemplated
hereby.

5.    CONDITIONS PRECEDENT TO BIOMARIN ACQUISITION'S OBLIGATION TO EXERCISE
      OPTION.

      BioMarin Acquisition's obligation to exercise the Option, and to take the
other actions required to be taken by BioMarin Acquisition at the Option Closing
is subject to the satisfaction, at or prior to the Option Closing, of each of
the following conditions (any of which may be waived by BioMarin Acquisition, in
whole or in part, in writing):

      5.1 ACCURACY OF REPRESENTATIONS. The representations and warranties made
by Medicis in this Agreement as specified in this Section 5.1 that are qualified
by materiality or Material Adverse Effect shall be true and complete as of the
Option Closing Date as if made on the Option Closing Date (except for
representations and warranties made as of a specified date, which need be true
only as of the specified date). The representations and warranties made by
Medicis in this Agreement as specified in this Section 5.1 that are not so
qualified shall be true and complete in all material respects as of the Option
Closing Date as if made on the Option Closing Date (except for representations
and warranties made as of a specified date, which need be true in all material
respects only as of the specified date). The closing condition set forth in

                                       26


this Section 5.1 shall apply only to the representations and warranties
contained in (i) the first sentence of Section 2.1 as it relates to Ascent, (ii)
the second and third sentences of Section 2.2, (iii) Section 2.3, (iv) clause
(b) in Section 2.5, (v) Section 2.6(a), (vi) Section 2.6(c), and (vii) clauses
(i) through (iv) in Section 2.7(a) as they relate to Ascent.

      5.2 CONSENTS AND GOVERNMENTAL APPROVALS. All material Consents required to
be obtained by Medicis from any Governmental Body in order to consummate the
transactions contemplated hereby shall have been obtained and shall be in full
force and effect, and all waiting periods under the HSR Act shall have expired,
other than any Consents the failure of which to obtain would require only the
payment by Medicis of monetary amounts, penalties or fines not exceeding, in the
aggregate, $10,000,000.

      5.3 NO RESTRAINTS. No preliminary injunction or other order, decree or
ruling issued by a court of competent jurisdiction or other Governmental Body
having jurisdiction, nor any statute, rule, regulation, or executive order
promulgated or enacted by any Governmental Body shall be in effect that would
make any of the transactions contemplated hereby illegal or otherwise prohibit
the consummation of the transactions contemplated hereby.

      5.4 PERFORMANCE OF OBLIGATIONS. Each of the covenants and obligations that
Medicis and Ascent is required to comply with or to perform in Section 4.1(d)
and 4.1(v) at or prior to the Option Closing Date shall have been duly complied
with and performed in all material respects.

      5.5 ADDITIONAL DOCUMENTS. BioMarin and BioMarin Acquisition shall have
received the following documents:

            (a) an opinion letter from Akin Gump Strauss Hauer & Feld LLP, dated
the Option Closing Date, in the form of EXHIBIT C;

            (b) a certificate executed by a duly authorized officer not less
senior than vice president of Medicis to the effect that Medicis has satisfied
each of the conditions set forth in Sections 5.1 and 5.4;

            (c) a certificate executed by a duly authorized officer not less
senior than vice president of Ascent to the effect that Ascent has satisfied
each of the conditions set forth in Section 5.4; and

            (d) duly executed resignations of each of the directors and officers
of Ascent dated as of the Option Closing Date.

      5.6 RELEASE. Medicis and Ascent shall have executed a mutual release of
Liabilities in the form attached hereto as EXHIBIT D.

6.    CONDITIONS PRECEDENT TO MEDICIS' OBLIGATION TO CLOSE.

      Medicis' obligation to sell and transfer the Option Shares and to take the
other actions required to be taken by Medicis at the Option Closing is subject
to the satisfaction, at or prior to the Option Closing, of each of the following
conditions (any of which may be waived by Medicis, in whole or in part, in
writing):

                                       27


      6.1 ACCURACY OF REPRESENTATIONS. The representations and warranties made
by BioMarin and BioMarin Acquisition in this Agreement as specified in this
Section 6.1 that are qualified by materiality or Material Adverse Effect shall
be true and complete as of the Option Closing Date as if made on the Option
Closing Date (except for representations and warranties made as of a specified
date, which need be true only as of the specified date). The representations and
warranties made by BioMarin and BioMarin Acquisition in this Agreement as
specified in this Section 6.1 that are not so qualified shall be true and
complete in all material respects as of the Option Closing Date as if made on
the Option Closing Date (except for representations and warranties made as of a
specified date, which need be true in all material respects only as of the
specified date). The closing condition set forth in this Section 6.1 shall apply
only to the representations and warranties contained in (i) the first sentence
of Section 3.1, (ii) Section 3.3 and (iii) clause (b) in Section 3.5.

      6.2 CONSENTS AND GOVERNMENTAL APPROVALS. All material Consents required to
be obtained by BioMarin or BioMarin Acquisition from any Governmental Body in
order to consummate the transactions contemplated hereby shall have been
obtained and shall be in full force and effect, and all waiting periods under
the HSR Act shall have expired, other than any Consents the failure of which to
obtain would require only the payment by BioMarin and BioMarin Acquisition of
monetary amounts, penalties or fines, not exceeding, in the aggregate,
$1,000,000.

      6.3 NO RESTRAINTS. No preliminary injunction or other order, decree or
ruling issued by a court of competent jurisdiction or other Governmental Body
having jurisdiction, nor any statute, rule, regulation, or executive order
promulgated or enacted by any Governmental Body shall be in effect that would
make any of the transactions contemplated hereby illegal or otherwise prohibit
the consummation of the transactions contemplated hereby.

      6.4 PERFORMANCE OF OBLIGATIONS. Each of the covenants and obligations that
BioMarin and BioMarin Acquisition are required to comply with or to perform in
Section 4.2 at or prior to the Option Closing shall have been duly complied with
and performed in all material respects.

      6.5 ADDITIONAL DOCUMENTS; PAYMENTS. Medicis shall have received the
following:

            (a) a certificate from a duly authorized officer not less senior
than vice president of BioMarin to the effect that BioMarin has satisfied each
of the conditions set forth in Sections 6.1 and 6.4;

            (b) a certificate from a duly authorized officer not less senior
than vice president of BioMarin Acquisition to the effect that BioMarin
Acquisition has satisfied each of the conditions set forth in Sections 6.1 and
6.4;

            (c) an opinion letter from Paul, Hastings, Janofsky & Walker LLP,
dated the Option Closing Date, in the form of EXHIBIT E; and

            (d) subject to Section 1.3(c), all payments required to be made by
BioMarin or BioMarin Acquisition pursuant to the License Agreement.

                                       28


7.    TERMINATION.

      7.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Option Closing Date:

            (a) by BioMarin Acquisition if there is a Breach of any
representation, warranty, covenant or obligation of Medicis or Ascent set forth
in this Agreement which Breach (i) would give rise to the failure of a condition
set forth in Section 5.1 or Section 5.4 and (ii) (if susceptible to cure) has
not been cured within 20 Business Days following receipt by Medicis of notice of
such Breach (a "MEDICIS BREACH");

            (b) by Medicis if there is a Breach of any representation, warranty,
covenant or obligation of BioMarin or BioMarin Acquisition set forth in this
Agreement which Breach (i) would give rise to the failure of a condition set
forth in Section 6.1 or Section 6.4 and (ii) (if susceptible to cure) has not
been cured within 20 Business Days following receipt by BioMarin Acquisition and
BioMarin of notice of such Breach (a "BIOMARIN BREACH");

            (c) by the mutual written consent of the parties hereto; and

            (d) by BioMarin Acquisition, upon delivery of a Notice of
Non-Exercise to Medicis in accordance with Section 1.2.

      7.2 TERMINATION PROCEDURES. If BioMarin Acquisition wishes to terminate
this Agreement pursuant to Section 7.1, BioMarin Acquisition shall deliver to
Medicis a written notice stating that BioMarin Acquisition is terminating this
Agreement and setting forth a brief description of the basis on which BioMarin
Acquisition is terminating this Agreement. If Medicis wishes to terminate this
Agreement pursuant to Section 7.1, Medicis shall deliver to BioMarin Acquisition
a written notice stating that Medicis is terminating this Agreement and setting
forth a brief description of the basis on which Medicis is terminating this
Agreement.

      7.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 7.1, this Agreement shall become wholly void and of no further force and
effect, without liability to BioMarin, BioMarin Acquisition, Medicis, Ascent or
any of their respective Representatives or Affiliates, except that the
provisions set forth in Sections 4.7, 4.11, 7.3, 9.2, 9.3, 9.8, 9.11 and, in the
case of termination of this Agreement pursuant to Section 7.1(b) or (d), 9.20,
shall remain in full force and effect; provided, however, that nothing in this
Section 7.3 shall be deemed to release any party from liability for any Breach
of its obligations under this Agreement.

8.    SURVIVAL AND INDEMNIFICATION

      8.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.

            (a) All representations and warranties contained in this Agreement
shall survive the Option Closing Date and shall expire at 11:59 p.m. (Pacific
Time) on the eighteenth-month anniversary of the Option Closing Date, and shall
thereafter be of no further force or effect, except (i) the representations and
warranties set forth in Sections 2.3, 2.6, 2.7, 2.8, 2.13, 3.3, and 3.13 shall
expire on the expiration of the relevant statute of limitations, and (ii) to the
extent required to enforce the parties' rights and obligations hereunder
following the

                                       29


end of such period for any claims for which a Claim Notice (as defined below)
has properly been made prior to the expiration of such period. All of the
covenants, agreements and obligations of the parties contained in this Agreement
shall survive (i) until fully performed or fulfilled, unless non-compliance with
such covenants, agreements or obligations is waived in writing by the party or
parties entitled to such performance or (ii) if not fully performed or
fulfilled, until the expiration of the relevant statute of limitations.
Notwithstanding anything in this Agreement to the contrary, if this Agreement is
terminated pursuant to Section 7.1(c) or (d), the representations and warranties
contained in this Agreement shall thereafter be of no further force or effect.

            (b) For purposes of this Agreement, a "Claim Notice" relating to a
particular representation or warranty or covenant shall be deemed to have been
given if any Indemnified Party, acting in good faith, delivers to the
Indemnifying Party a written notice stating that such Indemnified Party
reasonably believes that there is or has been a possible Breach of such
representation or warranty or covenant and containing (i) a brief description of
the circumstances supporting such Indemnified Party reasonable belief that there
is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct or indirect result of such possible
Breach.

            (c) Notwithstanding that the accuracy and performance of only
certain representations, warranties and covenants are conditions to the
obligations of the parties hereto to consummate the transactions contemplated
hereby, any party may pursue claims for indemnification with respect to Damages
that arise from the Breach of any representation, warranty or covenant contained
in this Agreement, regardless of whether the party asserting a claim for
indemnification had knowledge of such Breach prior to the Option Closing.

      8.2 INDEMNIFICATION BY MEDICIS.

            (a) From and after the Effective Date, Medicis shall hold harmless
and indemnify each of the BioMarin Indemnitees from and against, and shall
compensate and reimburse each of the BioMarin Indemnitees for, any Damages
suffered or incurred by any of the BioMarin Indemnitees or to which any of the
BioMarin Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any Third Party Claim) and that arise
from:

                  (i) any Breach of any of the representations or warranties
made by Medicis in this Agreement;

                  (ii) any Breach of any covenant or obligation of Medicis or
Ascent contained in this Agreement;

                  (iii) any Liability of Ascent at the Option Closing, other
than any Liability for which BioMarin has indemnified Medicis pursuant to
Section 8.3(a)(iii) below; and

                  (iv) any Proceeding relating directly or indirectly to any
Breach or Liability of the type referred to in clauses "(i)" through "(iii)"
above (including any Proceeding commenced by any BioMarin Indemnitee for the
purpose of enforcing any of its rights under this Section 8.2).

                                       30


            (b) Subject to Section 8.2(d), Medicis shall not be required to make
any indemnification payment pursuant to Sections 8.2(a)(i) of this Agreement,
Section 9.2(a)(i) of the Asset Purchase Agreement and Section 12.2(a)(i) of the
License Agreement, until such time as and to the extent that the total amount of
all Damages (including the Damages arising from such Breach and all other
Damages arising from any other Breaches of any representations or warranties)
that have been directly or indirectly suffered or incurred by any one or more of
the BioMarin Indemnitees, or to which any one or more of the BioMarin
Indemnitees has or have otherwise become subject, exceeds, in the aggregate,
$250,000 and then only to the extent of such excess.

            (c) Notwithstanding anything in this Agreement to the contrary, but
subject to Section 8.2(d), the aggregate liability for any indemnification
payments pursuant to Section 8.2(a)(i) of this Agreement, Section 9.2(a)(i) of
the Asset Purchase Agreement and Section 12.2(a)(i) of the License Agreement,
will be limited to, and shall not exceed, in the aggregate, $66.5 million (the
"MEDICIS CAP"); provided, however, that the Medicis Cap shall not apply to any
indemnification obligation of Medicis arising out of any Breach of Section 2.3,
2.6 or 2.7.

            (d) The limitations on the indemnification obligations of Medicis
set forth in each of Section 8.2(b) and Section 8.2(c) shall not apply to any
willful Breach, intentional misrepresentation or fraud by Medicis or Ascent.

            (e) The indemnification obligations of Medicis set forth in this
Section 8.2 shall be without any right of Medicis or any of its Affiliates to
any contribution from, or recourse against, Ascent. Medicis, on behalf of itself
and each of its Affiliates, hereby completely releases and covenants not to sue
Ascent and BioMarin and BioMarin Acquisition and their respective Affiliates, in
their capacity as direct or indirect owners of Ascent, from or with respect to
any and all Liabilities arising from or in connection with any Damages for which
Medicis is obligated to indemnify under this Section 8.2.

            (f) To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the License Agreement and/or the Asset Purchase Agreement,
such party shall be entitled to only one recovery of Damages resulting from such
actions, failures to act or other circumstances giving rise to the right of
indemnification, regardless of whether the actions, failures to act or other
circumstances giving rise to the right of indemnification constitute a breach of
more than one agreement. The parties acknowledge that the purpose of this
provision is to prevent duplicative recovery for the same Damages, and not to
preclude the recovery of Damages for separate and independent indemnity claims
that may arise under the various agreements.

      8.3 INDEMNIFICATION BY BIOMARIN.

            (a) From and after the Effective Date, BioMarin shall hold harmless
and indemnify the Medicis Indemnitees from and against, and shall compensate and
reimburse the Medicis Indemnitees for, any Damages suffered or incurred by any
of the Medicis Indemnitees

                                       31


or to which any of the Medicis Indemnitees may otherwise become subject at any
time (regardless of whether or not such Damages relate to any Third Party Claim)
and that arise from:

                  (i) any Breach of any representation or warranty made by
BioMarin or BioMarin Acquisition in this Agreement;

                  (ii) any Breach of any covenant or obligation of BioMarin or
BioMarin Acquisition contained in this Agreement;

                  (iii) any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing of the Products following the Effective Date, except
Damages suffered or incurred or arising from the Breach of Medicis, Ascent or
Medicis Manufacturing, as applicable, under the Supply Agreement, the Transition
Services Agreement or the License Agreement;

                  (iv) any Proceeding relating directly or indirectly to any
Breach, Liability or Third Party Claim of the type referred to in clauses "(i)"
through "(iii)" above (including any Proceeding commenced by any Medicis
Indemnitee for the purpose of enforcing its rights under this Section 8.3).

            (b) Subject to Section 8.3(d), BioMarin shall not be required to
make any indemnification payment pursuant to Section 8.3(a)(i) of this
Agreement, Section 9.3(a)(i) of the Asset Purchase Agreement and Section
12.3(a)(i) of the License Agreement, until such time as and to the extent that
the total amount of all Damages (including the Damages arising from such Breach
and all other Damages arising from any other Breaches of any representations or
warranties) that have been directly or indirectly suffered or incurred by the
Medicis Indemnitees or Ascent, or to which the Medicis Indemnitees or Ascent
have otherwise become subject, exceeds, in the aggregate, $250,000 and then only
to the extent of such excess.

            (c) Notwithstanding anything in this Agreement to the contrary, but
subject to Section 8.3(d), the aggregate liability for any indemnification
payments pursuant to Section 8.3(a)(i) of this Agreement, Section 9.3(a)(i) of
the Asset Purchase Agreement and Section 12.3(a)(i) of the License Agreement,
will be limited to, and shall not exceed, in the aggregate, $66.5 million (the
"BIOMARIN CAP"); provided, however, that the BioMarin Cap shall not apply to any
indemnification obligation of BioMarin arising out of any Breach of Section 3.3.

            (d) The limitation on the indemnification obligations of BioMarin
that is set forth in Section 8.3(b) and Section 8.3(c) shall not apply to (i)
any failure by BioMarin Acquisition to make any payment pursuant to Section
1.4(b), or (ii) any willful Breach, intentional misrepresentation or fraud by
BioMarin or BioMarin Acquisition.

            (e) To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the License Agreement and/or the Asset Purchase Agreement,
such party shall be entitled to only one recovery of Damages resulting from such
actions, failures to act or other circumstances giving rise to the right of
indemnification, regardless of whether the actions, failures to act or other
circumstances giving rise to the right of indemnification constitute a breach of
more than one agreement. The parties

                                       32


acknowledge that the purpose of this provision is to prevent duplicative
recovery for the same Damages, and not to preclude the recovery of Damages for
separate and independent indemnity claims that may arise under the various
agreements.

      8.4 PROCEDURES RELATING TO INDEMNIFICATION FOR THIRD PARTY CLAIMS.

            (a) Within ten (10) Business Days after a BioMarin Indemnitee or
Medicis Indemnitee obtains Knowledge of the commencement of any third-party
claim, action, suit or proceeding (a "THIRD PARTY CLAIM") or the occurrence of
any fact which may become the basis of a Third Party Claim in respect of which
an Indemnified Party is entitled to indemnification under this Agreement, such
Indemnified Party shall notify in writing the Indemnifying Party of such Third
Party Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been materially prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice). Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, within five (5) Business Days after the Indemnified Party's receipt
thereof, copies of all notices and non-privileged documents (including court
papers) received by the Indemnified Party relating to the Third Party Claim.

            (b) If a Third Party Claim is made against an Indemnified Party, the
Indemnifying Party shall be entitled to participate at its expense in the
defense thereof and, if it so chooses within thirty (30) days after receipt of
notice of such claim to assume the defense thereof at the Indemnifying Party's
expense, with counsel selected by the Indemnifying Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall be permitted to participate in the defense thereof and to employ
counsel (not reasonably objected to by the Indemnifying Party), at its own
expense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnified Party (i) for any period during which the
Indemnifying Party has not assumed the defense thereof or is not using
commercially reasonable efforts to pursue the defense thereof (other than during
the period in which the Indemnified Party failed to give notice of the Third
Party Claim as provided above), or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the
Indemnifying Party and the Indemnified Party in defending such claim or action,
or (y) that there may be legal defenses available to the Indemnified Party
different from or in addition to those available to the Indemnifying Party.

            (c) If the Indemnifying Party so elects to assume the defense of any
Third Party Claim, all of the Indemnified Parties shall reasonably cooperate
with the Indemnifying Party, at the expense of the Indemnifying Party, in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying Party
of non-privileged records and information which are reasonably relevant to such
Third Party Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim,

                                       33


the Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying Party's
prior written consent (which consent shall not be unreasonably withheld). If the
Indemnifying Party shall have assumed the defense of a Third Party Claim, the
Indemnified Party shall agree to any settlement, compromise or discharge of a
Third Party Claim for monetary Damages which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay the
full amount of the monetary Damages in connection with such Third Party Claim
and which releases the Indemnifying Party and the Indemnified Party completely
in connection with such Third Party Claim and does not impose any covenant or
commitment on the Indemnified Party.

      8.5 OTHER CLAIMS. In the event any Indemnified Party should have a claim
against any Indemnifying Party under Section 8.2 or 8.3 that does not involve a
Third Party Claim being asserted against or sought to be collected from such
Indemnified Party, the Indemnified Party shall deliver notice to the
Indemnifying Party of such claim within 15 Business Days of obtaining Knowledge
of the occurrence of such claim. The failure by any Indemnified Party so to
notify the Indemnifying Party within this time period shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party under Section 8.2 or 8.3, except to the extent that the Indemnifying Party
is materially prejudiced by such failure. If the Indemnifying Party does not
notify the Indemnified Party within 15 Business Days following its receipt of
such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under Section 8.2 or 8.3, such claim specified by the
Indemnified Party in such notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 8.2 or 8.3 and the Indemnifying Party shall pay
the amount of such liability to the Indemnified Party on demand or, in the case
of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined by agreement between the Indemnifying Party
and the Indemnified Party or by judgment or decree of a court of competent
jurisdiction. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall attempt to resolve such claim in accordance with Section
9.9.

      8.6 SETTLEMENTS. No party may settle any claim, action or proceeding
related to a liability to a third party without the consent of the other
parties, if such settlement would impose any monetary obligation on the other
parties or require the other parties to submit to an injunction or impose any
covenant or commitment on the other party or otherwise limit the other party's
rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.

      8.7 NO CONSEQUENTIAL OR PUNITIVE DAMAGES. No party hereto (or its
Affiliates) shall, under any circumstance, be liable to any other party (or its
Affiliates) for any consequential, exemplary, special, incidental or punitive
Damages claimed by such other party under the terms of or due to any Breach of
this Agreement.

9.    MISCELLANEOUS PROVISIONS.

      9.1 FURTHER ASSURANCES. From and after the Effective Date, each party
hereto shall execute and deliver such documents and take such other actions, as
such other party may

                                       34


reasonably request, for the purpose of carrying out or evidencing any of the
transactions contemplated hereby.

      9.2 FEES AND EXPENSES; INVESTMENT BANKING FEES.

            (a) Each party to this Agreement shall bear and pay all fees, costs
and expenses (including all legal fees and expenses, that have been incurred or
that are in the future incurred by, on behalf of or for the benefit of such
party in connection with: (i) the negotiation, preparation and review of any
letter of intent or similar document relating to any of the transactions
contemplated hereby; (ii) the investigation and review conducted by such party
and its Representatives with respect to the transactions contemplated hereby;
(iii) the negotiation, preparation and review of this Agreement or any of the
documents delivered in connection herewith; (iv) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated hereby, and the obtaining of any Consent required
to be obtained in connection with any of the transactions contemplated hereby;
and (v) the consummation and performance of the transactions contemplated
hereby.

            (b) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, and regardless of whether or not the Option Closing takes place,
each party to this Agreement shall pay its own investment banking, broker or
finder fees, if any, incurred in connection with the transactions contemplated
hereby.

      9.3 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to any Transaction Agreement or the enforcement of any provision of any
Transaction Agreement is brought by one party against any other party to this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys' fees, costs and disbursements (in addition to any other relief to
which the prevailing party may be entitled).

      9.4 NOTICES. All notices, demands and other communications under or in
connection with this Agreement shall be in writing and shall be deemed properly
delivered, given and received (a) if delivered personally, upon delivery, (b) if
delivered by registered or certified mail (return receipt requested) from the
United States, upon the earlier of actual delivery or three Business Days after
being mailed, (c) if sent by overnight delivery by a recognized overnight
delivery service for overnight delivery, upon the earlier of actual delivery or
one Business Day after being sent, or (d) if given by facsimile, upon
confirmation of transmission by facsimile (or, if such confirmation does not
occur during normal business hours on a Business Day then on the next Business
Day), in each case to the parties at the following addresses or facsimile
numbers or to such other address or facsimile numbers as each party may
designate for itself by like notice to the other parties:

                                       35


         if to Medicis:

                           Medicis Pharmaceutical Corporation
                           8125 N. Hayden Road
                           Scottsdale, Arizona  85258
                           Facsimile: (602) 778-6007
                           Attn: Jonah Shacknai

         if to Ascent:

                           Ascent Pediatrics, Inc.
                           8125 N. Hayden Road
                           Scottsdale, Arizona  85258
                           Facsimile: (602) 778-6007
                           Attn: Jonah Shacknai

         With a copy to each of (which copies shall not constitute notice):

                           Medicis Pharmaceutical Corporation
                           8125 N. Hayden Road
                           Scottsdale, Arizona 85258
                           Facsimile: (602) 808-3881
                           Attn: General Counsel

                           and

                           Akin Gump Strauss Hauer & Feld LLP
                           1700 Pacific Ave., Suite 4100
                           Dallas, Texas 75201
                           Facsimile: (214) 969-4343
                           Attention: Michael E. Dillard, P.C.

         if to BioMarin:

                           BioMarin Pharmaceutical Inc.
                           371 Bel Marin Keys Blvd., Suite 210
                           Novato, California 94949
                           Facsimile: (415) 382-7889
                           Attention: Fredric D. Price

                                       36


         if to BioMarin Acquisition:

                           BioMarin Pediatrics Inc.
                           371 Bel Marin Keys Blvd., Suite 210
                           Novato, California 94949
                           Facsimile: (415) 382-7889
                           Attention: Fredric D. Price

         With a copy (which copy shall not constitute notice) to:

                           Paul, Hastings, Janofsky & Walker LLP
                           515 South Flower Street, 25th Floor
                           Los Angeles, California 90071
                           Attention: Siobhan McBreen Burke, Esq.
                           Telephone:   (213) 683-6000
                           Facsimile:   (213) 627-0705

      9.5 TIME OF THE ESSENCE. Time is of the essence of this Agreement.

      9.6 HEADINGS. The headings contained in this Agreement are for convenience
of reference only, shall not be deemed to be a part of this Agreement and shall
not be referred to in connection with the construction or interpretation of this
Agreement.

      9.7 COUNTERPARTS. This Agreement may be executed in several counterparts
(including by facsimile), each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.

      9.8 GOVERNING LAW; VENUE.

            (a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of New York (without
giving effect to principles of conflicts of laws).

            (b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in New York, New
York in the Borough of Manhattan. Each party to this Agreement:

                  (i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in New York, New York in
the Borough of Manhattan (and each appellate court located in the State of New
York) in connection with any such legal proceeding;

                  (ii) agrees that each state and federal court located in New
York, New York in the Borough of Manhattan shall be deemed to be a convenient
forum; and

                  (iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in New York, New

                                       37


York in the Borough of Manhattan, any claim that such party is not subject
personally to the jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.

            (c) The parties hereto agree that, if any Proceeding is commenced
against any Indemnified Party by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnified Party may proceed against
the Indemnifying Party in or before such court or other tribunal with respect to
any indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.

      9.9 DISPUTE RESOLUTION PROCEDURES. In the event any dispute arises between
the parties with respect to the interpretation of this Agreement or with respect
to the performance of either party, the parties shall first seek to resolve such
dispute by negotiations between senior executives who have authority to settle
the dispute. When a party believes there is a dispute relating to the Agreement,
such party shall give written notice of the dispute to the other party or
parties subject to the dispute. The senior executives shall meet promptly after
the date of such notice and shall attempt in good faith within 45 days after the
date of such notice to resolve the dispute prior to initiating litigation with
respect to such matter. Notwithstanding the foregoing, if no such resolution is
reached within such 45 days, then any party may initiate any proceeding or
pursue any remedy it deems appropriate and that is not prohibited hereby.

      9.10 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.

            (a) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, the other Indemnified Parties, and the respective
successors and assigns (if any) of the foregoing. No Person (including any
creditor of Medicis or Ascent or any former or current employee of Ascent) who
is not a party to this Agreement shall have any rights hereunder as a
third-party beneficiary or otherwise.

            (b) Neither this Agreement nor the rights and obligations of any
party hereunder shall be assigned without the prior written consent of the other
parties, which consent may be given or withheld in such party's sole discretion.
If Medicis or BioMarin or any of their respective successors (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
Medicis or BioMarin, as the case may be, shall assume the obligations set forth
in this Agreement.

      9.11 EXCLUSIVE REMEDIES; SPECIFIC PERFORMANCE. Except as expressly
provided herein, from and after the Option Closing Date, the remedies provided
in Section 1.5, Article 8 and the Escrow Agreement shall constitute the sole and
exclusive remedy available to each party hereto for recovery against another
party for Breaches of the representations, warranties, covenants and agreements
in this Agreement. The parties hereto acknowledge that the material covenants,
obligations and other provisions to be performed under this Agreement are of a
special, unique and extraordinary character, and that irreparable injury will
result from any

                                       38


violation or continuing violation of the provisions of this Agreement for which
money damages may not be an adequate remedy. Accordingly, the parties agree that
in the event of any Breach or threatened Breach by any party hereto of any
material covenant, obligation or other provision set forth in this Agreement,
the other party or parties shall be entitled (in addition to any other remedy
that may be available to it) to seek in accordance with applicable law, (i) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach.

      9.12 WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.

      9.13 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of BioMarin, BioMarin Acquisition, Medicis and Ascent.

      9.14 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.

      9.15 ENTIRE AGREEMENT. This Agreement, the Escrow Agreement and the other
documents executed in connection herewith, set forth the entire understanding of
the parties relating to the subject matter thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter thereof.

      9.16 PERFORMANCE GUARANTEE.

            (a) BioMarin hereby unconditionally, irrevocably and absolutely
guarantees to Medicis the due and punctual performance and discharge of all of
BioMarin Acquisition's obligations under this Agreement, including, without
limitation, the due and punctual payment of the Cash Option Payment and the
Additional Consideration, if any, any other amount that BioMarin Acquisition is
or may become obligated to pay pursuant to this Agreement, and delivery of the
BioMarin Payment Shares (collectively, the "OBLIGATIONS"). The guarantee under
this Section 9.16 is a guarantee of timely payment and performance of the
Obligations and not merely of collection.

                                       39


            (b) To the fullest extent permitted by applicable law, the
obligations of BioMarin hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of BioMarin Acquisition or the bankruptcy,
insolvency, reorganization, dissolution, liquidation, or other similar
proceeding relating to BioMarin Acquisition or any Affiliate or Subsidiary of
either BioMarin Acquisition or BioMarin or (ii) any neglect, delay, omission,
failure or refusal of BioMarin to take or prosecute any action in connection
with this Agreement or any other agreement delivered in connection herewith. In
connection with this Section 9.16, BioMarin unconditionally waives: (i) any
right to receive demands, protests, or other notices of any kind or character
whatsoever, provided that the same has been delivered to BioMarin Acquisition,
(ii) any right to require Medicis or Ascent to proceed first against BioMarin
Acquisition or to exhaust any security held by Medicis or Ascent or to pursue
any other remedy, (iii) any defense based upon an election of remedies by
Medicis or Ascent, (iv) any duty of Medicis or Ascent to advise BioMarin of any
information known to Medicis or Ascent regarding BioMarin Acquisition or its
ability to perform under this Agreement, and (v) all suretyship and other
defenses of every kind and nature.

            (c) The obligations of BioMarin under this Section 9.16 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of BioMarin Acquisition in respect of the
Obligations are rescinded or must be otherwise restored, and BioMarin agrees
that it will indemnify Medicis and Ascent on demand for all costs and expenses
(including reasonable attorneys fees and expenses) incurred by Medicis and
Ascent in connection with such rescission or restoration. If in connection with
the foregoing, Medicis and Ascent is required to refund part or all of any
payment of BioMarin Acquisition, such payment by Medicis and Ascent shall not
constitute a release of BioMarin from any liability hereunder, and BioMarin's
liability hereunder shall be reinstated to the fullest extent allowed under
applicable law and shall not be construed to be diminished in any manner.

            (d) This Section 9.16 shall survive the Option Closing and shall
remain in full force and effect, subject to the provisions of Section 9.16(c).

      9.17 CONSTRUCTION.

            (a) For purposes of this Agreement, including the Exhibits hereto,
whenever the context requires: the singular number shall include the plural, and
vice versa; the masculine gender shall include the feminine and neuter genders;
the feminine gender shall include the masculine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.

            (b) The parties hereto agree that 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 Agreement.

            (c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."

                                       40


            (d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.

      9.18 CONSISTENCY. Each of the Parties hereto agrees to report the
transaction contemplated herein for all state and federal Tax purposes as a sale
and purchase of all of the outstanding capital stock of Ascent on the Option
Closing Date.

      9.19 NO PROJECTION OR FINANCIAL FORECAST. MEDICIS IS NOT MAKING ANY
REPRESENTATION OR WARRANTY TO BIOMARIN AND BIOMARIN ACQUISITION WITH RESPECT TO
(I) ANY FINANCIAL PROJECTION OR FORECAST RELATING TO THE PEDIATRICS BUSINESS,
THE ACQUIRED ASSETS OR LIABILITIES OF MEDICIS OR ASCENT OR RELATED TO THE
PHARMACEUTICAL MARKET AS A WHOLE OR THE MARKET FOR ORAL LIQUID PREDNISOLONE
SOLUTION PRODUCTS OR ORAL DISSOLVING TABLET PREDNISOLONE PRODUCTS SPECIFICALLY,
INCLUDING BUT NOT LIMITED TO ANY PROJECTIONS INCLUDING FUTURE SALES OF SUCH
PRODUCTS, OR THE INTRODUCTION OF ANY COMPETITIVE PRODUCTS (WHETHER GENERIC OR
NAME BRAND).

      9.20 NONCOMPETITION BY BIOMARIN. Each of BioMarin and BioMarin Acquisition
agree that, if this Agreement is terminated by Medicis pursuant to Section
7.1(b), by the parties hereto pursuant to Section 7.1(c), or by BioMarin
Acquisition pursuant to Section 7.1(d), it shall not and shall cause its
Subsidiaries not to, during the period from the termination date through the
fifth anniversary of the termination date, whether acting alone or as a member
of an Entity, and whether as an advisor, principal, consultant, independent
contractor, agent, partner, employee, officer, director, 5% or greater
equityholder or otherwise, anywhere in the world, (a) engage in, own, operate,
maintain or finance directly or indirectly any business or other enterprise
engaged in the development, distribution, sale or commercialization of an oral
liquid prednisolone sodium solution or oral dissolving tablet prednisolone
product, or (b) take any action that is designed or intended or would reasonably
be expected to have the effect of discouraging any customer, supplier, lessor,
licensor or other business associate of the business of BioMarin Acquisition or
its Affiliates related to the making, manufacturing, marketing, selling,
distributing, importing, exporting and developing of the Products from
maintaining a business relationship with Medicis or Ascent after the termination
date as it was maintained with the business of BioMarin Acquisition or its
Affiliates related to the making, manufacturing, marketing, selling,
distributing, importing, exporting and developing of the Products prior to the
termination date; provided, however, that, notwithstanding the foregoing, (a)
BioMarin may enter into a transaction or series of transactions that involves
the acquisition by BioMarin of another Entity whose activities, but for this
proviso would violate this Section 9.20 so long as such activities are not
primary but are merely ancillary to such Entity's activities and so long as
BioMarin terminates or divests such activities within a reasonable period of
time following such acquisition not to exceed 180 days, and (b) BioMarin may be
acquired by merger with another Entity, where the stockholders of BioMarin
immediately prior to the merger own less than 50% of the surviving entity, whose
activities, but for this proviso, would violate this Section 9.20. If the final
judgment of a court of competent jurisdiction declares that any term or
provision of this Section 9.20 is invalid or unenforceable, the parties agree
that the court making such determination of invalidity or unenforceability shall
have the power to reduce the scope, duration

                                       41


or area of the term or provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision with a term or provision
that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.

                            [SIGNATURE PAGE FOLLOWS]

                                       42


                [SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]

      The parties to this Agreement have caused this Agreement to be executed
and delivered by their duly authorized representatives as of May 18, 2004.

                                 MEDICIS PHARMACEUTICAL CORPORATION,
                                 a Delaware corporation

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                 ASCENT PEDIATRICS, INC.,
                                 a Delaware corporation

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                 BIOMARIN PHARMACEUTICAL INC.,
                                 a Delaware corporation

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________

                                 BIOMARIN PEDIATRICS INC.,
                                 a Delaware corporation

                                 By: ___________________________________________
                                 Name: _________________________________________
                                 Title: ________________________________________



                                    EXHIBIT A

                               CERTAIN DEFINITIONS

      For purposes of the Agreement (including this EXHIBIT A):

      "ACQUISITION TRANSACTION" shall mean any transaction or series of
transactions (other than the transactions contemplated hereby and in the
documents executed in connection herewith) involving:

            (a) any merger, consolidation, share exchange, business combination,
issuance of securities, direct or indirect acquisition of securities,
recapitalization, tender offer, exchange offer or other similar transaction in
which (i) Ascent is a constituent corporation, (ii) a Person or "group" (as
defined in the Exchange Act and the rules promulgated thereunder) of Persons
directly or indirectly acquires any of the outstanding securities of any class
of Ascent (other than in connection with the acquisition of Medicis), or (iii)
Ascent issues any securities;

            (b) any direct or indirect sale, lease, exchange, transfer, license,
acquisition or disposition of any business or businesses or of all or
substantially all of the assets or rights that are part of the Pediatrics
Business;

            (c) any liquidation or dissolution of Medicis or Ascent; or

            (d) any sale or other transfer of any of the Intellectual Property,
the Secondary ANDA, the Option Shares, or Medicis' or Ascent's obligations under
this Agreement.

      "AFFILIATE" shall mean with respect to any Person, any other Person
controlling, controlled by or within common control with such Person. Without
limiting the foregoing, Ascent is an Affiliate of Medicis and Medicis is an
Affiliate of Ascent, and BioMarin is an Affiliate of BioMarin Acquisition and
BioMarin Acquisition is an Affiliate of BioMarin.

      "AGREEMENT" shall mean the Securities Purchase Agreement to which this
EXHIBIT A is attached (including the Ascent Disclosure Schedule), as it may be
amended from time to time in accordance herewith.

      "ASCENT DISCLOSURE SCHEDULE" shall mean the schedule (dated as of the date
of the Agreement) delivered to BioMarin Acquisition on behalf of Ascent, a copy
of which is attached to the Agreement and incorporated in the Agreement by
reference.

      "ASCENT MERGER AGREEMENT" shall mean that certain Agreement and Plan of
Merger among Medicis, MPC Merger Corp. and Ascent, dated October 1, 2001.

      "ASSET PURCHASE AGREEMENT" shall mean that certain asset purchase
agreement among BioMarin, BioMarin Acquisition, Ascent and Medicis dated as of
April 20, 2004.

      "BIOMARIN INDEMNITEES" shall mean BioMarin Acquisition and BioMarin.

      "BIOMARIN SHARE" shall mean a share of BioMarin Common Stock.

                                      A-1


      "BREACH" means an inaccuracy in or breach of, or any failure to comply
with or perform, a representation, warranty, covenant, obligation or other
provision.

      "BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any day
which shall be in the State of New York a legal holiday or a day on which
banking institutions are authorized by law to close.

      "CODE" shall mean the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder.

      "COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.

      "CONFIDENTIALITY AGREEMENT" shall mean that certain Confidentiality
Agreement by and among Medicis, Ascent, Medicis Manufacturing, BioMarin and
BioMarin Acquisition, dated as of the date hereof.

      "CONSENT" shall mean any approval, consent, ratification, permission,
waiver, authorization, filing, registration or notification (including any
Governmental Authorization).

      "CONTRACT" shall mean any written, oral, implied or other agreement,
contract, understanding, arrangement, instrument, note, guaranty, indemnity,
deed, assignment, power of attorney, certificate, purchase order, work order,
insurance policy, benefit plan, commitment, covenant, assurance or undertaking
of any nature.

      "DAMAGES" shall include any loss, damage, injury, Liability, claim,
demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable legal fees, expert fees, accounting fees or advisory fees), charge,
cost (including reasonable costs of investigation) or expense of any nature.

      "DEVELOPMENT KNOW HOW" shall mean technical, scientific and medical
information, knowledge, know-how, inventions and trade secrets, that are
necessary for the development, registration, manufacturing, packaging,
stability, bioavailability, formulation, sale, use or commercialization of the
products claimed in the Development Patents, owned by Ascent or its Affiliates,
as of the Effective Date.

      "DEVELOPMENT PATENTS" shall mean all the United States and foreign patents
and utility models, invention registrations, supplementary protection
certificates and applications therefor listed in Part L-1.1(t) of the Ascent
Disclosure Schedule and all reissues, divisionals, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof.

      "DEVELOPMENT TECHNOLOGY" shall mean the Development Patents and the
Development Know How.

      "DOMAIN NAME AND WEB SITE LICENSE AGREEMENT" shall mean that certain
Domain Name and Web Site License Agreement among BioMarin, BioMarin Acquisition,
Ascent and Medicis dated as of May 18, 2004.

                                      A-2


      "DUAL USE KNOW HOW" shall mean technical, scientific and medical
information, knowledge, know-how, inventions and trade secrets, which (a) (i) is
owned by Ascent or its Affiliates and pertain or relate to both oral liquid
prednisolone solution products and the Primsol product previously marketed by
Ascent under Abbreviated New Drug Application 74-973 or (ii) is controlled by or
licensed to Ascent or its Affiliates on a non-exclusive basis, and is
sublicensable to a third party by Ascent or its Affiliates but is not owned by
Ascent or its Affiliates and (b) is necessary for, used in or related to the
development, registration, manufacturing, formulation, sale, use and
commercialization of oral liquid prednisolone solution products.

      "EMPLOYEE BENEFIT PLAN" shall have the meaning specified in Section 3(3)
of ERISA and each other employee benefit plan, program or arrangement at any
time maintained, sponsored or contributed to (or required to be contributed to)
by Medicis or any of its Affiliates or ERISA Affiliates or with respect to which
Medicis or any of its Affiliates has any liability or potential liability.

      "ENCUMBRANCE" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, equitable interest, claim, preference,
right of possession, lease, license, covenant, infringement, Order, proxy,
option, right of first refusal, preemptive right, legend, defect, impediment,
exception, reservation, limitation, impairment, imperfection of title, condition
or restriction of any nature (including any restriction on the transfer of any
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).

      "ENTITY" shall mean any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.

      "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and any regulations promulgated thereunder.

      "ERISA AFFILIATE" shall mean any Person that is, was or would be treated
as a single employer with Medicis, Ascent or any of their Affiliates under
Section 414 of the Code.

      "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and any regulations promulgated thereunder.

      "GAAP" shall mean generally accepted accounting principles as applied in
the United States.

      "GOVERNMENTAL AUTHORIZATION" shall mean any permit, license, certificate,
franchise, concession, approval, consent, ratification, permission, clearance,
confirmation, endorsement, waiver, certification, designation, rating,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.

                                      A-3


      "GOVERNMENTAL BODY" shall mean any United States federal, state or local
judicial, legislative, executive or other regulatory authority.

      "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and any regulations promulgated thereunder.

      "IMPROVEMENTS" means any and all inventions, improvements, discoveries,
enhancements, extensions, replacements, developments, refinements, or
modifications to the Technology or the Development Technology, or utilizing the
Technology or the Development Technology, or the respective use or the
manufacturing processes therefor, whether or not patentable, which may be
conceived, made, developed or otherwise controlled by BioMarin Acquisition or
its Affiliates during the term of the License Agreement including, without
limitation, modifications in size, package forms, dosage strength, methods for
administration, methods for delivering, or changes in the formulation including
the addition of actives to products.

      "INDEMNIFIED PARTIES" shall mean the Medicis Indemnitees or the BioMarin
Indemnitees, as the case may be.

      "INDEMNIFYING PARTIES" shall mean Medicis or BioMarin, as the case may be.

      "INTELLECTUAL PROPERTY" shall mean the Trademarks and the Technology.

      "INTELLECTUAL PROPERTY ASSETS" means the Technology, the Development
Technology, the Trademarks and the Improvements.

      "KNOW HOW" shall mean technical, scientific and medical information,
knowledge, know-how, inventions and trade secrets, that are necessary for the
development, registration, manufacturing, packaging, stability, bioavailability,
formulation, sale, use or commercialization of ORAPRED(R) and the "Licensed
Products" (as defined in the Development, Commercialization and License
Agreement between Ascent Pediatrics Inc. and Cima Labs Inc.), as the case may
be, including, without limitation: (a) physiochemical data, specifications,
quality control information and procedures; (b) market research data solely to
the extent Ascent has the right to assign such data to BioMarin Acquisition; and
(c) information concerning the clinical, toxicological and pharmacological
properties with respect to all of the foregoing, owned by Ascent or its
Affiliates, as of the Effective Date; provided that Know How shall not include
Dual Use Know How.

      "KNOWLEDGE" An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter. Each of Ascent or Medicis shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or individual
identified on EXHIBIT F hereto has Knowledge of such fact or other matter. Each
of BioMarin Acquisition or BioMarin shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or individual identified on
EXHIBIT G hereto has Knowledge of such fact or other matter.

      "LEGAL REQUIREMENT" shall mean any applicable order, writ, injunction,
judgment, decree, statute, rule or regulation of any Governmental Body.

                                      A-4


      "LIABILITY" shall mean any debt, obligation, liability of any nature
(including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation or liability is immediately due and payable.

      "LICENSE AGREEMENT" shall mean that certain License Agreement by and among
BioMarin, BioMarin Acquisition, Medicis and Ascent, dated as of the date hereof.

      "LITIGATION MATTERS" shall mean those matters set forth on EXHIBIT H
hereto.

      "LYNE LICENSE" shall mean that certain License Agreement between Ascent
and Lyne Laboratories, Inc. dated May 21, 2001 (without regard to any amendment
or modification thereof subsequent to the date hereof).

      "MATERIAL ADVERSE EFFECT" With respect to Medicis and/or Ascent, an
"ASCENT MATERIAL ADVERSE EFFECT" means any event, circumstance, condition,
development or occurrence causing, resulting in or having a material adverse
effect on Ascent, the Intellectual Property, or the Pediatrics Business, taken
as a whole; provided that in no event shall any of the following be deemed to
constitute or be taken into account in determining an Ascent Material Adverse
Effect: any event, circumstance, change or effect that results from (A) changes
affecting the economy generally, (B) changes in the pharmaceutical industry as a
whole or in the market for oral liquid prednisolone solution products or oral
dissolving tablet prednisolone products, (C) the public announcement or pending
nature of the transactions contemplated hereby, or (D) any adverse judgment,
verdict or Order relating to the Litigation Matters (provided that this clause
(D) shall not restrict or modify the conditions set forth in Sections 5.1, 5.3
and 5.4). With respect to BioMarin and/or BioMarin Acquisition, a "BIOMARIN
MATERIAL ADVERSE EFFECT" means any event, circumstance, condition, development
or occurrence causing, resulting in or having a material adverse effect on the
business, condition, capitalization, assets, liabilities, operations or
financial performance of BioMarin, taken as a whole; provided that in no event
shall any of the following be deemed to constitute or be taken into account in
determining a BioMarin Material Adverse Effect: any event, circumstance, change
or effect that results from (x) changes affecting the economy generally, (y)
changes in the pharmaceutical industry as a whole, or (z) the public
announcement or pending nature of the transactions contemplated hereby.

      "MEDICIS INDEMNITEES" shall mean Medicis.

      "MEDICIS MANUFACTURING" shall mean Medicis Manufacturing Corporation, a
Delaware corporation.

      "ORAPRED(R)" means a product having the approved prednisolone sodium
phosphate oral solution formulation, 15mg (base)/5ml as set forth under
Abbreviated New Drug Application 75-117.

      "ORDER" shall mean any order, judgment, injunction, decree, ruling,
decision, opinion, verdict, sentence, writ or award issued, made, entered,
rendered or otherwise put into effect by or

                                      A-5


under the authority of any court, administrative agency or other Governmental
Body or any arbitrator or arbitration panel.

      "ORDINARY COURSE OF BUSINESS" An action taken by or on behalf of Ascent or
Medicis shall not be deemed to have been taken in the "Ordinary Course of
Business" unless such action is regularly recurring in nature and is consistent
with the past practices of Ascent or Medicis in the conduct of the Pediatrics
Business.

      "OPTION TERM" shall mean the period commencing the Effective Date and
ending on the earlier to occur of (i) the Option Closing Date, or (ii) the
termination date of this Agreement.

      "PEDIATRICS BUSINESS" means the business of making, manufacturing,
marketing, selling, distributing and/or developing ORAPRED(R), certain oral
liquid prednisolone solution products and oral dissolving tablet prednisolone
products.

      "PERMITTED ENCUMBRANCES" shall mean the Lyne License, Permitted Liens and
the Security Agreement.

      "PERMITTED LIENS" shall means liens for Taxes, assessments and other
governmental charges which are not due and payable or which my hereafter be paid
without penalty or which are being contested in good faith by appropriate
proceedings.

      "PERSON" shall mean any individual, Entity or Governmental Body.

      "PROCEEDING" shall mean any claim, action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding), or investigation commenced, brought, conducted or heard
by or before, or otherwise involving, any Governmental Body or any arbitrator or
arbitration panel.

      "PRODUCTS" shall mean any product or method made, used, imported, offered
for sale, distributed or sold which, if in the course of such manufacture, use,
importation, offer for sale, distribution or sale, would, in the absence of the
License Agreement, infringe or misappropriate one or more of the Intellectual
Property Assets.

      "REPRESENTATIVES" shall mean officers, directors, employees, agents,
attorneys, accountants, advisors and representatives.

      "SECONDARY ANDA" shall mean the Abbreviated New Drug Application numbered
75-250, together with all amendments, modifications, supplements and updates
thereto.

      "SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and
the regulations promulgated thereunder.

      "SECURITY AGREEMENT" shall mean that certain Trademark Security Agreement
by and between Ascent and BioMarin Acquisition, dated as of the date hereof.

      "SUBSIDIARY" shall mean with respect to any Person, any other Person (a)
of which the initial Person directly or indirectly owns or controls more than
50% of the voting equity interests

                                      A-6


or has the power to elect or direct the election of a majority of the members of
the governing body of such Person or (b) which is required to be consolidated
with such Person under generally accepted accounting principles.

      "SUPPLY AGREEMENT" shall mean that certain supply agreement by and between
BioMarin Acquisition and Medicis Manufacturing dated as of the date hereof,
including any subcontracts related thereto.

      "TASTE MASKING RELATED PATENTS" shall mean all the United States and
foreign patents and utility models, invention registrations, supplementary
protection certificates and applications therefor listed in Part L-1.1(jjj) of
the Ascent Disclosure Schedule and all reissues, divisionals, renewals,
extensions, provisionals, continuations, and continuations-in-part thereof.

      "TAX" shall mean any tax (including any income tax, franchise tax, capital
gains tax, estimated tax, gross receipts tax, value added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, occupation tax, inventory tax, occupancy tax, withholding tax or
payroll tax), levy, assessment, tariff, impost, imposition, toll, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any fine, penalty or interest), that is, has been or may in
the future be (a) imposed, assessed or collected by or under the authority of
any Governmental Body, or (b) payable pursuant to any tax sharing agreement or
similar Contract.

      "TAX RETURN" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.

      "TECHNOLOGY" shall mean the Taste Masking Related Patents and the Know
How.

      "TRADEMARKS" shall mean all business names, trade names, logos, common law
trademarks and service trademarks, trademark and service mark registrations and
applications therefor as set forth on Part L-1.1 (oo) of the Ascent Disclosure
Schedule.

      "TRANSACTION AGREEMENTS" shall mean this Agreement and the Escrow
Agreement.

      "TRANSITION SERVICES AGREEMENT" shall mean that certain Transition
Services Agreement by and among Medicis, Ascent, BioMarin and BioMarin
Acquisition, dated as of the date hereof.

      Other defined terms are located in the Agreement as follows:



DEFINED TERM                                                                PAGE NO.
- ------------                                                                --------
                                                                         
ASCENT....................................................................     1
ASCENT COMMON STOCK.......................................................     7


                                      A-7


                                                                           
ASCENT LIABILTY...........................................................     5
BIOMARIN..................................................................     1
BIOMARIN ACQUISITION......................................................     1
BIOMARIN BREACH...........................................................    29
BIOMARIN CAP..............................................................    32
BIOMARIN COMMON STOCK.....................................................    12
BIOMARIN FILINGS..........................................................    14
BIOMARIN PAYMENT SHARES...................................................     3
BIOMARIN REGISTRATION INDEMNIFIED PARTIES.................................    23
CASH OPTION PAYMENT.......................................................     3
EFFECTIVE DATE............................................................     1
ENFORCEABILITY EXCEPTION..................................................     7
ESCROW AGREEMENT..........................................................     6
ESCROW CASH...............................................................     5
ESCROW SHARE PRICE........................................................     6
ESCROW SHARES.............................................................     6
ESTIMATED DAMAGES.........................................................     5
INDEPENDENT APPRAISER.....................................................     5
LIABILITIES NOTICE........................................................     5
MEDICIS...................................................................     1
MEDICIS BREACH............................................................    29
MEDICIS CAP...............................................................    31
MEDICIS REGISTRATION INDEMNIFIED PARTIES..................................    23
NOTICE OF ACCELERATION....................................................     2
NOTICE OF NON-EXERCISE....................................................     2
OBLIGATIONS...............................................................    39
OPTION....................................................................     1
OPTION CLOSING............................................................     4
OPTION CLOSING DATE.......................................................     1
OPTION SHARES.............................................................     1
REGISTRATION INDEMNIFIED PARTIES..........................................    24
RESOLUTION PERIOD.........................................................     5
RESTRICTED STOCK..........................................................    21
SUSPENSION PERIOD.........................................................    21
TARGET CLOSING DATE.......................................................     1
THIRD PARTY CLAIM.........................................................    33



                                      A-8

EX-10.3

                                                                    EXHIBIT 10.3

                                LICENSE AGREEMENT

      This LICENSE AGREEMENT ("AGREEMENT") is entered into as of May 18, 2004
(the "EFFECTIVE DATE") by and among BioMarin Pharmaceutical Inc., a Delaware
corporation ("BIOMARIN"), BioMarin Pediatrics Inc., a Delaware corporation and
wholly-owned subsidiary of BioMarin ("BIOMARIN ACQUISITION" or "LICENSEE"),
Medicis Pharmaceutical Corporation, a Delaware corporation ("MEDICIS"), and
Ascent Pediatrics, Inc., a Delaware corporation ("ASCENT" or "LICENSOR"), a
wholly-owned subsidiary of Medicis. Each is referred to herein as a "PARTY" and
collectively as the "PARTIES."

                                    RECITALS

      WHEREAS, Ascent is the sole and exclusive owner or has control of the
entire right, title, and interest, together with all goodwill connected
therewith, in and to the Licensed Technology, Licensed Trademarks and Licensed
Development Technology (each as defined below);

      WHEREAS, Ascent wishes to grant to BioMarin Acquisition, and BioMarin
Acquisition wishes to receive, an exclusive, worldwide, license to such Licensed
Technology, Licensed Trademarks and Licensed Development Technology under the
terms and conditions set forth herein; and

      WHEREAS, this Agreement is entered into as a condition to the consummation
of the transactions contemplated under the Asset Purchase Agreement (as defined
below) by and among BioMarin, BioMarin Acquisition, Medicis and Ascent.

      NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and promises contained herein, the Parties hereby agree as follows:

1.    DEFINITIONS

      1.1   DEFINITIONS. In addition to the terms defined in the text of this
Agreement, the following terms shall have the following respective definitions:

            (a)   "AFFILIATE" means with respect to any Person, any other Person
controlling, controlled by or within common control with such Person. Without
limiting the foregoing, Ascent is an Affiliate of Medicis and Medicis is an
Affiliate of Ascent, and BioMarin is an Affiliate of BioMarin Acquisition and
BioMarin Acquisition is an Affiliate of BioMarin.

            (b)   "ANDA" means Abbreviated New Drug Application 75-117 for
prednisolone sodium phosphate oral solution formulation, 15mg (base)/ 5ml,
together with all amendments, modifications, supplements and updates thereto.

            (c)   "ASCENT INDEMNITEES" means Ascent and Medicis.

            (d)   "ASCENT MERGER AGREEMENT" means that certain Agreement and
Plan of Merger among Medicis, MPC Merger Corp. and Ascent, dated October 1,
2001.

                                      -1-


            (e)   "ASCENT TECHNICAL ASSISTANCE" means the technical assistance
and training to be provided by Ascent hereunder that is reasonably necessary to
enable BioMarin Acquisition to utilize and in order to disclose fully the
Licensed Technology and Licensed Development Technology in connection with the
Pediatric Business as it was conducted by Ascent immediately prior to the
Effective Date.

            (f)   "ASSET PURCHASE AGREEMENT" means that certain asset purchase
agreement among BioMarin, BioMarin Acquisition, Ascent and Medicis dated as of
April 20, 2004.

            (g)   "BANKRUPTCY PROCEEDING" means any case or proceeding commenced
by or against any Person under any provision of the U.S. Bankruptcy Code (title
11 of the United States Code, as in effect from time to time) or under any other
state or federal bankruptcy or insolvency law, assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
creditors, or proceedings seeking reorganization, arrangement, or other similar
relief.

            (h)   "BIOMARIN INDEMNITEES" means BioMarin Acquisition and
BioMarin.

            (i)   "BIOMARIN SHARE" means a share of BioMarin's common stock, par
value $.001 per share.

            (j)   "BREACH" means an inaccuracy in or breach of, or any failure
to comply with or perform, a representation, warranty, covenant, obligation or
other provision.

            (k)   "BUSINESS DAY" means any day excluding Saturday, Sunday and
any day which shall be in the State of New York a legal holiday or a day on
which banking institutions are authorized by law to close.

            (l)   "CASH DEPOSIT" means $25 million.

            (m)   "CDA" means that certain Confidentiality Agreement by and
among the Parties and Medicis Manufacturing Corporation, a Delaware corporation,
dated as of the date hereof.

            (n)   "CLOSING" means the "Closing" as defined in the Asset Purchase
Agreement.

            (o)   "COMMISSION" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

            (p)   "CONTINGENT PAYMENTS REIMBURSEMENT PAYMENTS" means the
Quarterly Contingent Payments Reimbursement Payments payable pursuant to Section
4.1(b).

            (q)   "CONTRACT" means any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, deed, assignment, power of attorney, certificate, purchase order,
work order, insurance policy, benefit plan, commitment, covenant, assurance or
undertaking of any nature.

                                       -2-


            (r)   "DAMAGES" shall include any loss, damage, injury, Liability,
claim, demand, settlement, judgment, award, fine, penalty, Tax, fee (including
reasonable legal fees, expert fees, accounting fees or advisory fees), charge,
cost (including reasonable costs of investigation) or expense of any nature.

            (s)   "DEVELOPMENT KNOW HOW" shall mean technical, scientific and
medical information, knowledge, know-how, inventions and trade secrets, that are
necessary for the development, registration, manufacturing, packaging,
stability, bioavailability, formulation, sale, use or commercialization of the
products claimed in the Development Licensed Patents, owned by Ascent or its
Affiliates, as of the Effective Date.

            (t)   "DEVELOPMENT LICENSED PATENTS" means all the United States and
foreign patents and utility models, invention registrations, supplementary
protection certificates and applications therefor listed in Schedule 1.1(t) and
all reissues, divisionals, renewals, extensions, provisionals, continuations,
and continuations-in-part thereof.

            (u)   "DUAL USE KNOW HOW" shall mean technical, scientific and
medical information, knowledge, know-how, inventions and trade secrets which (a)
(i) is owned by Ascent or its Affiliates and pertain or relate to both oral
liquid prednisolone solution products and the Primsol product previously
marketed by Ascent under Abbreviated New Drug Application 74-973 or (ii) is
controlled by or licensed to Ascent or its Affiliates on a non-exclusive basis,
and is sublicensable to a third party by Ascent or its Affiliates but is not
owned by Ascent or its Affiliates and (b) is necessary for, used in or related
to the development, registration, manufacturing, formulation, sale, use and
commercialization of oral liquid prednisolone solution products.

            (v)   "ENCUMBRANCE" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equitable interest, claim,
preference, right of possession, lease, license, covenant, infringement, Order,
proxy, option, right of first refusal, preemptive right, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
transfer of any asset, any restriction on the receipt of any income derived from
any asset, any restriction on the use of any asset and any restriction on the
possession, exercise or transfer of any other attribute of ownership of any
asset).

            (w)   "ENTITY" means any corporation (including any non profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, company
(including any limited liability company or joint stock company), firm or other
enterprise, association, organization or entity.

            (x)   "ESCROW AGENT" means U.S. Bank, N.A., or such other escrow
agent as mutually agreed to by Medicis and BioMarin.

            (y)   "ESCROW AGREEMENT" means that certain Escrow Agreement entered
into by and among Medicis, Ascent and the Escrow Agent in substantially the form
attached hereto as EXHIBIT A.

                                       -3-


            (z)   "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, and any regulations promulgated thereunder.

            (aa)  "FDA" shall mean the United States Food and Drug
Administration.

            (bb)  "GOVERNMENTAL BODY" means any United States federal, state or
local judicial, legislative, executive or other regulatory authority.

            (cc)  "IMPROVEMENTS" means any and all inventions, improvements,
discoveries, enhancements, extensions, replacements, developments, refinements,
or modifications to the Licensed Technology or the Licensed Development
Technology, or utilizing the Licensed Technology or the Licensed Development
Technology, or the respective use or the manufacturing processes therefor,
whether or not patentable, which may be conceived, made, developed or otherwise
controlled by Licensee or its Affiliates during the License Term including,
without limitation, modifications in size, package forms, dosage strength,
methods for administration, methods for delivering, or changes in the
formulation including the addition of actives to products.

            (dd)  "INDEMNIFIED PARTIES" means the Ascent Indemnitees or the
BioMarin Indemnitees, as the case may be.

            (ee)  "INDEMNIFYING PARTIES" means Ascent or BioMarin, as the case
may be.

            (ff)  "KNOWLEDGE" An individual shall be deemed to have "Knowledge"
of a particular fact or other matter if such individual is actually aware of
such fact or other matter. Each of Ascent or Medicis shall be deemed to have
"Knowledge" of a particular fact or other matter if any officer or individual
identified on EXHIBIT B hereto has Knowledge of such fact or other matter. Each
of BioMarin Acquisition or BioMarin shall be deemed to have "Knowledge" of a
particular fact or other matter if any officer or individual identified on
EXHIBIT C hereto has Knowledge of such fact or other matter.

            (gg)  "LEGAL REQUIREMENT" means any applicable order, writ,
injunction, judgment, decree, statute, rule or regulation of any Governmental
Body.

            (hh)  "LIABILITY" means any debt, obligation, liability of any
nature (including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, derivative, joint, several or secondary
liability), regardless of whether such debt, obligation or liability would be
required to be disclosed on a balance sheet prepared in accordance with
generally accepted accounting principles and regardless of whether such debt,
obligation or liability is immediately due and payable.

            (ii)  "LICENSE PAYMENTS" means the Closing License Payment, the
First Year Quarterly License Payments, the Second Year Quarterly License
Payments, the Third and Fourth Year Quarterly License Payments and the Fifth
Year Quarterly License Payments.

            (jj)  "LICENSE TERM" means the term defined in Section 11.1 of this
Agreement.

                                       -4-


            (kk)  "LICENSED ASSETS" means the Licensed Technology, the Licensed
Development Technology, the Licensed Trademarks and the Improvements.

            (ll)  "LICENSED DEVELOPMENT TECHNOLOGY" means the Development
Licensed Patents and the Development Know How.

            (mm)  "LICENSED PRODUCTS" means any product or method made, used,
imported, offered for sale, distributed or sold which, if in the course of such
manufacture, use, importation, offer for sale, distribution or sale, would, in
the absence of this Agreement, infringe or misappropriate one or more of the
Licensed Assets.

            (nn)  "LICENSED TECHNOLOGY" means the Taste Masking Related Licensed
Patents and the Product Know How.

            (oo)  "LICENSED TRADEMARKS" means all business names, trade names,
logos, common law trademarks and service trademarks, trademark and service mark
registrations and applications therefor as set forth on Schedule 1.1(oo).

            (pp)  "LITIGATION MATTERS" means those matters set forth in EXHIBIT
D hereto.

            (qq)  "LYNE LICENSE" means that certain License Agreement by and
between Ascent and Lyne Laboratories, Inc., dated as of May 21, 2001, without
regard to any amendment or modification thereof subsequent to the date hereof.

            (rr)  "MATERIAL ADVERSE EFFECT" With respect to Medicis and/or
Ascent, an "ASCENT MATERIAL ADVERSE EFFECT" means any event, circumstance,
condition, development or occurrence causing, resulting in or having a material
adverse effect on the Licensed Assets, or the Pediatrics Business, taken as a
whole; provided that in no event shall any of the following be deemed to
constitute or be taken into account in determining an Ascent Material Adverse
Effect: any event, circumstance, change or effect that results from (A) changes
affecting the economy generally, (B) changes in the pharmaceutical industry as a
whole or in the market for oral liquid prednisolone solution products or oral
dissolving tablet prednisolone products, (C) the public announcement or pending
nature of the transactions contemplated hereby, or (D) any adverse judgment,
verdict or Order relating to the Litigation Matters. With respect to BioMarin
and/or BioMarin Acquisition, a "BIOMARIN MATERIAL ADVERSE EFFECT" means any
event, circumstance, condition, development or occurrence causing, resulting in
or having a material adverse effect on the business, condition, capitalization,
assets, liabilities, operations or financial performance of BioMarin, taken as a
whole; provided that in no event shall any of the following be deemed to
constitute or be taken into account in determining a BioMarin Material Adverse
Effect: any event, circumstance, change or effect that results from (x) changes
affecting the economy generally, (y) changes in the pharmaceutical industry as a
whole, or (z) the public announcement or pending nature of the transactions
contemplated hereby.

            (ss)  "MATERIALS" means all material files, documents (including
either electronic or paper copies), specimens, records and other documentation
maintained by or under the control of Ascent and/or any Ascent Affiliate(s)
embodying Product Know How or Development Know How including, without
limitation, all test results, clinical studies, data management, manufacturing
processes, formulas, specifications, process development and non-

                                       -5-


clinical research, market studies, correspondence (including, without
limitation, correspondence both to and from the Federal Drug Administration,
United States Copyright Office, United States Patent and Trademark Office or any
other Governmental Body), filings with the Food and Drug Administration, United
States Copyright Office, United States Patent and Trademark Office or any other
Governmental Body, customer and supplier records for the previous three years,
and field force records for the previous three years.

            (tt)  "ORAPRED(R)" means a product having the approved prednisolone
sodium phosphate oral solution formulation, 15mg (base)/5ml as set forth under
Abbreviated New Drug Application 75-117.

            (uu)  "ORDER" shall mean any order, judgment, injunction, decree,
ruling, decision, opinion, verdict, sentence, writ or award issued, made,
entered, rendered or otherwise put into effect by or under the authority of any
court, administrative agency or other Governmental Body or any arbitrator or
arbitration panel.

            (vv)  "PATENTS" means all United States and foreign patents and
utility models, invention registrations, supplementary protection certificates
and applications therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof, and equivalent or
similar rights anywhere in the world in inventions and discoveries.

            (ww)  "PEDIATRICS BUSINESS" means the business of making,
manufacturing, marketing, selling, distributing and developing ORAPRED(R) and
certain oral liquid prednisolone solution products and oral dissolving tablet
prednisolone products.

            (xx)  "PERMITTED LIENS" shall mean liens for Taxes, assessments and
other governmental charges which are not due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by
appropriate proceedings.

            (yy)  "PERSON" means any individual, Entity or Governmental Body.

            (zz)  "PROCEEDING" means any claim, action, suit, litigation,
arbitration, proceeding (including any civil, criminal, administrative,
investigative or appellate proceeding), or investigation commenced, brought,
conducted or heard by or before, or otherwise involving, any Governmental Body
or any arbitrator or arbitration panel.

            (aaa) "PRODUCT KNOW HOW" shall mean technical, scientific and
medical information, knowledge, know-how, inventions and trade secrets, that are
necessary for the development, registration, manufacturing, packaging,
stability, bioavailability, formulation, sale, use or commercialization of
ORAPRED(R) and the "Licensed Products" (as defined in the Development,
Commercialization and License Agreement between Ascent Pediatrics Inc. and Cima
Labs Inc.), as the case may be, including, without limitation: (a)
physiochemical data, specifications, quality control information and procedures;
(b) market research data solely to the extent Ascent has the right to assign
such data to BioMarin Acquisition; and (c) information concerning the clinical,
toxicological and pharmacological properties with respect to all of the
foregoing, owned by Ascent or its Affiliates, as of the Effective Date; provided
that Product Know How shall not include any Dual Use Know How.

                                       -6-


            (bbb) "REPRESENTATIVES" means officers, directors, employees,
agents, attorneys, accountants, advisors and representatives.

            (ccc) "SECONDARY ANDA" means the Abbreviated New Drug Application
numbered 75-250, together with all amendments, modifications, supplements and
updates thereto.

            (ddd) "SECURITIES ACT" means the Securities Act of 1933, as amended,
and the regulations promulgated thereunder.

            (eee) "SECURITIES PURCHASE AGREEMENT" means that certain Securities
Purchase Agreement among BioMarin, BioMarin Acquisition, Medicis and Ascent
dated as of the Effective Date.

            (fff) "SHARE DEPOSIT" shall mean that number of BioMarin Shares with
an aggregate value, as of the Effective Date, of $25 million, as measured by the
average closing sales price per BioMarin Share over the twenty trading days
ending May 12, 2004.

            (ggg) "SUBSEQUENT ANDA" shall mean any Abbreviated New Drug
Application filed by Ascent or BioMarin, in each case in Ascent's name,
following the Effective Date for which BioMarin Acquisition is the regulatory
agent other than the ANDA and the Secondary ANDA.

            (hhh) "SUBSIDIARY" shall mean with respect to any Person, any other
Person (a) of which the initial Person directly or indirectly owns or controls
more than 50% of the voting equity interests or has the power to elect or direct
the election of a majority of the members of the governing body of such Person
or (b) which is required to be consolidated with such Person under generally
accepted accounting principles.

            (iii) "SUPPLY AGREEMENT" means that certain Supply Agreement by and
between Medicis Manufacturing Corporation, a Delaware corporation, and BioMarin
Acquisition dated as of the date hereof, and any subcontracts related thereto.

            (jjj) "TASTE MASKING RELATED LICENSED PATENTS" means all the United
States and foreign patents and utility models, invention registrations,
supplementary protection certificates and applications therefor listed in
Schedule 1.1(jjj) and all reissues, divisionals, renewals, extensions,
provisionals, continuations, and continuations-in-part thereof.

            (kkk) "TAX" means any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (a) imposed, assessed or collected by or under the
authority of any Governmental Body, or (b) payable pursuant to any tax sharing
agreement or similar Contract.

            (lll) "TERRITORY" shall mean worldwide.

                                       -7-


            (mmm) "TRANSACTION AGREEMENTS" means: (a) this Agreement; (b) the
Escrow Agreement; and (c) the Security Agreement.

            (nnn) "TRANSITION SERVICES AGREEMENT" means that certain Transition
Services Agreement by and among the parties of even date herewith.

      1.2   OTHER DEFINED TERMS.

            Other defined terms are located in the Agreement as follows:



DEFINED TERM                                                            PAGE NO.
- ------------                                                            --------
                                                                     
AGREEMENT                                                                   1
ASCENT                                                                      1
ASCENT CAP                                                                 33
ASCENT OBLIGATIONS                                                         42
ASCENT REGISTRATION INDEMNIFIED PARTIES                                    26
BIOMARIN                                                                    1
BIOMARIN ACQUISITION                                                        1
BIOMARIN ACQUISITION OBLIGATIONS                                           42
BIOMARIN CAP                                                               34
BIOMARIN REGISTRATION INDEMNIFIED PARTIES                                  26
CLAIM NOTICE                                                               32
CLOSING LICENSE PAYMENT                                                    16
CONTINGENT PAYMENTS                                                         9
EFFECTIVE DATE                                                              1
ENFORCEABILITY EXCEPTION                                                   20
FIFTH YEAR QUARTERLY LICENSE PAYMENT                                       17
FIRST YEAR QUARTERLY LICENSE PAYMENT                                       17
FIRST YEAR QUARTERLY PAYMENT DATE                                          17
HOLDER                                                                     24
LICENSE                                                                     9
LICENSE TERM                                                               30
LICENSEE                                                                    1
LICENSOR                                                                    1
MEDICIS                                                                     1
PARTIES                                                                     1
PARTY                                                                       1
QUARTERLY CONTINGENT PAYMENTS REIMBURSEMENT PAYMENT                        17
REGISTRATION INDEMNIFIED PARTIES                                           26
REPORTING YEAR                                                              9
RESTRICTED STOCK                                                           23
SECOND YEAR QUARTERLY LICENSE PAYMENT                                      17
SECURITY AGREEMENT                                                         10
SUSPENSION PERIOD                                                          24
THIRD AND FOURTH YEAR QUARTERLY LICENSE PAYMENT                            17
THIRD PARTY CLAIM                                                          35


                                       -8-


2.    LICENSE GRANT

      2.1   LICENSE GRANT.

            (a)   Subject to the terms and conditions of this Agreement and the
Lyne License, Ascent hereby grants to BioMarin Acquisition during the License
Term, an exclusive, worldwide license (with the sole exception, for a period of
thirty (30) days following the Effective Date, of the Commonwealth of Puerto
Rico), with the right to sublicense, to and under the Licensed Assets to make,
manufacture, develop, use, market, offer for sale, sell, distribute, import and
export products, by itself and/or on its behalf, and to otherwise exploit the
Licensed Assets during the License Term (the "LICENSE"). For avoidance of doubt,
this License grant is for a limited term and shall not be considered an
assignment.

            (b)   Subject to the terms and conditions of this Agreement, Ascent
hereby grants to BioMarin Acquisition during the License Term, a non-exclusive,
worldwide license (with the sole exception, for a period of thirty (30) days
following the Effective Date, of the Commonwealth of Puerto Rico), with the
right to sublicense, to and under the Dual Use Know How to make, manufacture,
develop, use, market, offer for sale, sell, distribute, import and export
products, by itself and/or its behalf, and to otherwise exploit the Dual Use
Know How during the License Term. The term "LICENSE" shall not include the
license granted under this Section 2.1(b).

      2.2   LICENSE SCOPE. The License shall be exclusive to BioMarin
Acquisition even as against Ascent and its Affiliates. Accordingly, neither
Ascent nor any of its Affiliates shall during the License Term exercise or
otherwise practice any of the rights granted to BioMarin Acquisition pursuant to
the License.

      2.3   OTHER ACTIONS.

            (a)   To the extent any right, title or interest in or to any of the
Licensed Technology, Licensed Development Technology or Licensed Trademarks is
owned or controlled by an Affiliate of Ascent, Ascent covenants and agrees to
promptly take whatever action is necessary to carry out the intent and purpose
of the License.

            (b)   For so long as Medicis is obligated under the Ascent Merger
Agreement for "CONTINGENT PAYMENTS" (as that term is defined in the Ascent
Merger Agreement) to the former shareholders of Ascent, BioMarin Acquisition
shall, on or before December 10 in each calendar year, provide to Ascent a
report containing the following with respect to the twelve month period
beginning on December 1 of the previous year and ending on November 30 (each, a
"REPORTING YEAR"):

                  (i)   the gross amount and unit quantities invoiced by
BioMarin Acquisition or its subsidiaries, Affiliates, or sublicensees from or on
account of sales of Licensed Products (as such term is defined in the Ascent
Merger Agreement);

                  (ii)  the aggregate of any (A) normal, customary trade
discounts (including volume discounts) actually given or made, (B) credits,
chargebacks, reductions, rebates, allowances and adjustments for rejections,
recalls, outdated products and returns, (C)

                                       -9-


freight, shipping, insurance and other transportation charges, and (D) sales,
use, excise, value-added and similar taxes or duties imposed on the sale (other
than income taxes), in each case under clauses (A), (B), (C) and (D) with
respect to Licensed Products (as such term is defined in the Ascent Merger
Agreement); and

                  (iii) such other information reasonably necessary for Ascent
to fulfill its obligations under the Ascent Merger Agreement.

            (c)   For a period of not less than three (3) years after the
relevant calendar year in (b) above, BioMarin, BioMarin Acquisition and their
Subsidiaries, Affiliates, licensees and sublicensees shall keep full, true and
accurate books of account sufficient to determine the amounts pursuant to
Section 2.3(b). Ascent shall have the right, not more than once during any
calendar year and at its expense, to have the books and records of BioMarin,
BioMarin Acquisition and their Subsidiaries, Affiliates, licensees or
sublicensees audited by a qualified independent accounting firm of its choosing,
under appropriate confidentiality provisions, solely for the purpose of
ascertaining the accuracy of the reports under Section 2.3(b) and compliance by
BioMarin, BioMarin Acquisition and their Subsidiaries, Affiliates, licensees or
sublicensees with their obligations under this Agreement. In the event that
there is a dispute with regard to the accounting reports, Ascent shall have the
right to perform audits more frequently than once during a calendar year, and
the prevailing party in such dispute shall have its costs related to the audit
reimbursed by the other party. Any such audit shall be conducted upon at least
ten (10) days' advance notice to BioMarin Acquisition, during normal business
hours and in a manner that does not interfere unreasonably with the business of
the audited entity.

            (d)   Ascent shall not permit or allow any Licensed Assets to be
subject to any Encumbrance other than this Agreement, the Lyne License, the
Supply Agreement and the Security Agreement.

            (e)   BioMarin and BioMarin Acquisition shall not permit or allow
this License Agreement to be subject to any Encumbrance.

            (f)   As security for the obligations of Ascent under this
Agreement, pursuant to the terms of a Security Agreement in the form of EXHIBIT
E (the "SECURITY AGREEMENT") Ascent shall grant to BioMarin Acquisition a
security interest in the Licensed Trademarks.

      2.4   LICENSEE'S EFFORTS. BioMarin Acquisition shall use commercially
reasonable efforts to market, promote and sell ORAPRED(R), which efforts shall
include the allocation of efforts and resources consistent with the resources
allocated by BioMarin Acquisition to the marketing, promotion and sale of other
commercially available products of BioMarin Acquisition with comparable
commercial opportunity in the marketplace. BioMarin Acquisition shall use
commercially reasonable efforts to develop, market commercialize and sell
Acetaminophen extended release sprinkles, Pediavent(R) albuterol extended
release suspension, and Non-refrigerated Orapred(R) prednisolone sodium
phosphate oral solution (15 mg prednisolone per 5 ml), which efforts shall
include the allocation of efforts and resources consistent with the resources
allocated by BioMarin Acquisition to the development, marketing,
commercialization and sale of other in development products of BioMarin
Acquisition with comparable commercial opportunity in the marketplace.
Notwithstanding the foregoing, if the

                                      -10-


total of (x) the actual amount under Section 2.3(b)(i) minus (y) the actual
amount under Section 2.3(b)(ii) exceeds $35,000,000 for each Reporting Year,
then BioMarin Acquisition shall be deemed to have satisfied all of its
obligations set forth in this Section 2.4.

      2.5   RIGHT TO REFERENCE ANDA. Subject to the terms and conditions of this
Agreement and for the License Term, BioMarin Acquisition and its Affiliates and
their sublicensees shall have an unrestricted right of reference to the ANDA
listed on Schedule 2.5 and any Subsequent ANDA. Within ten (10) Business Days of
the Effective Date, BioMarin Acquisition and Ascent shall each notify the FDA
that BioMarin Acquisition shall act as regulatory agent for the ANDA. During the
License Term, BioMarin Acquisition shall act as regulatory agent for the ANDA
and Subsequent ANDAs, and during the License Term BioMarin Acquisition shall
timely comply with all requirements under 21 CFR Part 203 (Prescription Drug
Marketing Act), 21 CFR Part 314.70 (Supplements and Other Changes to an Approved
Application), 21 CFR Part 314.80 (Post-Marketing Reporting of Adverse Drug
Experiences) and 21 CFR Part 314.81 (Other Post-Marketing Reports). During the
License Term, BioMarin Acquisition shall comply in all material respects with
all Legal Requirements, including but not limited to 21 CFR Part 211 (Current
Good Manufacturing Practices). BioMarin Acquisition shall assume responsibility
for all FDA regulatory matters for products marketed under the ANDA and each
Subsequent ANDA and BioMarin Acquisition and Ascent shall each send a letter to
the FDA informing the FDA that BioMarin Acquisition has assumed such
responsibility. Ascent shall provide BioMarin with all assistance and data,
reports and other information reasonably requested by BioMarin Acquisition to
assume such responsibilities.

      2.6   REGULATORY. During the License Term, BioMarin Acquisition shall
maintain, at a location in the United States, complete and accurate books and
records in sufficient detail as necessary for both BioMarin Acquisition and
Ascent to meet their respective filing and other obligations with the FDA and
any other applicable Governmental Body. BioMarin Acquisition shall provide to
Ascent timely copies of all submissions to the FDA, including but not limited
to, annual reports and adverse event reports. Not more than once per year and at
such additional times as may be reasonably required to respond to FDA
communications, upon not less than five (5) Business Days' written notice to
BioMarin Acquisition, Ascent shall have the right to review, at its expense,
inspect, audit and make copies of any such books and records for purposes of
verifying BioMarin Acquisition's compliance with Sections 2.5 through 2.7.
During the License Term, Ascent shall maintain, at a location in the United
States, complete and accurate books and records related to ORAPRED(R) in
existence as of the Effective Date and all other information related to
regulatory filings provided by BioMarin Acquisition to Ascent pursuant to this
Section 2.6.

      2.7   ADVERSE REACTIONS. The parties' obligations relating to reporting
Adverse Events shall be as set forth in the Transition Services Agreement by and
among the parties hereto, dated as of the Effective Date.

3.    TRANSFER AND TRANSFER SUPPORT

      3.1   CHANGE OF PARTY NAMES AND PROMOTIONAL MATERIALS.

                                      -11-


            (a)   As soon as reasonably practicable following the Effective
Date, but no later than ten (10) Business Days following the Effective Date,
BioMarin Acquisition, at its own expense, shall: (i) with Ascent's reasonable
cooperation and assistance, notify the FDA that BioMarin Acquisition is the
marketer and distributor of ORAPRED(R); and (ii) use commercially reasonable
efforts to commence taking any and all action necessary to change the National
Drug Code number for ORAPRED(R).

            (b)   As soon as reasonably practicable, but no later than ten (10)
Business Days following the Effective Date, BioMarin Acquisition and Ascent
shall jointly notify the current manufacturers of ORAPRED(R), and any components
thereof, the contents of which notification shall be mutually agreed upon, that
all package inserts, labeling, and any components thereof, and packaging related
thereto to be manufactured or ordered after the Effective Date, must be changed
to identify BioMarin Acquisition as the marketer in the United States. BioMarin
Acquisition shall use commercially reasonable efforts to ensure that such change
takes effect for any new orders of ORAPRED(R), or components thereof, following
the date that is twenty (20) Business Days following the Effective Date.

            (c)   Notwithstanding the foregoing, except as may be required by
applicable law or the FDA, BioMarin Acquisition shall not be required by Ascent
to change the labeling on any Product Inventory purchased by BioMarin
Acquisition from Ascent or any components manufactured or being manufactured
pursuant to purchase orders placed within thirty (30) calendar days following
the Effective Date.

      3.2   ADVERTISING AND PROMOTIONAL MATERIALS.

            (a)   As of the Effective Date: (i) BioMarin Acquisition shall be
responsible for development of all new advertising and promotional materials
related to the Licensed Products, all in compliance with all applicable
regulatory agencies and other rules and regulations; and (ii) neither BioMarin
Acquisition nor its Affiliates shall use any promotional and marketing materials
with the corporate identifiers or trade names of Medicis.

            (b)   Within ten (10) Business Days following the Effective Date,
BioMarin Acquisition and Ascent each shall submit a letter to the DDMAC division
of FDA informing them that BioMarin Acquisition will be the new distributor of
ORAPRED(R) in the United States under license from Ascent and designating
BioMarin Acquisition as the contact for review and discussion of all promotional
materials related to ORAPRED(R) in the United States, after which time BioMarin
Acquisition will timely file with the appropriate regulatory agency, in
accordance with all applicable laws and regulations, all promotional materials
for ORAPRED(R) required to be filed with such agency.

      3.3   TECHNOLOGY TRANSFER. As of the Effective Date, Ascent shall deliver
copies of Materials embodying the Product Know How to BioMarin Acquisition. No
later than five (5) Business Days after the Effective Date, Ascent shall deliver
copies of Materials embodying the Development Know How to BioMarin Acquisition.

      3.4   TECHNOLOGY TRANSFER SUPPORT. Ascent Technical Assistance shall be
provided as set forth in the Transition Services Agreement

                                      -12-


      3.5   TRADEMARK USE AND QUALITY CONTROL. During the License Term, BioMarin
Acquisition agrees and acknowledges that: (a) neither Licensee nor its
Affiliates shall have any interest, right, or title in the Licensed Trademarks
other than the License; (b) neither Licensee nor its Affiliates shall obtain any
rights in or to the Licensed Trademarks through Licensee's or its Affiliate's
use in connection with the Licensed Products; (c) Ascent or its Affiliates, as
the case may be, is and will continue to be the sole and exclusive owner of all
right, title and interest in and to each Licensed Trademarks in any form or
embodiment thereof; (d) all goodwill associated with or attached to the Licensed
Trademarks arising out of the use thereof by Licensee and its Affiliates shall
inure to the benefit of Ascent or its Affiliate, as applicable; and (e) the
quality of the goods provided by Licensee under the Licensed Trademarks shall
conform to applicable FDA standards for the applicable goods and shall be
subject to a once a year independent third party inspection, upon reasonable
notice to Licensee, of such goods upon which Licensed Trademarks appear. During
the License Term, Licensee shall furnish at Licensee's expense samples of
packaging materials and other materials bearing the Licensed Trademarks for
inspection and analysis as Ascent may reasonably request.

      3.6   NO CONTEST. During the License Term, Licensee agrees that neither
Licensee nor its Affiliates will: (i) contest, oppose or challenge, or assist
any party in contesting, opposing or challenging, Ascent's or its Affiliate's
ownership of the applicable Licensed Trademarks or the distinctiveness or
validity of the applicable Licensed Trademarks; (ii) at any time do or suffer to
be done any act or thing that will in any way impair Ascent's or its Affiliate's
ownership of or rights in and to the applicable Licensed Trademarks or any
registration thereof; (iii) register or attempt to register any applicable
Licensed Trademark in any jurisdiction; or (iv) oppose Ascent's or its
Affiliate's registration of any applicable Licensed Trademark, alone or with
other words or designs, in any jurisdiction. Upon the reasonable request of
Ascent or its Affiliate, Licensee shall give Ascent or its Affiliate or an
authorized Representative thereof all necessary information as to the use of the
applicable Licensed Trademarks pursuant to this Agreement which Ascent or its
Affiliate may reasonably require and will render any assistance reasonably
required by Ascent or its Affiliate in maintaining the registrations of the
applicable Licensed Trademarks.

      3.7   USE OF THE LICENSED TRADEMARKS. Licensee agrees to comply in all
material respects with all applicable laws and regulations pertaining to the
proper use and designation of the Licensed Trademarks. Additionally, during the
License Term, Licensee shall use commercially reasonable efforts to:

            (a)   use the Licensed Trademarks upon or in relation to the
Licensed Products only in such manner that the distinctiveness, reputation, and
validity of the Licensed Trademarks shall not be impaired. Without prejudice to
the generality of the foregoing, Licensee shall ensure in particular that each
Licensed Trademark is accompanied by words accurately describing the nature of
the goods or services to which it relates, and ensure that each Licensed
Trademark is displayed in accordance with Ascent's guidelines, which are
attached hereto as Schedule 3.7(a);

            (b)   display the proper form of trademark and service mark notice
associated with the Licensed Trademarks; and

                                      -13-


            (c)   neither use nor display any of the Licensed Trademarks other
than the "ASCENT" mark or the Ascent "People Logo" (U.S. Registration No.
2,510,806) in such relation to any other mark or trademarks owned by any third
party or Licensee or its Affiliates as to suggest that the multiple Trademarks
constitute a single or composite trademark, service mark, or are under the same
proprietorship.

      3.8   MAINTAINING REGISTRATIONS. Licensee shall reimburse Ascent for all
expenses reasonably incurred by Ascent or its Affiliate, during the License
Term, in connection with maintenance of those Licensed Trademarks which are
registered as of the Effective Date, including, but not limited to, filing all
necessary maintenance and use documents, applying for renewal, and payment of
any required periodic taxes or fees due in connection with such registrations.
Ascent and its Affiliates shall not allow such Licensed Trademark registrations
to lapse during the License Term, without the consent of Licensee. During the
License Term, Ascent or its Affiliate, as applicable, shall execute any required
documents, provide upon reasonable request any required records, and otherwise
reasonably cooperate fully with Licensee as may be necessary to accomplish the
recordation of the License in any jurisdiction within the Territory that
Licensee seeks such recordation. In such event, the expenses for recordation
will be borne by Licensee. At any time during the License Term Licensee shall
execute any documents as shall be reasonably required by Ascent or its Affiliate
to confirm Ascent's or its Affiliate's ownership of the Licensed Trademarks or
to otherwise give effect to the provisions of this Article 3. Licensee
acknowledges that the PEDIATUDE mark, Registration No. 2,153,138, will lapse
effective April 21, 2004, if the United States Patent and Trademark Office does
not accept specimens of use filed on or before such date.

      3.9   FILING OF NEW REGISTRATIONS. At Licensee's expense, Ascent, its
Affiliate or outside trademark counsel selected by Ascent shall: (a) file
additional trademark registration applications and related documents relating to
the Licensed Trademarks at the written request of the Licensee; (b) promptly
inform Licensee of communications from applicable trademark agencies; and (c)
timely file Licensee's responses to the communications from such trademark
agencies. Ascent shall ensure that each filing described in clauses (a) and (c)
above is submitted to the relevant trademark agency within fifteen (15) Business
Days, or within ten (10) Business Days in the case of all submissions related to
new applications, after the receipt by Ascent, its Affiliate or outside
trademark counsel, as the case may be, of all information and documentation
sufficient to make such filing. Licensor acknowledges and permits Licensee's
expansion of the scope of goods covered by the Licensed Trademarks. All rights,
including goodwill, acquired in such expansion shall vest in Licensor and shall
be deemed part of the Licensed Trademarks.

      3.10  ENFORCEMENT OF LICENSED TRADEMARKS.

            (a)   During the License Term, if either Party or its Affiliates
becomes aware of actual or threatened infringement of any Licensed Trademark or
of a mark or name confusingly similar to any Licensed Trademark, including
without limitation by publication of a mark for opposition, such Party or its
Affiliates shall promptly so notify the other Party in writing. BioMarin
Acquisition or its Affiliates shall have the first right, but not the
obligation, to enforce such Licensed Trademarks, including the right to bring
opposition, infringement or unfair competition actions involving a Licensed Mark
in the Territory at BioMarin Acquisition's expense, provided that Ascent shall
have the right to participate in such actions at Ascent's

                                      -14-


expense. If Ascent participates in any such action, BioMarin Acquisition or its
Affiliates shall have sole control of the conduct of any such action which it
brings, provided that Ascent shall have the right to provide ongoing comments
and advice regarding its position in such action, which comments shall be
considered in good faith by BioMarin Acquisition. Ascent or its Affiliates
shall, at the request and expense of BioMarin Acquisition or its Affiliates,
cooperate and provide reasonable assistance in any action described in this
Section and, if required by law, join such action. Any recovery or compensation
resulting from such proceeding, including without limitation non-monetary
rights, shall belong entirely to BioMarin Acquisition or its Affiliates less
reimbursement to Ascent by BioMarin Acquisition or its Affiliates of any
reasonable costs incurred by Ascent as a result of its participation in such
action regardless of whether Ascent participated on its own or was joined in the
action by BioMarin Acquisition. BioMarin Acquisition and its Affiliates shall
not settle or accept any settlement from any third party without the prior
written consent of Ascent, which consent shall not be unreasonably withheld or
delayed.

            (b)   During the License Term, if (i) BioMarin Acquisition or its
Affiliates fail to take action against such threatened or actual infringement
within a reasonable period of no longer than sixty (60) calendar days from the
date of receipt of written notice from Ascent or its Affiliates, and (ii) within
such period of time, and no later than five (5) Business Days prior to the
applicable deadline, BioMarin Acquisition or its Affiliates has not provided a
commercially reasonable position for failing to take such action, Ascent or its
Affiliates may thereafter take such action as it deems necessary to enforce its
rights in and to the Licensed Trademark, including, without limitation, the
right, but not the obligation, to bring, at its own expense, an infringement
action or file any other appropriate action or claim related to infringement of
the Licensed Trademark against any third party. BioMarin Acquisition or its
Affiliates shall, at the request and expense of Ascent or its Affiliates,
cooperate and provide reasonable assistance in any action described in this
Section and, if required by law, join such action. In such events, the expenses
for enforcement will be borne by Ascent or its Affiliates, and any recovery or
compensation resulting from such proceeding, including without limitation
non-monetary rights, shall belong entirely to Ascent or its Affiliates. Ascent
and its Affiliates shall not settle or accept any settlement from any third
party without the prior written consent of BioMarin Acquisition, which consent
shall not be unreasonably withheld or delayed.

      3.11  THIRD PARTY TRADEMARK LITIGATION.

            (a)   During the License Term, in the event of (i) the initiation of
any suit by a third party against Ascent or BioMarin Acquisition for trademark
infringement involving the manufacture, use, sale, promotion or marketing of the
Licensed Products in the Territory, or (ii) the institution of a trademark
opposition, the Party sued or given notice of opposition shall promptly notify
the other Party in writing, and BioMarin Acquisition shall have the right to
defend such suit or opposition at its expense and BioMarin Acquisition shall
provide Ascent with notice of its intent to defend or not defend such suit or
opposition, provided that Ascent shall have the right to participate in such
action at Ascent's expense. If Ascent participates in such action, BioMarin
Acquisition or its Affiliate shall have sole control of the conduct of any such
action, provided that Ascent shall have the right to provide ongoing comments
and advice regarding its position in such action, which comments shall be
considered in good faith by BioMarin Acquisition. Ascent or its Affiliate shall,
at the request and expense of BioMarin

                                      -15-


Acquisition or its Affiliate, cooperate and provide reasonable assistance in any
action described in this Section and, if required by law, join such action. Any
recovery or compensation resulting from such proceeding, including without
limitation non-monetary rights, shall belong entirely to BioMarin Acquisition or
its Affiliate less reimbursement to Ascent or its Affiliates by BioMarin
Acquisition or its Affiliate of any reasonable costs incurred by Ascent or its
Affiliates as a result of its participation in such action regardless of whether
Ascent or its Affiliates participated on its own or was joined in the action.
BioMarin Acquisition and its Affiliates shall not settle or accept any
settlement from any third party without the prior written consent of Ascent,
which consent shall not be unreasonably withheld or delayed.

            (b)   During the License Term, if (i) BioMarin Acquisition or its
Affiliate fails to defend such suit or opposition within a reasonable period of
no longer than thirty (30) calendar days from the date of receipt of written
notice regarding the suit or opposition, or no later than five (5) Business Days
prior to the applicable deadline, and (ii) within such period of time, BioMarin
Acquisition or its Affiliate has not provided a commercially reasonable argument
for failing to defend such suit, Ascent or its Affiliate may thereafter take
such action as it deems necessary to defend and/or enforce its rights,
including, without limitation, the right, but not the obligation, to bring, at
its own expense, an infringement action or file any other appropriate action or
claim related to infringement against any third party and Ascent or its
Affiliate. BioMarin Acquisition or its Affiliate shall, at the request and
expense of Ascent or its Affiliate, cooperate and provide reasonable assistance
in any action described in this Section and, if required by law, join such
action. In such events, the expenses for enforcement will be borne by Ascent or
its Affiliate, and any recovery or compensation resulting from such proceeding,
including without limitation non-monetary rights, shall belong entirely to
Ascent or its Affiliate. Ascent and its Affiliates shall not settle or accept
any settlement from any third party without the prior written consent of
BioMarin Acquisition, which consent shall not be unreasonably withheld or
delayed.

4.    CONSIDERATION

      4.1   LICENSE PAYMENTS. Subject to the terms and conditions set forth
herein and in consideration for the grant of the License and the license granted
under Section 2.1(b), BioMarin Acquisition shall pay to Ascent the License
Payments and Contingent Payments Reimbursement Payments as set forth below. The
Contingent Payments Reimbursement Payments are intended to be a reimbursement to
Ascent for the contingent payments due to the former shareholders of Ascent
pursuant to the Ascent Merger Agreement. The parties agree that the prompt
payment of the License Payments are royalty payments as that term is used in
Section 365(n)(2)(B) of the U.S. Bankruptcy Code.

            (a)   The License Payments shall total, in the aggregate, $93
million, and shall be paid as royalties as follows:

                  (i)   Ten Million Dollars ($10,000,000) (the "CLOSING LICENSE
PAYMENT"), payable at the Closing;

                  (ii)  Fifty Million Dollars ($50,000,000) in four quarterly
installments of Twelve Million Five Hundred Thousand Dollars ($12,500,000) (each
a "FIRST YEAR QUARTERLY

                                      -16-


LICENSE PAYMENT"), with one such installment payable on each of August 16, 2004,
November 16, 2004, February 16, 2005 and May 16, 2005 (each, a "FIRST YEAR
QUARTERLY PAYMENT DATE");

                  (iii) Ten Million Dollars ($10,000,000) in four quarterly
installments of Two Million Five Hundred Thousand Dollars ($2,500,000) (each a
"SECOND YEAR QUARTERLY LICENSE PAYMENT"), with one such installment payable on
each of August 16, 2005, November 16, 2005, February 16, 2006 and May 16, 2006;

                  (iv)  Sixteen Million Dollars ($16,000,000) in eight quarterly
installments of Two Million Dollars ($2,000,000) (each a "THIRD AND FOURTH YEAR
QUARTERLY LICENSE PAYMENT"), with one such installment payable on each of August
16, 2006, November 16, 2006, February 16, 2007, May 16, 2007, August 16, 2007,
November 16, 2007, February 18, 2008 and May 16, 2008; and

                  (v)   Seven Million Dollars ($7,000,000) in four quarterly
installments of One Million Seven Hundred Fifty Thousand Dollars ($1,750,000)
(each a "FIFTH YEAR QUARTERLY LICENSE PAYMENT"), with one such installment
payable on each of August 18, 2008, November 17, 2008, February 17, 2009 and May
18, 2009.

            (b)   The Contingent Payments Reimbursement Payments shall total, in
the aggregate, $15 million, and shall be paid as follows:

                  (i)   Fifteen Million Dollars ($15,000,000) in six quarterly
installments of Two Million Five Hundred Thousand Dollars ($2,500,000) (each a
"QUARTERLY CONTINGENT PAYMENTS REIMBURSEMENT PAYMENT"), with one such
installment payable on each of August 16, 2004, November 16, 2004, February 16,
2005, May 16, 2005, August 16, 2005 and November 16, 2005.

            (c)   As security for the payment of the First Year Quarterly
License Payments, BioMarin Acquisition agrees to deposit the Cash Deposit and
BioMarin agrees to deposit the Share Deposit on the Effective Date with the
Escrow Agent pursuant to the terms and conditions of the Escrow Agreement.
Pursuant to the Escrow Agreement, BioMarin may be required to deposit additional
BioMarin Shares with the Escrow Agent. The Cash Deposit and the Share Deposit
(and such additional BioMarin Shares as BioMarin may be required to deposit with
the Escrow Agent in accordance with the Escrow Agreement) and all interest
thereon shall be released by the Escrow Agent in accordance with the Escrow
Agreement.

      4.2   LOSS OF EXCLUSIVITY. In addition to the rights of Ascent pursuant to
Section 11.2(a), in the event that BioMarin Acquisition fails to timely make any
License Payment or Contingent Payments Reimbursement Payment, and such failure
to pay is not cured within fifteen (15) Business Days of the due date thereof,
the License granted herein shall automatically become non-exclusive as to
Medicis and its Affiliates or sublicensees and the noncompetition provision of
Section 6.2 hereof shall be of no further force and effect (except as shall be
waived by Ascent so long as all outstanding payments have been made by BioMarin
Acquisition, all interest has been paid thereon and Ascent has not licensed the
Licensed Assets to any third party). If BioMarin Acquisition fails to timely
make any payment due to Ascent under this Agreement, and such failure to pay is
not cured within three (3) Business Days of the due date

                                      -17-


thereof, then interest shall accrue on a daily basis at the lesser of: (a) an
annual rate equal to two percent (2%) above the reference rate of CitiBank,
N.A., San Francisco, California, for the date that such payment was due; and (b)
the maximum rate permitted by applicable law.

5.    IMPROVEMENTS; DISCLOSURE OF IMPROVEMENTS

      5.1   IMPROVEMENTS BY BIOMARIN ACQUISITION. Any and all Improvements
during the License Term shall be the responsibility (financial and otherwise) of
BioMarin Acquisition and shall be the property of Ascent and, to the extent
filed with the United States Patent and Trademark Office or other Governmental
Body, shall be filed in the name of Ascent; provided, however, that such
Improvements shall be included in the Licensed Technology or Licensed
Development Technology, as applicable, without additional charge to BioMarin
Acquisition. BioMarin Acquisition shall disclose such Improvements to Ascent
pursuant to Section 5.2 below.

      5.2   DISCLOSURE. During the License Term, BioMarin Acquisition shall
promptly disclose to Ascent any Improvements. Regarding each such Improvement,
BioMarin Acquisition shall:

            (a)   Advise Ascent within sixty (60) days of BioMarin Acquisition's
receipt from an employee or third party of an invention disclosure for such
Improvement;

            (b)   Permit Ascent's or its Affiliates' employees (and/or technical
consultants who have signed a confidentiality agreement at least as restrictive
as the CDA) to make such inspections of such Improvement as are reasonably
acceptable to BioMarin Acquisition, at reasonable times and at Ascent's expense;

            (c)   Have BioMarin Acquisition's or BioMarin's employees
experienced in technical data relating to such Improvement impart to Ascent's
employees (and/or technical consultants) at reasonable times and at Ascent's
expense, information relative to such Improvement;

            (d)   Furnish Ascent with copies of drawings, schematics and other
available technical data relative to the raw materials and equipment developed
for or found suitable for use in such Improvement; and

            (e)   Furnish Ascent with copies of papers, documents and
correspondence filed in or received from, the United States Patent and Trademark
Office or other Governmental Body pertaining to those Patents or regulatory
approvals that cover any aspect of such Improvement.

6.    CONFIDENTIALITY AND NONCOMPETITION

      6.1   CONFIDENTIALITY. The CDA is hereby incorporated by reference.

      6.2   NONCOMPETITION. Each of Medicis and Ascent agrees that, in
consideration of the consummation of the transactions by BioMarin Acquisition
hereunder, it shall not and shall cause its Subsidiaries not to, at any time
during the License Term, (whether acting alone or as a member of an Entity, and
whether as an advisor, principal, consultant, independent contractor, agent,
partner, employee, officer, director, 5% or greater equityholder or otherwise),
anywhere in

                                      -18-


the world, (a) engage in, own, operate, maintain or finance directly or
indirectly any business or other enterprise engaged in the development,
distribution, sale or commercialization of an oral liquid prednisolone sodium
solution or oral dissolving tablet prednisolone product other than the
ownership, operation and maintenance of the Licensed Assets or the Secondary
ANDA as contemplated under the Supply Agreement, provided, however, that neither
Ascent nor Medicis shall make, manufacture, market, sell, distribute, or develop
any product under the Secondary ANDA, or (b) other than the transactions
contemplated by this Agreement, the Securities Purchase Agreement, the Asset
Purchase Agreement, the Transition Services Agreement, the Supply Agreement or
the Lyne License, take any action that is designed or intended or would
reasonably be expected to have the effect of discouraging any customer,
supplier, lessor, licensor or other business associate of the Pediatrics
Business from maintaining a business relationship with BioMarin Acquisition
after the Effective Date as it maintained with the Pediatrics Business prior to
the Effective Date; provided, further, that Medicis may continue to own the
outstanding stock of Ascent and Ascent may continue to own the Licensed Assets
and all rights necessary to perform its obligations under the Lyne License, the
Transition Services Agreement and the Supply Agreement; provided further that,
notwithstanding the foregoing, (a) Medicis may enter into a transaction or
series of transactions that involves the acquisition by Medicis of another
Entity whose activities, but for this proviso would violate this Section 6.2 so
long as such activities are not primary but are merely ancillary to such
Entity's activities so long as Medicis terminates or divests such activities
within a reasonable period of time following such acquisition not to exceed 180
days, and (b) Medicis may be acquired by merger with another Entity, where the
stockholders of Medicis immediately prior to the merger own less than 50% of the
surviving entity, whose activities, but for this proviso, would violate this
Section 6.2. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section 6.2 is invalid or unenforceable, the
parties agree that the court making such determination of invalidity or
unenforceability shall have the power to reduce the scope, duration or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.

7.    REPRESENTATIONS AND WARRANTIES OF ASCENT.

      Ascent hereby represents and warrants, to and for the benefit of BioMarin
Acquisition, that each of the following representations and warranties is true
and correct as of the Effective Date:

      7.1   AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of Ascent and Medicis
has all corporate power and authority to enter into and to perform its
obligations under this Agreement. The execution, delivery and performance by
each of Ascent and Medicis of this Agreement have been duly authorized by all
necessary action on the part of Ascent and Medicis and their stockholders,
boards of directors and officers. This Agreement, assuming the due
authorization, execution and delivery by the other parties hereto, constitutes
the legal, valid and binding obligation of Ascent or Medicis, as applicable,
enforceable against Ascent or Medicis, as applicable, in accordance with its
terms, subject to the effect of any applicable bankruptcy,

                                      -19-


insolvency, reorganization, moratorium or similar laws now or hereinafter in
effect relating to creditors' rights generally or to general principles of
equity (the "ENFORCEABILITY EXCEPTION").

      7.2   TITLE TO ASSETS.

            (a)   Ascent has good and valid title to all of the Licensed
Trademarks, Licensed Technology and Licensed Development Technology. Except as
identified in Schedule 7.2, none of the Licensed Technology, Licensed Trademarks
or Licensed Development Technology is subject to any Encumbrance (including any
tax-related Encumbrance), other than the Lyne License, the Supply Agreement, the
Security Agreement, and any Permitted Liens.

            (b)   Ascent and/or its Affiliates has good and valid title to the
Dual Use Know How.

      7.3   REGULATORY MATTERS. Ascent has not been debarred and is not subject
to debarment and will not use in any capacity, in connection with the
obligations to be performed under this Agreement, any person who has been
debarred pursuant to section 306 of the FDCA, 21 U.S.C. 335a, or who is the
subject of a conviction described in such section or who undergoes any analogous
proceeding under foreign law.

      7.4   INTELLECTUAL PROPERTY.

            (a)   Ascent is the sole and exclusive owner or has the authority to
license and/or sell the Licensed Technology, Licensed Development Technology,
and Licensed Trademarks;

            (b)   Except as identified in Schedule 7.2, Ascent has the right,
power and authority to grant licenses under the Licensed Trademarks, Licensed
Development Technology, and Licensed Technology to BioMarin Acquisition in
accordance with the terms and conditions of this Agreement, free and clear of
any Encumbrances, other than the Lyne License, the Supply Agreement, Permitted
Liens and the Security Agreement;

            (c)   Ascent has not specifically admitted that any claim of an
issued and unexpired patent or pending patent application included within the
Taste Masking Related Licensed Patents is invalid or unenforceable through
reissue or disclaimer (other than to the extent that any terminal disclaimer has
been filed);

            (d)   Except as identified in Schedule 7.4(d), (i) neither Ascent
nor its Affiliates have taken any action that materially and adversely affects
the rights and licenses granted to BioMarin Acquisition under this Agreement,
and (ii) neither Ascent nor its Affiliates have granted to any third party or
Affiliate any rights or licenses that conflict with or materially and adversely
affect the rights and licenses granted to BioMarin Acquisition under this
Agreement,

            (e)   to the Knowledge of Ascent and Medicis, the issued Taste
Masking Related Licensed Patents are valid and enforceable and the manufacture,
development, marketing, distribution, importation, sale, offer for sale,
disposition or use of ORAPRED(R) as carried out by Ascent or its Affiliates
immediately prior to the Effective Date does not and will not infringe any
patent rights, trade secrets or other industrial or intellectual property rights
of

                                      -20-


any third party or Affiliate of Ascent, excluding any Medicis corporate
identifier or mark used therewith;

            (f)   to the Knowledge of Ascent and Medicis, (i) no issued patent
or patent application within the Taste Masking Related Licensed Patents or (ii)
except as identified in Schedule 7.2, Licensed Trademark is involved in or is
threatened to be involved in, any court proceeding, arbitration, interference,
reissue, re-examination or opposition;

            (g)   except as identified in Schedule 7.2, there are no claims,
judgments or settlements, either actual or, to the Knowledge of Ascent and
Medicis, threatened, relating to the Taste Masking Related Licensed Patents,
Licensed Trademarks and/or the Product Know-How;

            (h)   except as identified in Schedule 7.2, since November 15, 2001,
to the Knowledge of Ascent and Medicis, no Person has infringed or
misappropriated, and no Person is currently infringing or misappropriating, any
Licensed Technology or Licensed Trademark;

            (i)   except as identified in Schedule 7.4(i), to the Knowledge of
Ascent and Medicis, all filings and registrations related to the Licensed
Trademarks are in good standing and all maintenance and renewal fees necessary
to preserve the rights of Ascent in respect of the Licensed Trademarks have been
paid;

            (j)   to the Knowledge of Ascent and Medicis, since November 15,
2001, (a) there has been no misappropriation of any material trade secrets used
in connection with the Pediatrics Business, (b) no current employee, independent
contractor or agent of Ascent or Medicis employed in the Pediatrics Business has
misappropriated any material trade secrets of any other Person in the course of
the performance of its duties as an employee, independent contractor or agent of
Ascent or Medicis employed in the Pediatrics Business, and (c) no current
employee, independent contractor or agent of Ascent or Medicis is in default or
breach of any non-disclosure agreement, assignment of invention agreement or
similar agreement or contract regarding the protection, ownership, development,
use or transfer of the Licensed Technology;

            (k)   Ascent has taken reasonable steps in accordance with normal
industry practice to maintain the confidentiality of its material trade secrets
related to the Pediatrics Business; and

            (l)   Each current employee and current independent contractor of
Ascent or Medicis who contributed to the conception or development of the Taste
Masking Related Licensed Patents and Development Patents has executed a valid
and binding assignment to Ascent or Medicis of all rights they may hold therein.

      7.5   INVESTMENT REPRESENTATIONS REGARDING ASCENT. To the extent that
Ascent acquires BioMarin Shares subject to the Share Deposit:

            (a)   Ascent will acquire such BioMarin Shares for investment
purposes, for its own account and not as nominee or agent for any other Person
and not with a view to or for resale in connection with any distribution thereof
within the meaning of the Securities Act.

                                      -21-


            (b)   Ascent knows of no public solicitation or advertisement of an
offer in connection with such BioMarin Shares.

            (c)   Ascent has had the opportunity to ask questions of and receive
answers from BioMarin concerning the terms and conditions of the BioMarin Shares
subject to the Share Deposit. Ascent has received all information that it has
requested regarding BioMarin and believes that such information is sufficient to
make an informed decision with respect to the acquisition of the BioMarin
Shares.

            (d)   Ascent is able to bear the economic risk of its investment in
the BioMarin Shares and has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of and
protecting its interests with respect to its investment in the BioMarin Shares.
Ascent is aware of the risk involved in its investment in the BioMarin Shares
and has determined that such investment is suitable for Ascent in light of its
financial circumstances and available investment opportunities.

            (e)   On the date hereof Ascent is, and on the date or dates that
Ascent acquires any BioMarin Shares subject to the Share Deposit, Ascent will be
an "accredited investor" as that term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.

            (f)   Ascent hereby further agrees with BioMarin that the
instruments or certificates evidencing such BioMarin Shares and each instrument
or certificate issued in transfer thereof will bear the following legend:

            "The securities evidenced by this certificate have not been
            registered under the Securities Act of 1933 and have been taken for
            investment purposes only and not with a view to the distribution
            thereof, and, except as stated in an agreement between the holder of
            this certificate or its predecessor in interest, and the issuer
            corporation, such securities may not be sold or transferred unless
            there is an effective registration statement under such Act covering
            such securities or the issuer corporation receives an opinion, in
            form and content reasonably satisfactory to the issuer corporation,
            of counsel reasonably acceptable to the issuer corporation (which
            may be counsel for the issuer corporation) stating that such sale or
            transfer is exempt from the registration and prospectus delivery
            requirements of such Act."

            (g)   The instruments or certificates representing the BioMarin
Shares and each instrument or certificate issued in transfer thereof will also
bear any legend required under any applicable state securities law.

            (h)   Prior to any proposed sale, assignment, transfer or pledge of
any of the BioMarin Shares by Ascent, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, Ascent shall
give written notice to BioMarin of Ascent's intention to effect such transfer,
sale, assignment or pledge. Each such notice shall describe the manner and
circumstances of the proposed transfer, sale, assignment or pledge in sufficient
detail and shall be accompanied, at Ascent's expense, by an unqualified written
opinion of legal

                                      -22-


counsel, who shall and whose legal opinion shall be reasonably satisfactory to
BioMarin (which may be counsel for BioMarin), addressed to BioMarin, to the
effect that the proposed transfer of the Share Deposit may be effected without
registration under the Securities Act, whereupon Ascent shall be entitled to
transfer such Share Deposit in accordance with the terms of the notice delivered
by Ascent to BioMarin.

            (i)   Ascent consents to BioMarin's making a notation on its records
or giving instructions to any transfer agent of the BioMarin Shares in order to
implement the restrictions on transfer of the Share Deposit.

            (j)   Ascent is aware that the Share Deposit Shares are being issued
and sold in reliance on an exemption from the registration requirements of the
Securities Act and that such exemption is expressly conditioned on the accuracy
of the representations and warranties contained in this Section 7.5.

            (k)   Ascent is not a company established solely to acquire the
BioMarin Shares.

8.    REPRESENTATIONS AND WARRANTIES OF BIOMARIN AND BIOMARIN ACQUISITION.

      Each of BioMarin and BioMarin Acquisition represents and warrants jointly
and severally, to and for the benefit of Ascent, that each of the following
representations and warranties is true and correct as of the Effective Date.

      8.1   AUTHORITY; BINDING NATURE OF AGREEMENTS. Each of BioMarin and
BioMarin Acquisition has the corporate power and authority to enter into and
perform its obligations under this Agreement, and the execution and delivery by
each of BioMarin and BioMarin Acquisition of this Agreement has been duly
authorized by all necessary action on the part of each of BioMarin and BioMarin
Acquisition and its stockholders, board of directors and officers. This
Agreement, assuming the due authorization, execution and delivery by the other
Parties hereto, constitutes the legal, valid and binding obligation of each of
BioMarin and BioMarin Acquisition, enforceable against it in accordance with its
terms, subject to the Enforceability Exception.

      8.2   REGULATORY MATTERS. BioMarin has not been debarred and is not
subject to debarment and will not use in any capacity, in connection with the
obligations to be performed under this Agreement, any person who has been
debarred pursuant to section 306 of the FDCA, 21 U.S.C. 335a, or who is the
subject of a conviction described in such section or who undergoes any analogous
proceeding under foreign law.

9.    REGISTRATION OF SHARES.

      9.1   REGISTRATION. On or before the thirtieth day following the Effective
Date, BioMarin shall prepare and file a registration statement on Form S-3 under
the Securities Act, covering the Share Deposit (the "RESTRICTED STOCK") and
shall use its best efforts to cause such registration statement to become
effective as expeditiously as possible and to remain effective until the
earliest to occur of (i) the date the Restricted Stock covered thereby has been
sold (but

                                      -23-


in any event not before the expiration of any longer period required under the
Securities Act) or (ii) the date by which all Restricted Stock covered thereby
may be sold under Rule 144 without restriction as to volume.

      9.2   SUSPENSION. Following the effectiveness of a registration statement
filed pursuant to this section, BioMarin may, at any time, suspend the
effectiveness of such registration for up to thirty (30) days, as appropriate (a
"SUSPENSION PERIOD"), by giving notice to Ascent (for the purposes of this
Article 9, the "HOLDER"), if BioMarin shall have determined that BioMarin may be
required to disclose any material corporate development. Notwithstanding the
foregoing, no more than two Suspension Periods may occur during any twelve-month
period. BioMarin shall use its best efforts to limit the duration and number of
any Suspension Periods. The Holder agrees that, upon receipt of any notice from
BioMarin of a Suspension Period, the Holder shall forthwith discontinue
disposition of Restricted Stock pursuant to such registration statement or
prospectus until the earlier of (A) the Holder (i) is advised in writing by
BioMarin that the use of the applicable prospectus may be resumed, (ii) has
received copies of a supplemental or amended prospectus, if applicable, and
(iii) has received copies of any additional or supplemental filings which are
incorporated or deemed to be incorporated by reference into such prospectus, and
(B) thirty (30) days after receipt of the notice concerning the Suspension
Period.

      9.3   REGISTRATION PROCEDURES. When BioMarin effects the registration of
the Restricted Stock under the Securities Act pursuant to Section 9.1 hereof,
BioMarin will, at its expense, as expeditiously as possible:

            (a)   In accordance with the Securities Act and the rules and
regulations of the Commission, prepare and file in accordance with Section 9.1,
with the Commission a registration statement with respect to the Restricted
Stock and use its best efforts to cause such registration statement to become
and remain effective for the period described herein, and prepare and file with
the Commission such amendments to such registration statement and supplements to
the prospectus contained therein as may be necessary to keep such registration
statement effective for such period and such registration statement and
prospectus accurate and complete for such period (provided that, before filing a
registration statement or prospectus or any amendments or supplements thereto,
BioMarin will furnish to the counsel selected by the Holder copies of the plan
of distribution section of such prospectus proposed to be filed);

            (b)   Furnish to the Holder participating in such registration such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus, each amendment and supplement thereto and such
other documents as the Holder may reasonably request in order to facilitate the
disposition of the Restricted Stock;

            (c)   Use its best efforts to register or qualify the Restricted
Stock covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as the Holder may reasonably request except that
BioMarin shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified;

                                      -24-


            (d)   Notify the Holder, promptly after it shall receive notice
thereof, of the date and time when such registration statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed;

            (e)   Notify the Holder promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;

            (f)   Prepare and file with the Commission, promptly upon the
request of the Holder, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for the Holder, is
required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Restricted Stock by the Holder;

            (g)   Prepare and promptly file with the Commission, and promptly
notify the Holder of the filing of, such amendments or supplements to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;

            (h)   Advise the Holder, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation or
threatening of any proceeding for that purpose and promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued;

            (i)   Cause all such Restricted Stock to be listed on each
securities exchange on which similar securities issued by BioMarin are then
listed and, if not so listed, to be listed on the Nasdaq National Market or any
United States national securities exchange;

            (j)   Provide a transfer agent and registrar for all such Restricted
Stock which shall be the transfer agent for the common stock of BioMarin not
later than the effective date of such registration statement; and

            (k)   Otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
BioMarin's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.

      With respect to any registration effected pursuant to Section 9.1 hereof,
all fees, costs and expenses of and incidental to such registration and the
public offering in connection therewith shall be borne by BioMarin; provided,
however, that the Holder shall bear its own legal fees, if any, and its pro rata
share of any underwriting discounts or commissions, if any.

                                      -25-


      9.4   INDEMNIFICATION.

            (a)   BioMarin will indemnify and hold harmless the Holder, pursuant
to the provisions of this Section 9.4, and any underwriter (as defined in the
Securities Act) for the Holder, and any person who controls the Holder or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of the Holder (for purposes of
this Section 9.4, the "ASCENT REGISTRATION INDEMNIFIED PARTIES"), from and
against, and will reimburse each such Ascent Registration Indemnified Party with
respect to, any and all claims, actions, demands, losses, damages, liabilities,
costs and expenses to which such Ascent Registration Indemnified Party may
become subject under the Securities Act or otherwise, insofar as such claims,
actions, demands, losses, damages, liabilities, costs or expenses arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that BioMarin will not be liable in any such case to the
extent that any such claim, action, demand, loss, damage, liability, cost or
expense is caused by an untrue statement or alleged untrue statement or omission
or alleged omission so made in strict conformity with information furnished by
such Ascent Registration Indemnified Party in writing specifically for use in
the preparation thereof.

            (b)   The Holder will indemnify and hold harmless BioMarin pursuant
to the provisions of this Section 9.4, and any underwriter (as defined in the
Securities Act) for BioMarin and any person who controls BioMarin or such
underwriter within the meaning of the Securities Act, and any officer, director,
employee, agent, partner, member or affiliate of BioMarin (for purposes of this
Section 9.4, the "BIOMARIN REGISTRATION INDEMNIFIED PARTIES", and together with
the Ascent Registration Indemnified Parties, the "REGISTRATION INDEMNIFIED
PARTIES"), from and against, and will reimburse each such BioMarin Registration
Indemnified Party, and such controlling Persons with respect to, any and all
claims, actions, demands, losses, damages, liabilities, costs or expenses to
which such BioMarin Registration Indemnified Party may become subject under the
Securities Act or otherwise, insofar as such claims, actions, demands, losses,
damages, liabilities, costs or expenses are caused by any untrue or alleged
untrue statement of any material fact contained in such registration statement,
any prospectus contained therein or any amendment or supplement thereto, or are
caused by the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made solely in reliance
upon and in strict conformity with written information furnished by an Ascent
Registration Indemnified Party specifically for use in the preparation thereof;
provided, however, that the liability of the Holder shall be limited to an
amount not to exceed the net proceeds received by the Holder pursuant to the
registration statement which gives rise to such obligation to indemnify.

            (c)   Promptly after receipt by a party indemnified pursuant to the
provisions of clause (a) or (b) of this Section 9.4 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such Registration Indemnified Party will, if a claim
thereof is to be made against the indemnifying party pursuant to the provisions
of clause

                                      -26-


(a) or (b) of this Section 9.4, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to a Registration
Indemnified Party otherwise than under this Section 9.4 and shall not relieve
the indemnifying party from liability under this Section 9.4 unless such
indemnifying party is prejudiced by such omission. In case such action is
brought against any Registration Indemnified Party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such Registration Indemnified
Party, and after notice from the indemnifying party to such Registration
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Registration Indemnified Party
pursuant to the provisions of such clause (a) or (b) for any legal or other
expense subsequently incurred by such Registration Indemnified Party in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall be liable to a Registration
Indemnified Party for any settlement of any action or claim without the consent
of the indemnifying party. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Registration
Indemnified Party of a release from all liability in respect to such claim or
litigation.

            (d)   If the indemnification provided for in clause (a) or (b) of
this Section 9.4 is held by a court of competent jurisdiction to be unavailable
to a party to be indemnified with respect to any claims, actions, demands,
losses, damages, liabilities, costs or expenses referred to therein, then each
indemnifying party under any such subsection, in lieu of indemnifying such
Registration Indemnified Party thereunder, hereby agrees to contribute to the
amount paid or payable by such Registration Indemnified Party as a result of
such claims, actions, demands, losses, damages, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the Registration Indemnified Party on
the other in connection with the statements or omissions which resulted in such
claims, actions, demands, losses, damages, liabilities, costs or expenses, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the Registration Indemnified Party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the Registration Indemnified Party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount the Holder shall be obligated to contribute pursuant to
this clause (d) shall be limited to an amount not to exceed the net proceeds
received by the Holder pursuant to the registration statement which gives rise
to such obligation to contribute. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution hereunder from any person who was not guilty
of such fraudulent misrepresentation.

      9.5   REPORTING REQUIREMENTS UNDER THE EXCHANGE ACT. BioMarin shall timely
file such information, documents and reports as the Commission may require or
prescribe under Section 13 of the Exchange Act. BioMarin acknowledges and agrees
that the purposes of the requirements contained in this Section 9.5 are to
enable the Holder to comply with the current public information requirement
contained in paragraph (c) of Rule 144 should the Holder ever

                                      -27-


wish to dispose of any of the Restricted Stock without registration under the
Securities Act in reliance upon Rule 144 (or any other similar exemptive
provision).

      9.6   STOCKHOLDER INFORMATION. BioMarin may require the Holder to furnish
BioMarin such information with respect to the Holder and the distribution of its
Restricted Stock as BioMarin may from time to time reasonably request in writing
as shall be required by law or by the Commission in connection therewith.

10.   PATENT PROSECUTION AND THIRD PARTY INFRINGEMENT

      10.1  PATENT PROSECUTION.

            (a)   PROSECUTION. Commencing on the Effective Date and continuing
during the License Term, BioMarin Acquisition shall use commercially reasonable
efforts and diligence to file, prosecute, issue and maintain all registered
intellectual property rights in and to the Taste Masking Related Licensed
Patents and Development Licensed Patents in the name of Ascent and on behalf of
Ascent, and may, with the prior written consent of Ascent, file and prosecute
applications and otherwise pursue registration for any unregistered intellectual
property rights in and to the Licensed Technology, Licensed Development
Technology and Improvements and such new filings, applications, or the like
shall be made in the name of and on behalf of Ascent. For avoidance of doubt,
such new filings, applications, or the like shall be considered Taste Masking
Related Licensed Patents, Development Licensed Patents or Improvements, as
applicable, and shall be subject to the License and the terms and conditions of
this Agreement. In connection with BioMarin Acquisition's performance of its
obligations under this Section 10.1, it shall promptly provide written
notification and copies of all correspondence from Governmental Bodies or
agencies to Ascent as well as promptly provide drafts of all replies for review
by Ascent. In the event that BioMarin Acquisition elects not to file, prosecute
or maintain any Taste Masking Related Licensed Patents, Development Licensed
Patents and Improvements, it shall give reasonable written notice, not less than
thirty (30) days after such election, to allow Ascent to file, prosecute or
maintain such Taste Masking Related Licensed Patents, Development Licensed
Patents and Improvements unless BioMarin Acquisition has provided to Ascent a
commercially reasonable position for not taking such action. With regard to any
Taste Masking Related Licensed Patents, Development Licensed Patents or
Improvements that are subject to such written notice, upon the date of the
notice, the exclusive license thereto shall be terminated and all Materials
related thereto must be immediately returned to Ascent within ten (10) Business
Days.

            (b)   FURTHER ASSURANCES. Ascent and/or Medicis shall execute and/or
cause to be delivered to BioMarin Acquisition and shall take such other actions,
as BioMarin Acquisition may reasonably request, at or after the Effective Date,
at BioMarin Acquisition's expense, for the purpose of evidencing, prosecuting,
obtaining and maintaining all intellectual property rights in and to the
Licensed Technology, Licensed Development Technology and Licensed Trademarks in
any and all countries. Such acts may include, but are not limited to, execution
of documents and making inventors and employees available to BioMarin
Acquisition.

            (c)   POWER OF ATTORNEY. Ascent and Medicis each hereby designates
and appoints the officers of BioMarin Acquisition as their agents and
attorneys-in-fact, respectively,

                                      -28-


to act for and on behalf and instead of Ascent and Medicis to execute and file
any documents and to do all other lawfully permitted acts to further the
purposes set forth in Section 10.1(a) above with the same legal force and effect
as if executed by Ascent or Medicis, respectively; provided that such officers
shall not be authorized to act for or on their behalf with respect to Taste
Masking Related Licensed Patents, Development Licensed Patents or Improvements
which BioMarin Acquisition has elected not to file, prosecute or maintain
pursuant to Section 10.1(a). Each of Ascent and Medicis further acknowledge and
agree that such power of attorney is a power of attorney coupled with an
interest and is revocable only if (i) this Agreement expires, (ii) this
Agreement is terminated, or (iii) the License becomes non-exclusive pursuant to
Section 4.2.

      10.2  THIRD PARTY INFRINGEMENT.

            (a)   NOTICE. In the event that Ascent or its Affiliates, on the one
hand, or BioMarin Acquisition or its Subsidiaries, or BioMarin, on the other
hand, becomes aware of any actual or threatened infringement of any Licensed
Technology or the Licensed Development Technology or has actual knowledge that
any Licensed Technology is being infringed or misappropriated by a third party,
or is subject to a declaratory judgment action arising from such infringement or
misappropriation, it shall promptly notify the other party of all available
details regarding such infringement or misappropriation with a written
description thereof.

            (b)   BIOMARIN ACQUISITION'S RIGHT TO CONTROL PROCEEDINGS. BioMarin
Acquisition shall have the first right, but not the obligation, during the
License Term, at its sole expense, to initiate and conduct legal proceedings to
enforce the Licensed Technology, Licensed Development Technology or Improvements
against infringement or misappropriation by third parties and to defend against
any declaratory judgment action relating thereto; provided, however, that during
the License Term: (i) Ascent shall receive prompt notice of such action and have
the right to actively participate in any such action at Ascent's expense; (ii)
Ascent shall have the right to provide ongoing comments and advice regarding its
position in such action, which comments shall be considered in good faith by
BioMarin Acquisition; and (iii) BioMarin Acquisition shall not make any
settlement or otherwise abandon any Licensed Technology, Licensed Development
Technology or Improvements without the prior written consent of Ascent, which
shall not be unreasonably withheld or delayed. Ascent shall timely execute all
necessary and proper documents and take all other reasonable and appropriate
action required for BioMarin Acquisition to initiate and prosecute such
proceedings. If Ascent is a legally indispensable party to such action, Ascent
shall join in such action at the request of BioMarin Acquisition. Ascent shall
reasonably cooperate with BioMarin Acquisition in such action upon written
request by BioMarin Acquisition. During the License Term, Ascent and its
Affiliates shall ensure that any personnel of Ascent or its Affiliates will be
available to cooperate with BioMarin Acquisition, as reasonably requested by
BioMarin Acquisition, at BioMarin Acquisition's expense. Any recovery received
in connection with a suit brought by BioMarin Acquisition pursuant to this
Section 10.2(b) shall be retained by BioMarin Acquisition, less reimbursement to
Ascent or its Affiliates by BioMarin Acquisition of any reasonable costs
incurred by Ascent or its Affiliates as a result of its participation in such
action regardless of whether Ascent or its Affiliates participated on its own or
was joined in the action. During the License Term, if BioMarin Acquisition (i)
fails to institute or defend, as applicable, such suit within a reasonable
period of no less than thirty (30) calendar days from the date of receipt of

                                      -29-


written notice regarding the suit or the basis for such suit, and (ii) within
such period of time, BioMarin Acquisition has not provided a commercially
reasonable position for failing to take such action, Ascent or its Affiliate may
thereafter take such action as it deems necessary to defend and/or enforce its
rights, including, without limitation, the right, but not the obligation, to
bring, at its own expense, an infringement action or file any other appropriate
action or claim related to infringement against any third party. BioMarin
Acquisition shall, at the request and expense of Ascent or its Affiliate,
cooperate and provide reasonable assistance in any action described in this
Section and, if required by law, join such action. In such events, the expenses
for enforcement will be borne by Ascent or its Affiliate, and any recovery or
compensation resulting from such proceeding, including without limitation
non-monetary rights, shall belong entirely to Ascent or its Affiliate. Ascent or
its Affiliate shall be entitled to any and all damages recovered. Ascent and its
Affiliates shall not settle or accept any settlement from any third party
without the prior written consent of BioMarin Acquisition, which consent shall
not be unreasonably withheld or delayed.

      10.3  ASCENT'S RIGHT TO ASSUME OBLIGATIONS. In the event that BioMarin
Acquisition elects not to make any filing related to, prosecute, or maintain any
registered intellectual property rights in the Licensed Technology, Licensed
Development Technology or Improvements, Ascent shall have the right, but not the
obligation, to take such action as it deems appropriate, at its own expense, to
protect such Licensed Technology, Licensed Development Technology or
Improvements.

11.   TERM AND TERMINATION

      11.1  TERM. The term of this Agreement (the "LICENSE TERM") will commence
on the Effective Date and, unless sooner terminated as provided in this Section
11, shall continue until the earlier occurrence of (a) six (6) years from the
Effective Date, and (b) the date on which this Agreement terminates pursuant to
Section 11.2 below, at which time this Agreement shall terminate.

      11.2  TERMINATION.

            (a)   In the event that BioMarin Acquisition fails to timely make
any License Payment or Contingent Payments Reimbursement Payment and such
failure is not cured within twenty (20) Business Days of the due date thereof,
then Medicis and Ascent shall have the right, until such failure is cured, in
their sole discretion, to terminate this Agreement and exercise the rights set
forth in Section 11.4. In the event that Medicis or Ascent terminates this
Agreement, such party may require BioMarin Acquisition to pay Ascent immediately
a sum equal to (x) the License Payments and the Contingent Reimbursements
Payment Reimbursements under this Agreement, less the sum of all amounts paid to
Ascent pursuant to Section 4.1 plus (y) all attorney's fees and other expenses
reasonably incurred by Ascent in connection with obtaining the sum described in
clause (x) above.

            (b)   If any Breach by Ascent or Medicis of Section 7.1, 7.2(a) or
10.1(c) results in an Ascent Material Adverse Effect and BioMarin Acquisition
gives Medicis written notice of such Breach, specifying in reasonable detail the
particulars of the alleged Breach, and such Breach has not been cured within
twenty (20) Business Days after Medicis' receipt of such

                                      -30-


notice, then BioMarin Acquisition shall have the right, in its sole discretion,
to terminate this Agreement.

            (c)   This Agreement may terminate by the mutual written consent of
the parties hereto.

      11.3  TERMINATION PROCEDURES. If BioMarin Acquisition wishes to terminate
this Agreement pursuant to Section 11.2, BioMarin Acquisition shall deliver to
Ascent a written notice stating that BioMarin Acquisition is terminating this
Agreement and setting forth a brief description of the basis on which BioMarin
Acquisition is terminating this Agreement. If Ascent wishes to terminate this
Agreement pursuant to Section 11.2, Ascent shall deliver to BioMarin Acquisition
a written notice stating that Medicis is terminating this Agreement and setting
forth a brief description of the basis on which Medicis is terminating this
Agreement. Any termination pursuant to Section 11.2 shall be effective upon
receipt of notice to such effect by the non-terminating Party in accordance
herewith.

      11.4  EFFECTS OF TERMINATION.

            (a)   In the event this Agreement is terminated pursuant to Section
11.2 above:

                  (i)   the licenses and sublicenses set forth in Article 2 will
terminate and BioMarin and BioMarin Acquisition will no longer have the right to
market any Licensed Products;

                  (ii)  BioMarin Acquisition shall destroy or return to Ascent,
upon request by Ascent, all packaging, labels, and promotional materials bearing
a Licensed Trademark;

                  (iii) Ascent, in its sole discretion, shall have the right to
elect to purchase all or any portion of Licensed Products remaining in inventory
or ordered by BioMarin Acquisition prior to the effective date of the
termination at the carrying cost for such Licensed Products;

                  (iv)  BioMarin Acquisition shall provide to Ascent all test
data including pharmacological, biological, chemical, biochemical, toxicological
and clinical test data, analytical and quality control data, stability data,
studies and procedures, patent and other legal information or descriptions,
customer lists and, upon Ascent's request, all promotional and marketing
materials, in each case, related to the Licensed Products that were conceived,
made, developed or otherwise controlled by BioMarin Acquisition or its
Affiliates during the term of this Agreement;

                  (v)   BioMarin Acquisition shall cooperate with Ascent to
transfer all applicable regulatory matters to Ascent; and

                  (vi)  BioMarin Acquisition shall use commercially reasonable
efforts to assign to Ascent, to the extent assignable in whole or in part, as
applicable, any agreements of BioMarin Acquisition requested by Ascent to be
assigned to the extent related to the promotion, marketing, manufacture, supply
and/or distribution of any of the Licensed Products.

                                      -31-


            (b)   Upon the expiration or termination of this Agreement for
whatever reason, all rights and obligations of BioMarin and BioMarin Acquisition
hereunder shall terminate and BioMarin Acquisition shall promptly discontinue
the manufacture, marketing, sale and distribution of Licensed Products and any
other use or exploitation of the Licensed Technology, Licensed Trademarks, and
Licensed Development Technology; provided, however, that the obligation of
BioMarin to indemnify the Ascent Indemnitees shall survive termination of this
Agreement in accordance herewith.

12.   SURVIVAL AND INDEMNIFICATION

      12.1  SURVIVAL OF REPRESENTATIONS AND COVENANTS.

            (a)   All representations and warranties contained in this Agreement
are made as of the Effective Date and shall expire at 11:59 p.m. (Pacific Time)
on the eighteenth-month anniversary of the Effective Date and shall thereafter
be of no further force or effect, except (i) the representations and warranties
set forth in Sections 7.1, 7.2(a) and 8.1 shall expire on the expiration of the
relevant statute of limitations, and (ii) to the extent required to enforce the
parties' rights and obligations hereunder following the end of such period for
any claims for which a Claim Notice (as defined below) has properly been made
prior to the expiration of such period. All of the covenants, agreements and
obligations of the parties contained in this Agreement shall survive (i) until
fully performed or fulfilled, unless non-compliance with such covenants,
agreements or obligations is waived in writing by the party or parties entitled
to such performance or (ii) if not fully performed or fulfilled, until the
expiration of the relevant statute of limitations.

            (b)   For purposes of this Agreement, a "CLAIM NOTICE" relating to a
particular representation or warranty or covenant shall be deemed to have been
given if any Indemnified Party, acting in good faith, delivers to the
Indemnifying Party a written notice stating that such Indemnified Party
reasonably believes that there is or has been a possible Breach of such
representation or warranty or covenant and containing (i) a brief description of
the circumstances supporting such Indemnified Party's reasonable belief that
there is or has been such a possible Breach, and (ii) a non-binding, preliminary
estimate of the aggregate dollar amount of the actual and potential Damages that
have arisen and may arise as a direct result of such possible Breach.

      12.2  INDEMNIFICATION BY ASCENT.

            (a)   From and after the Effective Date, Ascent shall hold harmless
and indemnify each of the BioMarin Indemnitees from and against, and shall
compensate and reimburse each of the BioMarin Indemnitees for, any Damages that
are suffered or incurred by any of the BioMarin Indemnitees or to which any of
the BioMarin Indemnitees may otherwise become subject at any time (regardless of
whether or not such Damages relate to any Third Party Claim) and that arise
from:

                  (i)   any Breach of any of the representations or warranties
made by Ascent in this Agreement;

                  (ii)  any Breach of any covenant or obligation of Ascent or
Medicis contained in this Agreement;

                                      -32-


                  (iii) any Third Party Claim arising from the conduct or
operation of the Pediatrics Business prior to the Effective Date; or

                  (iv)  any Proceeding relating directly or indirectly to any
Breach, Liability or Third Party Claim of the type referred to in clauses (i)
through (iii) above (including any Proceeding commenced by any BioMarin
Indemnitee for the purpose of enforcing any of its rights under this Section
12.2).

            (b)   Subject to Section 12.2(d), Ascent shall not be required to
make any indemnification payment pursuant to Section 12.2(a)(i) of this
Agreement, Section 9.2(a)(i) of the Asset Purchase Agreement, or Section
8.2(a)(i) of the Securities Purchase Agreement, until such time as and to the
extent that the total amount of all Damages (including the Damages arising from
such Breach and all other Damages arising from any other Breaches of any
representations or warranties) that have been directly or indirectly suffered or
incurred by any one or more of the BioMarin Indemnitees, or to which any one or
more of the BioMarin Indemnitees has or have otherwise become subject, exceeds,
in the aggregate, $250,000 and then only to the extent of such excess.

            (c)   Notwithstanding anything in this Agreement to the contrary,
but subject to Section 12.2(d), the aggregate liability for any indemnification
payments pursuant to Section 12.2(a)(i) of this Agreement, Section 9.2(a)(i) of
the Asset Purchase Agreement and Section 8.2(a)(i) of the Securities Purchase
Agreement will be limited to, and shall not exceed, in the aggregate, $66.5
million (the "ASCENT CAP"), provided, however, that the Ascent Cap shall not
apply to any indemnification obligation of Ascent arising out of any Breach of
Section 7.1 or 7.2.

            (d)   The limitations on the indemnification obligations of Ascent
set forth in each of Section 12.2(b) and Section 12.2(c) shall not apply to any
willful Breach, intentional misrepresentation or fraud by Medicis or Ascent.

            (e)   To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the Asset Purchase Agreement and/or the Securities
Purchase Agreement, such party shall be entitled to only one recovery of Damages
resulting from such actions, failures to act or other circumstances giving rise
to the right of indemnification, regardless of whether the actions, failures to
act or other circumstances giving rise to the right of indemnification
constitute a Breach of more than one agreement. The parties acknowledge that the
purpose of this provision is to prevent duplicative recovery for the same
Damages, and not to preclude the recovery of Damages for separate and
independent indemnity claims that may arise under the various agreements.

      12.3  INDEMNIFICATION BY BIOMARIN.

            (a)   From and after the Effective Date, BioMarin shall hold
harmless and indemnify the Ascent Indemnitees from and against, and shall
compensate and reimburse each of the Ascent Indemnitees for, any Damages that
are suffered or incurred by the Ascent

                                      -33-


Indemnitees or to which the Ascent Indemnitees may otherwise become subject at
any time (regardless of whether or not such Damages relate to any Third Party
Claim) and that arise from:

                  (i)   any Breach of any representation or warranty made by
BioMarin or BioMarin Acquisition in this Agreement;

                  (ii)  any Breach of any covenant or obligation of BioMarin or
BioMarin Acquisition in this Agreement; and

                  (iii) any Third Party Claim arising from the conduct or
operation of making, manufacturing, marketing, selling, distributing, importing,
exporting and developing of the Licensed Products following the Effective Date,
except Damages suffered or incurred or arising from the Breach of Medicis,
Ascent or Medicis Manufacturing, as applicable, under this Agreement, the Supply
Agreement, or the Transition Services Agreement;

                  (iv)  any Proceeding relating directly or indirectly to any
Breach, Liability or Third Party Claim of the type referred to in clauses "(i)"
through "(iii)" above (including any Proceeding commenced by any Ascent
Indemnitee for the purpose of enforcing its rights under this Section 12.3).

            (b)   Subject to Section 12.3(d), BioMarin shall not be required to
make any indemnification payment pursuant to Section 12.3(a)(i) of this
Agreement, Section 9.3(a)(i) of the Asset Purchase Agreement or Section
8.3(a)(i) of the Securities Purchase Agreement until such time as and to the
extent that the total amount of all Damages (including the Damages arising from
such Breach and all other Damages arising from any other Breaches of its
representations or warranties) that have been directly or indirectly suffered or
incurred by the Ascent Indemnitees, or to which the Ascent Indemnitees have
otherwise become subject, exceeds, in the aggregate, $250,000 and then only to
the extent of such excess.

            (c)   Notwithstanding anything in this Agreement to the contrary,
but subject to Section 12.3(d), the aggregate liability for any indemnification
payments pursuant to Section 12.3(a)(i) of this Agreement, Section 9.3(a)(i) of
the Asset Purchase Agreement and Section 8.3(a)(i) of the Securities Purchase
Agreement, will be limited to, and shall not exceed, in the aggregate, $66.5
million (the "BIOMARIN CAP"), provided, however, that the BioMarin Cap shall not
apply to any indemnification obligation of BioMarin arising out of any Breach of
Section 8.1.

            (d)   The limitation on the indemnification obligations of BioMarin
that is set forth in Section 12.3(b) and Section 12.3(c) shall not apply to (i)
any failure by BioMarin Acquisition to make any payment pursuant to Section 4.1,
or (ii) any willful Breach, intentional misrepresentation or fraud by BioMarin
or BioMarin Acquisition.

            (e)   To the extent that actions or failures to act or other
circumstances result in a Breach of a representation, warranty or covenant or
other triggering event giving rise to a right of indemnification to a party
under this Agreement, the Asset Purchase Agreement and/or the Securities
Purchase Agreement, such party shall be entitled to only one recovery of the
Damages resulting from such actions, failures to act or other circumstances
giving rise to the right of indemnification, regardless of whether the actions,
failures to act or other circumstances giving

                                      -34-


rise to the right of indemnification constitute a breach of more than one
agreement. The parties acknowledge that the purpose of this provision is to
prevent duplicative recovery for the same Damages, and not to preclude the
recovery of Damages for separate and independent indemnity claims that may arise
under the various agreements.

      12.4  PROCEDURES RELATING TO INDEMNIFICATION FOR THIRD PARTY CLAIMS

            (a)   Within ten (10) Business Days after a BioMarin Indemnitee or
Ascent Indemnitee obtains Knowledge of the commencement of any third-party
claim, action, suit or proceeding (a "THIRD PARTY CLAIM") or the occurrence of
any fact which may become the basis of a Third Party Claim in respect of which
an Indemnified Party is entitled to indemnification under this Agreement, such
Indemnified Party shall notify in writing the Indemnifying Party of such Third
Party Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been materially prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnified Party failed to give such
notice). Thereafter, the Indemnified Party shall deliver to the Indemnifying
Party, within five (5) Business Days after the Indemnified Party's receipt
thereof, copies of all notices and non-privileged documents (including court
papers) received by the Indemnified Party relating to the Third Party Claim.

            (b)   If a Third Party Claim is made against an Indemnified Party,
the Indemnifying Party shall be entitled to participate at its expense in the
defense thereof and, if it so chooses within thirty (30) days after receipt of
notice of such claim to assume the defense thereof at the Indemnifying Party's
expense, with counsel selected by the Indemnifying Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party shall be permitted to participate in the defense thereof and to employ
counsel (not reasonably objected to by the Indemnifying Party), at its own
expense. The Indemnifying Party shall be liable for the fees and expenses of
counsel employed by the Indemnified Party (i) for any period during which the
Indemnifying Party has not assumed the defense thereof or is not using
commercially reasonable efforts to pursue the defense thereof (other than during
the period in which the Indemnified Party failed to give notice of the Third
Party Claim as provided above), or (ii) if the Indemnified Party reasonably
determines (x) that there may be a conflict between the positions of the
Indemnifying Party and the Indemnified Party in defending such claim or action,
or (y) that there may be legal defenses available to the Indemnified Party
different from or in addition to those available to the Indemnifying Party.

            (c)   If the Indemnifying Party so elects to assume the defense of
any Third Party Claim, all of the Indemnified Parties shall reasonably cooperate
with the Indemnifying Party, at the expense of the Indemnifying Party, in the
defense or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Party's request) the provision to the Indemnifying Party
of non-privileged records and information which are reasonably relevant to such
Third Party Claim, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party shall have assumed the defense
of a Third Party Claim,

                                      -35-


the Indemnified Party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third Party Claim without the Indemnifying Party's
prior written consent (which consent shall not be unreasonably withheld). If the
Indemnifying Party shall have assumed the defense of a Third Party Claim, the
Indemnified Party shall agree to any settlement, compromise or discharge of a
Third Party Claim for monetary Damages which the Indemnifying Party may
recommend and which by its terms obligates the Indemnifying Party to pay the
full amount of the monetary Damages in connection with such Third Party Claim
and which releases the Indemnifying Party and the Indemnified Party completely
in connection with such Third Party Claim and does not impose any covenant or
commitment on the Indemnified Party.

      12.5  OTHER CLAIMS. In the event any Indemnified Party should have a claim
against any Indemnifying Party under Section 12.2 or 12.3 that does not involve
a Third Party Claim being asserted against or sought to be collected from such
Indemnified Party, the Indemnified Party shall deliver notice to the
Indemnifying Party of such claim within 15 Business Days of obtaining Knowledge
of the occurrence of such claim. The failure by any Indemnified Party so to
notify the Indemnifying Party within this time period shall not relieve the
Indemnifying Party from any liability which it may have to such Indemnified
Party under Section 12.2 or 12.3, except to the extent that the Indemnifying
Party is materially prejudiced by such failure. If the Indemnifying Party does
not notify the Indemnified Party within 15 Business Days following its receipt
of such notice that the Indemnifying Party disputes its liability to the
Indemnified Party under Section 12.2 or 12.3, such claim specified by the
Indemnified Party in such notice shall be conclusively deemed a liability of the
Indemnifying Party under Section 12.2 or 12.3 and the Indemnifying Party shall
pay the amount of such liability to the Indemnified Party on demand or, in the
case of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined by agreement between the Indemnifying Party
and the Indemnified Party or by judgment or decree of a court of competent
jurisdiction. If the Indemnifying Party has timely disputed its liability with
respect to such claim, as provided above, the Indemnifying Party and the
Indemnified Party shall attempt to resolve such claim in accordance with Section
13.6.

      12.6  SETTLEMENTS. No party may settle any claim, action or proceeding
related to a liability to a third party without the consent of the other
parties, if such settlement would impose any monetary obligation on the other
parties or require the other parties to submit to an injunction or impose any
covenant or commitment on the other party or otherwise limit the other party's
rights under this Agreement, and any payment made by a party in such a
settlement without obtaining such consent shall be at its own cost and expense.

      12.7  NO CONSEQUENTIAL OR PUNITIVE DAMAGES. No party hereto (or its
Affiliates) shall, under any circumstance, be liable to any other party (or its
Affiliates) for any consequential, exemplary, special, incidental or punitive
Damages claimed by such other party under the terms of or due to any Breach of
this Agreement.

13.   MISCELLANEOUS

      13.1  FURTHER ASSURANCES. From and after the Effective Time, each party
hereto shall execute and deliver such documents and take such other actions as
the other party may

                                      -36-


reasonably request, for the purpose of carrying out or evidencing any of the
transactions contemplated hereby.

      13.2  RELATIONSHIP OF THE PARTIES. BioMarin Acquisition, on the one hand,
and Ascent, on the other hand, hereby acknowledge that each is an independent
entity and is not subject to the control of the other party hereto in any manner
except as specifically provided in this Agreement. Nothing contained in this
Agreement shall be construed in any way as creating any relationship of
partnership or joint venture, between the parties, or to render either party
liable for any of the debts or obligations of the other party hereto. Neither
party shall act or purport to act, or represent itself, directly or by
implication, as the agent, legal Representative, partner or joint venturer of
the other party, or in any manner assume or create or purport to assume or
create any obligation in the name or on behalf of the other party.

      13.3  RIGHTS IN BANKRUPTCY.

            (a)   All rights and licenses granted under or pursuant to this
Agreement by Ascent and Medicis are, and shall otherwise be deemed to be, for
purposes of Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to
"intellectual property" as defined under Section 101 of the U.S. Bankruptcy
Code. The parties agree that BioMarin Acquisition shall retain and may fully
exercise all of its rights and elections under the U.S. Bankruptcy Code. The
parties further agree that, in the event of the commencement of a Bankruptcy
Proceeding by or against Ascent and/or Medicis under the U.S. Bankruptcy Code,
BioMarin Acquisition shall be entitled to a complete duplicate of (or complete
access to, as appropriate) all Licensed Assets and all embodiments of all
applicable intellectual property rights, and same, if not already in its
possession, shall be promptly delivered to it upon any such commencement of a
Bankruptcy Proceeding upon its written request therefor, unless Ascent or
Medicis, as applicable (or a trustee on behalf of each such applicable party)
elects to continue to perform all of their obligations under this Agreement.

            (b)   The parties agree and intend that, to the extent permitted by
law, the non-monetary provisions of this Agreement and the Securities Purchase
Agreement are material elements of such agreements and that the failure to
perform such non-monetary provisions would have a materially adverse impact on
the value of the Licensed Assets such that any provision of cure, compensation,
or adequate assurance of future performance under Section 365(b)(1) of the U.S.
Bankruptcy Code must include such non-monetary provisions except as specifically
excluded under Section 365(b)(2) of the U.S. Bankruptcy Code. The parties
further agree that the prompt payment of all License Payments and Contingent
Payment Reimbursement Payments becoming due on or after the commencement of a
Bankruptcy Proceeding by or against BioMarin Acquisition shall be a condition
precedent to the continued use of Licensed Assets under this Agreement.

      13.4  GOVERNING LAW; VENUE.

            (a)   This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of New York (without
giving effect to principles of conflicts of laws).

                                      -37-


            (b)   Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in New York, New
York in the Borough of Manhattan. Each party to this Agreement:

                  (i)   expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in New York, New York in
the Borough of Manhattan (and each appellate court located in the State of New
York) in connection with any such legal proceeding;

                  (ii)  agrees that each state and federal court located in New
York, New York in the Borough of Manhattan shall be deemed to be a convenient
forum; and

                  (iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in New York, New York in the Borough of Manhattan, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.

            (c)   The parties hereto agree that, if any Proceeding is commenced
against any Indemnified Party by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnified Party may proceed against
the Indemnifying Party in or before such court or other tribunal with respect to
any indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Proceeding or any of the matters alleged
therein or any of the circumstances giving rise thereto.

      13.5  EXCLUSIVE REMEDIES; SPECIFIC PERFORMANCE. Except as expressly
provided herein or in any Transaction Agreement, the remedies provided in
Article 12 shall constitute the sole and exclusive remedy available to each
party hereto for recovery against another party for Breaches of the
representations, warranties, covenants and agreements in this Agreement. The
parties hereto acknowledge that the material covenants, obligations and other
provisions to be performed under this Agreement are of a special, unique and
extraordinary character, and that irreparable injury will result from any
violation or continuing violation of the provisions of this Agreement for which
money damages may not be an adequate remedy. Accordingly, the parties agree that
in the event of any Breach or threatened Breach by any party hereto of any
material covenant, obligation or other provision set forth in this Agreement,
the other party or parties shall be entitled (in addition to any other remedy
that may be available to it) to seek in accordance with applicable law, (i) a
decree or order of specific performance or mandamus to enforce the observance
and performance of such covenant, obligation or other provision, and (ii) an
injunction restraining such Breach or threatened Breach.

      13.6  DISPUTE RESOLUTION PROCEDURES. In the event any dispute arises
between the parties with respect to the interpretation of this Agreement or with
respect to the performance of either party, the parties shall first seek to
resolve such dispute by negotiations between senior executives who have
authority to settle the dispute. When a party believes there is a dispute
relating to the Agreement, such party shall give written notice of the dispute
to the other party or

                                      -38-


parties subject to the dispute. The senior executives shall meet promptly after
the date of such notice and shall attempt in good faith within 45 days after the
date of such notice to resolve the dispute prior to initiating litigation with
respect to such matter. Notwithstanding the foregoing, if no such resolution is
reached within such 45 days, then any party may initiate any proceeding or
pursue any remedy it deems appropriate and that is not prohibited hereby.

      13.7  SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.

            (a)   This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto, the other Indemnified Parties, and the respective
successors and assigns (if any) of the foregoing. No Person (including any
creditor of Medicis or Ascent or any former or current employee of Ascent) who
is not a party to this Agreement shall have any rights hereunder as a
third-party beneficiary or otherwise.

            (b)   Neither this Agreement nor the rights and obligations of any
party hereunder shall be assigned without the prior written consent of the other
parties, which consent may be given or withheld in such party's sole discretion.
If Medicis or BioMarin or any of their respective successors (i) consolidates
with or merges into any other Person and shall not be the continuing or
surviving entity of such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any Person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
Medicis or BioMarin, as the case may be, shall assume the obligations set forth
in this Agreement.

      13.8  NOTICES. All notices, demands and other communications under or in
connection with this Agreement shall be in writing and shall be deemed properly
delivered, given and received (a) if delivered personally, upon delivery, (b) if
delivered by registered or certified mail (return receipt requested) from the
United States, upon the earlier of actual delivery or three Business Days after
being mailed, (c) if sent by overnight delivery by a recognized overnight
delivery service for overnight delivery, upon the earlier of actual delivery or
one Business Day after being sent, or (d) if given by facsimile, upon
confirmation of transmission by facsimile (or, if such confirmation does not
occur during normal business hours on a Business Day then on the next Business
Day), in each case to the parties at the following addresses or facsimile
numbers or to such other address or facsimile numbers as each party may
designate for itself by like notice to the other parties:

                                      -39-


   if to Medicis:

                     Medicis Pharmaceutical Corporation
                     8125 N. Hayden Road
                     Scottsdale, Arizona  85258
                     Facsimile:  (602) 778-6007
                     Attn:  Jonah Shacknai

   With a copy to each of (which copies shall not constitute notice):

                     Ascent Pediatrics Corporation
                     8125 N. Hayden Road
                     Scottsdale, Arizona 85258
                     Facsimile:  (602) 808-3881
                     Attn:  General Counsel

                     and

                     Akin Gump Strauss Hauer & Feld LLP
                     1700 Pacific Ave., Suite 4100
                     Dallas, Texas 75201
                     Facsimile: (214) 969-4343
                     Attention: Michael E. Dillard, P.C.

   if to Ascent:

                     Ascent Pediatrics, Inc.
                     8125 N. Hayden Road
                     Scottsdale, Arizona  85258
                     Facsimile:  (602) 778-6007
                     Attn:  Jonah Shacknai:

   if to BioMarin:

                     BioMarin Pharmaceutical Inc.
                     371 Bel Marin Keys Blvd., Suite 210
                     Novato, California 94949
                     Facsimile: (415) 382-7889
                     Attention:  Fredric D. Price

   if to BioMarin Acquisition:

                     BioMarin Pharmaceutical Inc.
                     371 Bel Marin Keys Blvd., Suite 210
                     Novato, California 94949
                     Facsimile: (415) 382-7889
                     Attention:  Fredric D. Price

                                      -40-


      With a copy (which copies shall not constitute notice) to:

                     BioMarin Pediatrics Inc.
                     371 Bel Marin Keys Blvd., Suite 210
                     Novato, California 94949
                     Facsimile: (415) 382-7889
                     Attention:  Fredric D. Price

                     Paul, Hastings, Janofsky & Walker LLP
                     515 South Flower Street, 25th Floor
                     Los Angeles, California  90071
                     Attention:  Siobhan McBreen Burke, Esq.
                     Telephone:    (213) 683-6000
                     Facsimile:    (213) 627-0705

      13.9  HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.

      13.10 COUNTERPARTS. This Agreement may be executed in several counterparts
(including by facsimile), each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.

      13.11 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.

      13.12 WAIVER. No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy. No Person shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.

      13.13 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of BioMarin Acquisition, BioMarin, Medicis and Ascent.

                                      -41-


      13.14 MEDICIS PERFORMANCE GUARANTEE.

            (a)   Medicis hereby unconditionally, irrevocably and absolutely
guarantees to BioMarin and BioMarin Acquisition the due and punctual performance
and discharge of all of Ascent's obligations under this Agreement (collectively,
the "ASCENT OBLIGATIONS"). The guarantee under this Section 13.14 is a guarantee
of performance of the Ascent Obligations and not merely of collection.

            (b)   To the fullest extent permitted by applicable law, the
obligations of Medicis hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of Ascent or the bankruptcy, insolvency,
reorganization, dissolution, liquidation, or other similar proceeding relating
to Ascent or any Affiliate or Subsidiary of either Ascent or Medicis or (ii) any
neglect, delay, omission, failure or refusal of Medicis to take or prosecute any
action in connection with this Agreement or any other agreement, delivered in
connection herewith. In connection with this Section 13.14, Medicis
unconditionally waives: (i) any right to receive demands, protests, or other
notices of any kind or character whatsoever provided that the same has been
delivered to Ascent, (ii) any right to require BioMarin or BioMarin Acquisition
to proceed first against Ascent or to exhaust any security held by BioMarin or
BioMarin Acquisition or to pursue any other remedy, (iii) any defense based upon
an election of remedies by BioMarin or BioMarin Acquisition, (iv) any duty of
BioMarin or BioMarin Acquisition to advise Medicis of any information known to
BioMarin or BioMarin Acquisition regarding Ascent or its ability to perform
under this Agreement, and (v) all suretyship and other defenses of every kind
and nature.

            (c)   The obligations of Medicis under this Section 13.14 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of Ascent in respect of the Ascent Obligations
are rescinded or must be otherwise restored, and Medicis agrees that it will
indemnify BioMarin and BioMarin Acquisition on demand for all costs and expenses
(including reasonable attorneys fees and expenses) incurred by BioMarin or
BioMarin Acquisition in connection with such rescission or restoration. If in
connection with the foregoing, BioMarin or BioMarin Acquisition is required to
refund part or all of any payment of Ascent, such payment by BioMarin or
BioMarin Acquisition shall not constitute a release of Medicis from any
liability hereunder, and Medicis' liability hereunder shall be reinstated to the
fullest extent allowed under applicable law and shall not be construed to be
diminished in any manner.

      13.15 BIOMARIN PERFORMANCE GUARANTEE.

            (a)   BioMarin hereby unconditionally, irrevocably and absolutely
guarantees to Medicis and Ascent the due and punctual performance and discharge
of all of BioMarin Acquisition's obligations under this Agreement, including,
without limitation, the due and punctual payment of the Licensed Payments and
the Contingent Payments Reimbursement Payments and any other amount that
BioMarin Acquisition is or may become obligated to pay pursuant to this
Agreement (collectively, the "BIOMARIN ACQUISITION OBLIGATIONS"). The guarantee
under this Section 13.15 is a guarantee of timely payment and performance of the
BioMarin Acquisition Obligations and not merely of collection.

                                      -42-


            (b)   To the fullest extent permitted by applicable law, the
obligations of BioMarin hereunder shall remain in full force and effect without
regard to, and shall not be affected or impaired by, (i) any change in the
corporate structure or ownership of BioMarin Acquisition or the bankruptcy,
insolvency, reorganization, dissolution, liquidation, or other similar
proceeding relating to BioMarin Acquisition or any Affiliate or Subsidiary of
either BioMarin Acquisition or BioMarin or (ii) any neglect, delay, omission,
failure or refusal of BioMarin to take or prosecute any action in connection
with this Agreement or any other agreement, delivered in connection herewith. In
connection with this Section 13.15, BioMarin unconditionally waives: (i) any
right to receive demands, protests, or other notices of any kind or character
whatsoever, provided that the same has been delivered to BioMarin Acquisition,
(ii) any right to require Medicis or Ascent to proceed first against BioMarin
Acquisition or to exhaust any security held by Medicis or Ascent or to pursue
any other remedy, (iii) any defense based upon an election of remedies by
Medicis or Ascent, (iv) any duty of Medicis or Ascent to advise BioMarin of any
information known to Medicis or Ascent regarding BioMarin Acquisition or its
ability to perform under this Agreement, and (v) all suretyship and other
defenses of every kind and nature.

            (c)   The obligations of BioMarin under this Section 13.15 shall be
automatically reinstated if and to the extent that for any reason any payment or
other performance by or on behalf of BioMarin Acquisition in respect of the
BioMarin Acquisition Obligations are rescinded or must be otherwise restored,
and BioMarin agrees that it will indemnify Medicis and Ascent on demand for all
costs and expenses (including reasonable attorneys fees and expenses) incurred
by Medicis or Ascent in connection with such rescission or restoration. If in
connection with the foregoing, Medicis or Ascent is required to refund part or
all of any payment of BioMarin Acquisition, such payment by Medicis or Ascent
shall not constitute a release of BioMarin from any liability hereunder, and
BioMarin's liability hereunder shall be reinstated to the fullest extent allowed
under applicable law and shall not be construed to be diminished in any manner.

      13.16 ENTIRE AGREEMENT. The Transaction Agreements set forth the entire
understanding of the parties relating to the subject matter thereof and
supersede all prior agreements and understandings among or between any of the
parties relating to the subject matter thereof.

      13.17 CONSISTENCY. Each of the parties hereto agrees to report the
transaction contemplated herein for all state and federal Tax purposes as a
license and to treat the payments made by BioMarin Acquisition pursuant to
Section 4 as a payment for the use of the assets subject to the License and the
license granted under Section 2.1(b).

      13.18 NO PROJECTION OR FINANCIAL FORECAST. ASCENT IS NOT MAKING ANY
REPRESENTATION OR WARRANTY TO BIOMARIN AND BIOMARIN ACQUISITION WITH RESPECT TO
(I) ANY FINANCIAL PROJECTION OR FORECAST RELATING TO THE PEDIATRICS BUSINESS,
THE ACQUIRED ASSETS OR LIABILITIES OF MEDICIS OR ASCENT OR RELATED TO THE
PHARMACEUTICAL MARKET AS A WHOLE OR THE MARKET FOR ORAL LIQUID PREDNISOLONE
SOLUTION PRODUCTS OR ORAL DISSOLVING TABLET PREDNISOLONE PRODUCTS SPECIFICALLY,
INCLUDING BUT NOT LIMITED TO ANY PROJECTIONS INCLUDING

                                      -43-


FUTURE SALES OF SUCH PRODUCTS, OR THE INTRODUCTION OF ANY COMPETITIVE PRODUCTS
(WHETHER GENERIC OR NAME BRAND).

      13.19 RELEASE. In the event that Ascent becomes a wholly-owned Subsidiary
of Licensee or any of its Affiliates, without any action of any party, on the
date Ascent becomes such a Subsidiary, Medicis shall no longer be deemed a party
to this Agreement and all rights and obligations of Medicis hereunder shall be
deemed extinguished; provided, however, that the obligation of Medicis to
guarantee indemnification of the BioMarin Indemnitees shall survive termination
of this Agreement in accordance herewith.

      13.20 FEES AND EXPENSES; INVESTMENT BANKING FEES.

            (a)   Each party to this Agreement shall bear and pay all fees,
costs and expenses (including all legal fees and expenses, that have been
incurred or that are in the future incurred by, on behalf of or for the benefit
of such party in connection with: (i) the negotiation, preparation and review of
any letter of intent or similar document relating to any of the transactions
contemplated hereby; (ii) the investigation and review conducted by such party
and its Representatives with respect to the transactions contemplated hereby;
(iii) the negotiation, preparation and review of this Agreement or any of the
documents delivered in connection herewith; (iv) the preparation and submission
of any filing or notice required to be made or given in connection with any of
the transactions contemplated hereby, and the obtaining of any consent required
to be obtained in connection with any of the transactions contemplated hereby;
and (v) the consummation and performance of the transactions contemplated
hereby.

            (b)   Notwithstanding anything to the contrary contained elsewhere
in this Agreement, each party to this Agreement shall pay its own investment
banking, broker or finder fees, if any, incurred in connection with the
transactions contemplated hereby.

      13.21 ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to the Transaction Agreements or the enforcement of any provision of
any of the Transaction Agreements is brought by one party against any other
party to this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).

                                      -44-


      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized representatives as of the day
and year first above written.

ASCENT PEDIATRICS, INC.                       BIOMARIN PEDIATRICS INC.

By:________________________________           By:______________________________
Its:_______________________________           Its:_____________________________

MEDICIS PHARMACEUTICAL CORPORATION            BIOMARIN PHARMACEUTICAL INC.

By:________________________________           By:______________________________
Its:_______________________________           Its:_____________________________

                                       45

EX-10.72F

                                                                EXHIBIT 10.72(f)

                               FIFTH AMENDMENT TO
                           CREDIT & SECURITY AGREEMENT
                             DATED NOVEMBER 22, 2002

            NORWEST BANK ARIZONA, NATIONAL ASSOCIATION (as Successor
            in interest to Norwest Business Credit, Inc. - "Lender")

                 MEDICIS PHARMACEUTICAL CORPORATION ("Borrower")



                FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT

      THIS FIFTH AMENDMENT TO CREDIT AND SECURITY AGREEMENT (the "Amendment") is
made as of the 22nd day of November, 2002 by and between MEDICIS PHARMACEUTICAL,
CORPORATION, a Delaware corporation ("Borrower"), and WELLS FARGO BANK ARIZONA,
NATIONAL ASSOCIATION, a national banking association, formerly known as NORWEST
BANK ARIZONA, NATIONAL ASSOCIATION, a national banking association ("Lender"),
as succcssor-in-interest to NORWEST BUSINESS CREDIT, INC., a Minnesota
corporation.

                                R E C I T A L S:

      WHEREAS, Borrower and Lender are parties to that certain Credit and
Security Agreement dated as of August 3, 1995, as modified by letter agreements
dated March 6, 1996 and April 11, 1996, First Amendment to Credit and Security
Agreement dated as of May 29, 1996 among Borrower, Norwest Business Credit, Inc.
("NBCI") and Lender, Second Amendment to Credit and Security Agreement dated as
of November 22, 1996 between Borrower and Lender, Third Amendment to Credit and
Security Agreement dated as of November 22, 1998 between Borrower and Lender,
and Fourth Amendment to Credit and Security Agreement dated as of November 22,
2000 between Borrower and Lender (collectively, the "Credit Agreement"),
pursuant to which Lender agreed to make available to Borrower a $25,000,000
revolving credit facility (the "Acquisitions Credit Facility") to finance
acquisitions of complementary businesses, brand product lines, brand purchase
contracts, licensing agreements, and internal product research and development
costs, which Acquisitions Credit Facility is evidenced by that certain
Replacement Acquisitions Revolving Note from Borrower payable to the order of
Lender in the principal amount of $25,000,000;

      WHEREAS, Borrower has requested that Lender extend the term of the Credit
Agreement and Acquisitions Credit Facility for an additional two (2) years and
Lender is willing to do so on the terms and conditions contained herein;

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Borrower and Lender, intending to
be legally bound, agree as follows:

      1. INTERPRETATION. Except as otherwise defined herein, all capitalized
terms used herein shall have the meanings ascribed thereto in the Credit
Agreement.

      2. RECITALS. The recitals set forth above are true and accurate in every
respect.

      3. OUTSTANDING INDEBTEDNESS. As of November 22, 2002: the outstanding
principal balance of the Revolving Loan is $0.00 and the accrued and unpaid
interest on the Revolving Loan is $0.00; the outstanding principal balance of
the Term Credit Facility is $0.00 and the accrued and unpaid interest on the
Term Credit Facility is $0.00; and the outstanding principal balance of the
Acquisitions Credit Facility is $0.00 and the accrued and unpaid interest on the
Acquisitions Credit Facility is $0.00.



      4. NO OFFSETS. Borrower acknowledges with respect to the amounts owing to
Lender that, as of the date of execution of this Amendment (which may be after
the effective date of this Agreement), Borrower has no offset, defense or
counterclaim with respect thereto, no claim or defense in the abatement or
reduction thereof, or any other claim against Lender or with respect to any
document forming part of the transaction in respect of which the Acquisitions
Credit Facility was made or forming part of any other transaction under which
Borrower is indebted to Lender. Borrower acknowledges that all interest imposed
under the Acquisitions Credit Facility through the date of execution hereof, and
all fees and other charges that have been collected from or known by Borrower to
have been imposed upon Borrower with respect to the Acquisitions Credit Facility
evidenced by the Acquisitions Revolving Note were and are agreed to, and were
properly computed and collected, and that Lender has fully performed all
obligations that it may have had or now have to Borrower, and Lender has no
obligation to make any additional loan or extension of credit to or for the
benefit of Borrower, except as provided in the Credit Agreement, as amended by
this Amendment.

      5. REPRESENTATIONS AND WARRANTIES OF BORROWER. To induce Lender to enter
into this Amendment and the arrangement contemplated by this Amendment, Borrower
represents and warrants to Lender as follows:

            (a) This Amendment and all other instruments executed and delivered
to Lender concurrently herewith, were executed in accordance with the
requirements of law and in accordance with any requirements of Borrower's
certificate of incorporation and bylaws and any amendments thereto.

            (b) The execution and delivery of this Amendment and any other
instruments executed and delivered to Lender concurrently herewith, and the full
and complete performance of the provisions hereof will not result in any breach
of, or constitute a default under, or result in the creation of any lien, charge
or encumbrance upon any property or assets of Borrower under any indenture,
mortgage, deed of trust, bank loan or credit agreement or other instrument to
which Borrower is a party or by which Borrower is bound.

            (c) The Loan Documents executed by Borrower and this Amendment are
the legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their terms.

            (d) Except as previously disclosed to Lender in writing, there are
no actions, suits or proceedings pending or, to the knowledge of the Borrower,
threatened against or affecting Borrower or any of its Subsidiaries or the
properties of Borrower or any of its Subsidiaries before any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which, if determined adversely to the Borrower or any of
its Subsidiaries, would reasonably be expected to have a material adverse effect
on the financial condition, properties or operations of the Borrower or any
Subsidiaries and where such claim(s) exceed $200,000 individually, or
$500,000 in the aggregate.

            (e) Except for the sale of TRIAZ under an Applicable License,
Borrower has not derived ten percent (10%) or more of Borrower's Net Sales in
any Fiscal Year from any Applicable License as described in Section 6.14 of the
Credit Agreement.



            (f) Except as disclosed by Borrower to Lender in writing
contemporaneously with the execution and delivery of this Amendment, Borrower
does not have any patent applications pending before the PTO Office.

            (g) There are no oral agreements, understandings or course of
conduct that would modify, amend, rearrange, vary, diminish or impair the Loan
Documents or the obligation of Borrower to pay the indebtedness evidenced
thereby or to perform fully the obligations of Borrower in strict accordance
with the Loan Documents, or which would permit Borrower to void or avoid its
obligations in whole or in part.

            (h) All of the respective representations and warranties made by
Borrower in the Loan Documents remain true, complete and correct as of the date
hereof, including, without limitation, the representations and warranties in
Section 5 of the Credit Agreement, except to the extent of any changes to such
representations and warranties previously disclosed in writing to Lender.

No representation or warranty made by Borrower and contained herein or in the
other Loan Documents, and no certificate, information or report furnished or to
be furnished by Borrower in connection with any of the Loan Documents or any of
the transactions contemplated hereby or thereby, contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein not misleading in the light of the circumstances under which such
statements were made.

      6. CONTINUED ENFORCEABILITY OF LOAN DOCUMENTS. Except as modified herein,
all of the terms and provisions of the Loan Documents remain in full force and
effect. In the event of any conflict between the terms and provisions of this
Amendment and the terms and provisions of the Loan Documents, the terms and
provisions of this Amendment shall govern and prevail. Borrower acknowledges,
confirms and ratifies the enforceability of the Credit Agreement, the
Acquisitions Revolving Note and the Loan Documents, as modified pursuant to this
Amendment, and the continuing validity, enforceability and priority of the liens
and security interests granted in the Loan Documents.

      7. RELEASE OF CLAIMS.

         (a) Borrower hereby releases Lender and its officers, employees and
agents from all claims and demands (known and unknown) it may have on the date
hereof arising out of or in any way relating to the extension or denial of
credit by Lender to Borrower or other matters relating to the indebtedness, any
collateral securing payment and performance of such indebtedness, or any matter
preliminary to the execution and delivery by Borrower and Lender of this
Amendment. The release set forth above shall not extend to any claim arising
after the date of execution hereof (which may be after the effective date of
this Agreement) to the extent based on acts or omissions of Lender occurring
after such date, except that such release is specifically intended by the
parties to include the transactions leading up to the execution of this
Amendment. This Amendment and the release provisions contained in this Section 7
are contractual, and not a mere recital.



            (b) Borrower acknowledges and agrees that Lender is not, and shall
not be, obligated in any way to continue or undertake any loan, financing or
other credit arrangement with Borrower, including, without limitation, any
renewal of the indebtedness evidenced by the Loan Documents, except on the terms
and subject to the conditions set forth in the Loan Documents as hereby amended
and modified.

            (c) Borrower understands and acknowledges that Lender and Account
Holder are separate and distinct corporate entities, as well as affiliate
corporations, and Borrower has knowingly and consciously made the determination
to proceed with the credit arrangements with Lender as provided in this Credit
Agreement and to maintain the investment advisor and custodian relationship with
Account Holder as provided in the Investment Agreement. Borrower (i) knowingly
waives and releases Lender for, from and against any claim, demand, cause of
action, liability, damages and expenses incurred by Borrower and (ii) covenants
and agrees that it will not claim, or attempt to claim, rights of setoff,
off-set, recoupment or the like against Lender, in the case of both clauses (i)
and (ii), arising out of, based upon, relating to, or otherwise occurring as a
result of, any acts or omissions of, or any breach of contract or tort or any
other theory of liability by, Account Holder. This provision is not intended to
affect any rights or remedies of Borrower against Lender pursuant to the Credit
Agreement.

      8. CONDITIONS OF CLOSING. Lender's obligation to enter into this Amendment
and the other documents and instruments required hereunder shall be subject to
the satisfaction of all of the following conditions on or before February 14,
2003 (the "Closing" or the "Closing Date") in a manner, form and substance
satisfactory to Lender, which conditions may be waived by Lender in writing in
its sole and absolute discretion.

            (a) On the Closing Date, the representations and warranties of
Borrower set forth in the Loan Documents shall be true and correct in all
material respects when made and at and as of the time of the Closing.

            (b) The following shall have been delivered to Lender, each duly
authorized, executed and acknowledged, where applicable, and in form and
substance satisfactory to Lender:

                  (i) This Amendment;

                  (ii) First Amendment to Amended and Restated Patent Collateral
Assignment and Security Agreement;


                  (iii) First Amendment to Amended and Restated Trademark,
Tradename and Service Mark Collateral Assignment and Security Agreement;


                  (iv) A certificate of the Secretary or an Assistant Secretary
of the Borrower, certifying as to the resolutions of the directors and, if
required, the shareholders of the Borrower, authorizing the execution, delivery
and performance of the Fifth Amendment and all other documents and instruments
incident thereto and to the transactions contemplated by the Fifth Amendment,
reasonably satisfactory to Lender and its counsel.

            (c) Borrower shall have performed and complied in all material
respects with all agreements and conditions contained in the Loan Documents to
be performed by or complied



with by Borrower prior to or at the Closing, and no Event of Default or Default
shall have occurred and be continuing or would occur by Borrower entering into
this Amendment and each condition precedent to the effectiveness of each of the
Loan Documents shall have been satisfied.

            (d) Lender shall have received such documents as Lender shall
require to establish the proper organization and good standing of Borrower, the
authority of Borrower to execute this Amendment and any other documents or
instruments required hereunder, and evidence that all approvals and/or consents
of, or other action by, any shareholder, governmental agency or other Person
whose approval or consent is necessary or required to enable Borrower to (a)
enter into and perform its obligations under the Loan Documents and (b) grant to
Lender the Security Interests, have been obtained.

            (e) All filings of Uniform Commercial Code financing statements and
other filings and actions necessary to perfect and maintain the Security
Interests as first, valid and perfected security interest in the Collateral
shall have been filed or taken (or such filings delivered for filing immediately
following the Closing, to Lender or a third party acceptable to Lender) and
confirmation thereof shall have been received by Lender.

            (f) Lender shall have determined to its satisfaction that, as of the
Closing Date, there has been no material adverse change in the financial
condition of Borrower from the financial statements dated as of_______________,
2002 and other documents submitted by Borrower to Lender prior to the Closing
Date.

            (g) Borrower shall have paid to Lender an extension fee of $32,500,
which shall be fully earned and non-refundable upon Lender's execution and
delivery of this Amendment, and, when invoiced, Lender's reasonable attorneys'
fees and costs incurred in connection with this Amendment.

            (h) Lender shall be satisfied that (a) Borrower has good and
indefeasible title to all of the Collateral and (b) Borrower at all times shall
be entitled to the use and quiet enjoyment of all assets necessary and desirable
for the continued ownership and operation of Borrower's business, including,
without limitation, the use of equipment, licenses, fixtures and warehouses.

      9. DEFINITIONS. (a) The definition of "Maturity Date" in Section 1.1 of
the Credit Agreement is hereby deleted in its entirety and the following
inserted therefor:

                  "Maturity Date" means November 22, 2004.

and (a) Section 1.1 of the Credit Agreement is hereby amended to add the
following definitions in proper alphabetical order:


                  "Fifth Amendment" means that certain Fifth Amendment to Credit
            and Security Agreement dated as of November 22, 2002 between
            Borrower and Lender.


                  "Fourth Amendment" means that certain Fourth Amendment to
            Credit and Security Agreement dated as of November 22, 2000 between
            Borrower and Lender.



      10. FEES. Section 2.11 of the Credit Agreement is hereby amended to add
the following:


            (g) Upon execution and delivery of the Fifth Amendment, Borrower
      agrees to pay to Lender an extension fee of $32,500, which shall be fully
      earned and non-refundable upon Lender's execution and delivery of the
      Fifth Amendment, and, when invoiced, Lender's reasonable attorneys' fees
      and costs incurred in connection with the Fifth Amendment.

      11. SECURITY INTEREST. Article 3 of the Credit Agreement is hereby amended
to add the following:


            3.6 Authorization to File Financing Statements. Borrower hereby
      irrevocably authorizes Lender at any time and from time to time to file a
      record in any filing office in any Uniform Commercial Code jurisdiction to
      perfect the lien on, and security interest in, the Collateral and to
      provide any information required by Article 9 of the Uniform Commercial
      Code of any jurisdiction for the sufficiency or filing office acceptance
      of any record. The Borrower agrees to furnish any such information to the
      Lender promptly upon the Lender's request. Borrower also ratifies its
      authorization for the Lender to have filed in any Uniform Commercial Code
      jurisdiction any record perfecting the lien on, and security interest in,
      the Collateral filed before the date of the Fifth Amendment.

      12. FINANCIAL CONDITION; NO ADVERSE CHANGE. Section 5.5 of the Credit
Agreement is hereby deleted in its entirety and the following inserted therefor:

            Section 5.5 Financial Condition; No Adverse Change. The Borrower has
      heretofore furnished to the Lender audited financial statements of the
      Borrower for its Fiscal Year ended June 30, 2002 and such statements
      fairly present the financial condition of the Borrower on the dates
      thereof and the results of its operations and cash flows for the period
      then ended and were prepared in accordance with generally accepted
      accounting principles applied in a consistent manner. Since the date of
      such financial statements of the Borrower, there has been no material
      adverse change in the business, properties or condition (financial or
      otherwise) of the Borrower.

      13. TOTAL LIABILITIES TO TANGIBLE NET WORTH. Section 6.16 of the Credit
Agreement is hereby deleted in its entirety and the following inserted therefor:


            Section 6.16 Total Liabilities to Tangible Net Worth. Borrower shall
      maintain on a consolidated basis, measured quarterly as of the last day of
      March, June, September and December, a ratio of total liabilities under
      GAAP to Tangible Net Worth of no more



            than 3.0:1.0 from and including September 30, 2002 through the
            remaining term of this Agreement.

      14. MISCELLANEOUS.

            (a) Arbitration Agreement; Waiver of Right to Jury Trial. The
Agreement contains an arbitration provision, governing law provision and waiver
of right to jury trial. In the event of any dispute arising out of or related to
this Amendment, the provisions of Section 9.12 of the Agreement shall apply.

            (b) Voluntary Agreement. Borrower represents and warrants to Lender
that (i) it is, or has had the opportunity to be, represented by legal counsel
of its choice in regard to the transaction provided for by this Amendment and
that such counsel (if engaged) has explained the significance of the terms, and
the meaning and effect of this Amendment; (ii) it is fully aware and clearly
understands all of the terms and provisions contained in this Amendment; (iii)
it has voluntarily, with full knowledge and without coercion or duress of any
kind, entered into this Amendment and the documents executed in connection with
this Amendment; (iv) it is not relying on any representations, either written or
oral, express or implied, made to it by Lender other than as set forth in this
Amendment; and (v) the consideration received by Borrower to enter into this
Amendment and the arrangement contemplated by this Amendment has been actual and
adequate.

            (c) Entire Agreement. This Amendment and the Loan Documents
constitute the entire agreement among the parties as to the agreements and
understandings contemplated by this Amendment. All parties to this Amendment
acknowledge that there are no agreements, understandings, warranties or
representations among the parties except as set forth in the Loan Documents and
this Amendment.

            (d) Counterpart Execution. This Amendment may be executed in
counterparts, each of which shall be deemed an original document, and all of
which combined shall constitute a single document.

            (e) Waiver. Neither this Amendment nor any of the provisions hereof
may be changed, waived, discharged or terminated, except by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.

            (f) Headings. Paragraph or other headings contained in this
Amendment are for reference purposes only and are not intended to affect in any
way the meaning or interpretation of this Amendment.

            (g) Severability. If any clause or provision of this Amendment is
determined to be illegal, invalid, or unenforceable under any present or future
law by the final judgment of a court of competent jurisdiction, such clause or
provision shall be ineffective, but the remainder of this Amendment will not be
affected thereby.

            (h) Binding Effect. All of the provisions of this Amendment shall be
binding upon and shall inure to the benefit of Borrower and Lender and their
permitted successors and



assigns, including, without limitation, any successor holder of any Note and any
successor mortgagee/beneficiary under any security document.

            (i) Time of the Essence. Time is of the essence of each and every
provision under this Amendment.

            (j) Amendment. Except as specifically set forth herein, the
Agreement and the other Loan Documents shall remain in full force and effect. In
the event of a conflict between the terms and provisions of this Amendment and
the terms and provisions of the Agreement, the terms and provisions of this
Amendment shall govern and control. Nothing contained in this Amendment is
intended to or shall be construed as relieving any person or entity, whether a
party to this Amendment or not, of any of such person's or entity's obligations
to Lender.

                           [THE REMAINDER OF THIS PAGE
                          IS LEFT INTENTIONALLY BLANK]



      IN WITNESS WHEREOF, this Amendment is executed to be effective as of the
date first above written.

                                BORROWER:

                                MEDICIS PHARMACEUTICAL CORPORATION,
                                a Delaware corporation

                                By: /s/ Mark A. Prygocki, Sr.
                                    -------------------------------------------
                                Name: Mark A. Prygocki, Sr.
                                Title: Executive Vice President and Chief
                                       Financial Officer

                                Execution Date: MARCH 6, 2003

                                LENDER:

                                WELLS FARGO BANK ARIZONA, NATIONAL
                                ASSOCIATION, a national banking association

                                By: /s/ Tim Billings
                                    -------------------------------------------
                                Name: Tim Billings
                                Title: Vice president

                                Execution Date: February,      2003

EX-10.102

                                                                  EXHIBIT 10.102

[THE OMITTED PORTIONS INDICATED BY AN ASTERISK HAVE BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.]

                                SUPPLY AGREEMENT

            This Supply Agreement (this "AGREEMENT") is entered into this 15th
day of July, 2004 between Medicis Aesthetics Holdings Inc., a corporation
organized under the laws of the State of Delaware ("MEDICIS"), and a
wholly-owned subsidiary of Medicis Pharmaceutical Corporation, a corporation
organized under the laws of the State of Delaware ("MEDICIS PHARMACEUTICAL"),
and Q-Med AB, a company organized under the laws of the Kingdom of Sweden with
corporate registration number 556258-6882 ("Q-MED").

                                    RECITALS

            WHEREAS, Medicis has been granted, pursuant to the License Agreement
(as defined herein), a license under the Licensed Rights (as defined herein)
without a right to manufacture or have manufactured, the Licensed Products in
the Territory (as defined herein);

            WHEREAS, in connection with entering into such License Agreement,
Q-Med has agreed to supply Medicis and its Affiliates (as defined herein) with
the Licensed Products and Medicis has the right to sublicense immediately to
Medicis' Permitted Transferees (as defined in the License Agreement) its rights
under the Licensed Rights pursuant to the License Agreement; and

            WHEREAS, Q-Med and Medicis desire to define their respective rights
and obligations with regard to the supply of the Licensed Products in this
Agreement.

            NOW, THEREFORE, for good and valuable consideration, the sufficiency
and receipt of which are hereby acknowledged, the Parties hereby agree as
follows:

                                    ARTICLE I

                                   DEFINITIONS

            1.1 Definitions. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:

            "ACTION" shall mean any action, claim, suit, litigation,
arbitration, investigation, notification, audit or other proceeding brought in
law or at equity by a Governmental Authority or other Person.

            "ACTUAL ASP" shall have the meaning given to such term in Section
4.1(b).

            "ADVERTISING" shall mean printed or descriptive matter not
classified by the FDA as labeling (e.g., promotional material airing on
television and radio or appearing in journals, magazines and newspapers).



            "ADVERTISING IN CANADA" shall mean printed or descriptive matter not
classified by the TPD as labeling (e.g., promotional material airing on
television and radio or appearing in journals, magazines and newspapers).

            "AESTHETIC ENHANCEMENT" shall mean the alteration of the visual
appearance, visual form, visual size, or visual shape of the naked human body or
any of its components; provided, that Aesthetic Enhancement shall not be deemed
to include modification of the functions, restoration of the functions,
adjustment of the functions or correction of the functions of the human body or
any of its component parts.

            "AFFILIATE" of a Person shall mean, with respect to any Person, any
other Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. As
used in this definition, the term "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract, or otherwise.

            "AGREEMENT" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.

            "AMENDED MEDICAL DEVICE LICENSE" shall mean a license issued by the
TPD approving an Amended Medical Device License Application and allowing
Commercial Distribution of a Licensed Product in Canada.

            "AMENDED MEDICAL DEVICE LICENSE APPLICATION" shall mean an
application amending an approved Medical Device License and requesting TPD's
approval to Commercially Distribute a Licensed Product reflecting any change or
supplement to the Medical Device License which is required or permitted to be
made pursuant to Canada's FDA and/or regulations made thereunder or other TPD
policies or guidelines, including all information submitted with or incorporated
by reference therein.

            "AMENDED MEDICAL DEVICE LICENSE APPROVAL" shall mean TPD's approval
of an Amended Medical Device License.

            "AVERAGE SELLING PRICE" shall mean in U.S. dollars the Net Revenues
for a given period divided by the number of units sold of a Licensed Product for
such given period.

            "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banks in Sweden or New York are authorized or obligated by Law or
executive order to remain closed.

            "CANADA'S FDA" shall mean Canada's Food and Drugs Act, R.S.C. 1985,
c. F-27, as amended.

            "CHANGE IN CONTROL" shall mean (a) the disposition of all or
substantially all of the outstanding shares, assets or business of a Party or
Medicis Pharmaceutical on a consolidated basis; or (b) any transaction or event
(or series of transactions or events) as a result of which any Person (other
than an Affiliate of such Party or Medicis Pharmaceutical), acting singly or as
a

                                       2



part of a "partnership, limited partnership, syndicate or group" (within the
meaning of Section 13(d)(3) of the United States Securities Exchange Act of
1934, as amended): (i) acquires (by purchase, merger, consolidation or
otherwise) or for the first time controls or is able to vote (directly or
through nominees, beneficial ownership, proxy or contract) fifty percent (50%)
or more of the aggregate of all outstanding equity securities of a Party or
Medicis Pharmaceutical; or (ii) acquires (by purchase, merger, consolidation or
otherwise) equity securities of a Party or Medicis Pharmaceutical with the right
to or for the first time is otherwise able to, nominate or designate (directly
or through nominees, beneficial ownership, proxy or contract) at least fifty
percent (50%) of the nominees to the board of directors of such Party or Medicis
Pharmaceutical, in each of (a) or (b), in the event that Q-Med, Medicis or
Medicis Pharmaceutical, as the case may be, was not a party to the applicable
transaction and/or such transaction was not approved by the Board of Directors
of Q-Med, Medicis or Medicis Pharmaceutical, as the case may be.

            "CLOSING" shall have the meaning set forth in the License Agreement.

            "CLOSING DATE" shall mean the date of the Closing of the
transactions contemplated by the License Agreement.

            "COMMERCIAL DISTRIBUTION" shall mean a distribution in accordance
with the terms and conditions of the Transaction Agreements for all purposes
other than Investigational Distribution.

            "CONFIDENTIALITY AGREEMENT" shall mean the Confidentiality
Undertaking, dated as of March 29, 2004 between Q-Med and Medicis
Pharmaceutical, as the same may be amended from time to time in accordance with
its terms, which shall supercede and replace in its entirety any and all
confidentiality agreements or arrangements entered into prior to the date hereof
by the Parties or their respective officers, directors, employees, agents,
consultants or representatives with respect to the transactions contemplated by
the Transaction Agreements other than the Mutual Disclosure and Confidentiality
Agreement, dated September 15, 1999, between Medicis Pharmaceutical and Q-Med,
which shall continue in full force and effect in accordance with its terms.

            "COST OF PRODUCTION" shall mean the production cost for producing
one unit, the calculation done once a year, calculations based on an Activity
Based Costing (ABC) model, using the information in the budget of Q-Med. Such
amount excludes the allocation of administrative costs not related to the
production. Related production variances will be determined by Q-Med subsequent
to the end of the calendar year and will be billed or credited to future orders
placed by Medicis.

            "DIRECT COSTS" shall mean Cost of Production and Overhead plus any
additional direct costs applicable to providing Licensed Products for
Investigational Distribution.

            "FCA" shall mean FCA as defined in the International Chamber of
Commerce Incoterms 2000.

            "FDA" shall mean the United States Food and Drug Administration.

                                       3



            "FDCA" shall mean the United States Federal Food, Drug, and Cosmetic
Act of 1938, as amended (21 U.S.C. Sections 301 et. seq.).

            "FIELD" shall mean Aesthetic Enhancement.

            "FIRM ORDER" shall mean a written irrevocable firm purchase order
for the Licensed Products, which order shall set forth (i) the Licensed Product
requirement on a monthly basis for a three (3) month period and (ii) shall
include a delivery schedule specifying the monthly delivery date for each
Licensed Product ordered and the location to which shipment of such Licensed
Product is to be delivered by Q-Med.

            "GOVERNMENTAL AUTHORITY" shall mean any supranational, national,
federal, state, provincial or local judicial, legislative, executive or
regulatory authority.

            "GUARANTEE" shall mean the guarantee dated as of the Closing Date
from Medicis Pharmaceutical to Q-Med.

            "IDE APPLICATION" shall mean an investigational device exemption
application requesting FDA or TPD approval to distribute an investigational
device for clinical study, pursuant to the requirements of 21 C.F.R. Part 812
and Part 3 of the Canadian Medical Device Regulations SOR/98-282 as amended.

            "IDE APPROVAL" shall mean FDA's approval of an IDE Application or an
IDE deemed approved pursuant to the requirements set forth in 21 C.F.R. Part 812
permitting distribution of an investigational product.

            "IDE CANADA APPROVAL" shall mean TPD permission to distribute an
investigational device for clinical study, pursuant to the provisions of Part 3
of the Canadian Medical Device Regulations SOR/98-282, as amended.

            "IDE SUPPLEMENT" shall mean an IDE supplement application requesting
approval for changes in the investigational plan, clinical protocol, or
developmental or manufacturing changes pursuant to the requirements of 21 C.F.R.
Part 812.

            "IDE SUPPLEMENT APPROVAL" shall mean FDA's approval of an IDE
Supplement.

            "IMPROVEMENTS" shall mean any replacements, improvements or
modifications, including without limitation, new indications or new uses, in
each case in the Field.

            "INVESTIGATIONAL DISTRIBUTION" shall mean distribution in accordance
with the terms and conditions of the Transaction Agreements pursuant to the
requirements of 21 C.F.R. Part 812 in the United States and Part 3 of the
Canadian Medical Device Regulations SOR/98-282 in Canada.

            "LABELING" shall mean all labels and other written, printed or
graphic material upon any Licensed Product or any of its containers or wrappers
accompanying such Licensed Product (e.g., instructions sheets, package inserts).

                                       4



            "LAUNCH" of a Licensed Product shall mean the first offer for sale
of the Licensed Product to the trade.

            "LAWS" shall mean all applicable laws, statutes, rules, regulations,
ordinances and other pronouncements of law of any Governmental Authority.

            "LICENSE AGREEMENT" shall mean the Intellectual Property License
Agreement, dated as of the date hereof, between Medicis and Q-Med.

            "LICENSED KNOW-HOW" shall have the meaning given to such term in the
License Agreement.

            * * *

            "LICENSED REGULATORY DATA" shall have the meaning given to such term
in the License Agreement.

            "LICENSED RIGHTS" shall have the meaning set forth in the License
Agreement.

            "LICENSEE REGULATORY MATERIALS" shall have the meaning given to such
term in the License Agreement.

            "LOSS" or "LOSSES" shall mean any and all damages, fines, fees,
penalties, deficiencies, losses and expenses, including reasonable legal fees
and expenses, but excluding loss of profits or other special, punitive or
consequential damages (except as set forth in Sections 9.1(c) and 9.2(b)).

            "MACROLANE SIDE LETTER" shall mean that certain letter from Medicis
to Q-Med, dated as of the Closing Date.

            "MANUFACTURE", "MANUFACTURED" or "MANUFACTURING" shall mean
manufacture, process, test, assemble, fill, label and package and shall also
include the performance of any activity that would render an entity a
"manufacturer" under 21 C.F.R. Sections 803.3(o) and 820.3(o).

            "MANUFACTURING DIRECT COSTS" shall mean Cost of Production, Overhead
and Profit.

            "MEDICAL DEVICE DIRECTIVE" shall mean the European Council Directive
concerning Medical Devices, 93/42/EEC (OJ No L 169/1, July 12, 1993), as
amended.

            "MEDICAL DEVICE LICENSE" shall mean a medical device license issued
by the TPD and approving the Commercial Distribution of a Licensed Product.

            "MEDICAL DEVICE LICENSE APPLICATION" shall mean a medical device
license application requesting TPD's approval to commercially distribute a
Licensed Product, including all information submitted with or incorporated by
reference therein.

                                       5



            "MEDICAL DEVICE LICENSE APPROVAL" shall mean TPD's approval of a
Medical Device License Application.

            "MILESTONE PAYMENTS" shall have the meaning given to such term in
the License Agreement.

            "NET REVENUES" shall mean, with respect to any Licensed Product, the
gross sales of such Licensed Product invoiced by Medicis and/or its Affiliates
to Medicis' and/or its Affiliates' customers who are not Affiliates, less, to
the extent actually paid or accrued net of payments by Medicis and/or its
Affiliates (as applicable), (a) normal and customary credits, allowances,
discounts and rebates to, and chargebacks from the account of, such customers
for spoiled, damaged, out-dated and returned Licensed Product; (b) normal and
customary freight and insurance costs incurred in transporting such Licensed
Product to and from such customers; (c) normal and customary cash, quantity and
trade discounts, rebates and other price reductions or special programs for such
Licensed Product; and (d) excise, sales, use, value-added and other direct taxes
(but not income taxes of any kind) imposed upon the sale of such Licensed
Product to such customers. For avoidance of doubt, Medicis shall calculate Net
Revenues for purposes of this Agreement according to U.S. generally accepted
accounting principles applied on a consistent basis and in a manner consistent
with Medicis Pharmaceutical's calculations of consolidated net revenues and
consistent with the numbers used to consolidate net revenues reported in Medicis
Pharmaceutical's periodic reports with the United States Securities and Exchange
Commission.

            "NOTIFIED BODY" shall mean the certification organization designated
by the relevant national authority of any member of the European Union,
authorized to conduct conformity assessments in accordance with the procedures
listed in the Medical Device Directive.

            "ONE TIME PAYMENTS" shall have the meaning given to such term in the
License Agreement.

            "ORDERED PRODUCTS" shall mean the Licensed Products ordered pursuant
to a Firm Order.

            "OVERHEAD" shall mean as to the Licensed Product in the Territory
allocated, yearly sum, including the costs for maintenance of the quality
system, interest if any, related solely to loans on production facilities,
process development and production development, such yearly sum based on the
budget of Q-Med, and allocated to the number of units of Licensed Products.

            "PARTY" shall mean Q-Med or Medicis and, when used in the plural,
means both Q-Med and Medicis or their respective Permitted Transferees or Third
Party transferees, in each case upon the consummation of a Transfer in
accordance with the terms and conditions herein.

            "PERSON" shall mean any individual, firm, corporation, partnership,
limited liability company, trust, joint venture or other entity or organization.

                                       6



            "PMA APPLICATION" shall mean a premarket approval application under
section 515(c) of the FDCA requesting FDA's approval to commercially sell and
distribute a Licensed Product in the United States and its territories and
possessions, including all information submitted with or incorporated by
reference therein.

            "PMA APPROVAL" shall mean approval from the FDA of a PMA
Application.

            "PMA SUPPLEMENT" shall mean a supplemental application to an
approved PMA Application requesting FDA's approval of a Licensed Product or
relating to the Manufacture or Labeling thereof, including all information
submitted with or incorporated by reference therein.

            "PMA SUPPLEMENT APPROVAL" shall mean FDA's approval of a PMA
Supplement allowing Commercial Distribution of a Licensed Product.

            "PPI" shall mean the Producer Price Index as published by the
Statistical Central Bureau of Sweden.

            "PREVIOUS LICENSE LETTER AGREEMENT" shall mean that certain letter
from Medicis Pharmaceutical to Q-Med, dated as of the Closing Date, relating to
the Previous License Agreement (as such term is defined in the License
Agreement).

            "PRIOR SUPPLY AGREEMENT" shall mean that certain Supply Agreement
dated March 7, 2003, between Medicis Pharmaceutical and Q-Med, as the same may
be amended from time to time in accordance with its terms.

            "PRODUCT CLAIM" shall mean an Action by a Third Party in respect of
potential or actual injury, harm or death whether based in strict tort
liability, strict products liability, negligence, misrepresentation, or breach
of express or implied warranty, allegedly due and owing as a result of the
manufacture, use, application or defective condition of any of the Licensed
Products or the Labeling of any of the Licensed Products.

            "PROFIT" shall mean an amount per unit of a Licensed Product equal
to the amount of Cost of Production per unit.

            "PROMOTIONAL LABELING" shall mean a subset of Labeling that is
intended as marketing material that is intended to promote Licensed Products
(e.g., customer presentations, detailing pieces, press kits, brochures, trade
show presentations, flyers, booklets, mailing pieces, and "Dear Doctor"
letters); provided, however, that excluded from this definition are written
materials or communications intended for a non-customer audience (e.g., United
States Securities Exchange Commission filings and press releases for the
financial community), price sheets and reminder labeling that sets forth the
product name but not the indications or other use information as defined in 21
C.F.R. Section 801.109(d).

            "QUALITY SYSTEM REGULATION" or "QSR" shall mean the quality system
requirements applicable to manufacturers of finished medical devices
commercially distributed in the United States and its territories and
possessions, codified at 21 C.F.R. Part 820.

                                       7



            "QUALITY SYSTEM REGULATION CANADA" or "QSRC" shall mean the quality
system requirements applicable to manufacturers of medical devices commercially
distributed in Canada, as set forth in Canada's Medical Devices Regulations,
SOR/98-282, as amended.

            "REGULATORY APPROVAL" shall mean a PMA Approval, PMA Supplement
Approval, IDE Approval, IDE Canada Approval, Medical Device License Approval
and/or Amended Medical Device License Approval.

            "SEK" shall mean Swedish Krona, the currency currently used in
Sweden or the Euro if the Euro is adopted as the official currency used in
Sweden at the official exchange rate.

            "SPECIFICATIONS" shall mean the specifications for each of the
Licensed Products as set forth on Schedule A; provided that all amendments
thereof shall be agreed to in a writing signed by both of the Parties.

            "STEERING COMMITTEE" shall mean the Steering Committee already
established pursuant to the Prior Supply Agreement. It shall have all the same
membership, voting, delegation, and deadlock resolution procedures and
requirements, except that it shall not use the "most interested party" procedure
in connection with this Agreement. For convenience, a copy of these provisions
are attached in Schedule B to this Agreement. In the event of a conflict between
the provisions of Article VI hereof and Schedule B, Article VI shall control.

            "SUBQ" shall mean the first Licensed Product.

            "TERM" shall have the meaning set forth in Section 8.1.

            "TERRITORY" shall mean the United States, including its territories
and possessions, and Canada.

            "TERRITORY SPECIFIC MATERIALS" shall have the meaning given to such
term in the License Agreement.

            "THIRD PARTY" shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.

            "TPD" shall mean Canada's Therapeutic Products Directorate.

            "TRANSACTION AGREEMENTS" shall mean this Agreement, the License
Agreement, the Macrolane Side Letter, the Previous License Letter Agreement, the
Guarantee and the Confidentiality Agreement.

            "TRANSFER" shall mean any Change in Control or Volitional Change in
Control of a Party or Medicis Pharmaceutical or a transfer or assignment by a
Party of its rights and obligations under this Agreement.

            "VOLITIONAL CHANGE IN CONTROL" shall mean (a) the disposition of all
or substantially all of the outstanding shares, assets or business of a Party or
Medicis Pharmaceutical on a consolidated basis; or (b) any transaction or event
(or series of transactions

                                       8



or events) as a result of which any Person (other than an Affiliate of such
Party or Medicis Pharmaceutical), acting singly or as a part of a "partnership,
limited partnership, syndicate or group" (within the meaning of Section 13(d)(3)
of the United States Securities Exchange Act of 1934, as amended): (i) acquires
(by purchase, merger, consolidation or otherwise) or for the first time controls
or is able to vote (directly or through nominees, beneficial ownership, proxy or
contract) fifty percent (50%) or more of the aggregate of all outstanding equity
securities of a Party or Medicis Pharmaceutical; or (ii) acquires (by purchase,
merger, consolidation or otherwise) equity securities of a Party or Medicis
Pharmaceutical with the right to or for the first time is otherwise able to,
nominate or designate (directly or through nominees, beneficial ownership, proxy
or contract) at least fifty percent (50%) of the nominees to the board of
directors of such Party or Medicis Pharmaceutical, in each of (a) or (b),in the
event that Q-Med, Medicis or Medicis Pharmaceutical, as the case may be, was a
party to the applicable transaction or of which the Board of Directors of Q-Med,
Medicis or Medicis Pharmaceutical, as the case may be, shall have approved.

            1.2 Other Definitional Provisions.

            (a) The words "HEREOF", "HEREIN", "HERETO" and "HEREUNDER" and words
of similar import, when used in this Agreement, shall refer to this Agreement as
a whole and not to any particular provision of this Agreement unless otherwise
indicated.

            (b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.

            (c) The term "INCLUDING" shall mean "INCLUDING, WITHOUT LIMITATION".

            (d) When a reference is made in this Agreement to an Article, a
Section or Schedule, such reference shall be to an Article of, a Section of or a
Schedule to, this Agreement unless otherwise indicated.

                                   ARTICLE II

           SUPPLY OF LICENSED PRODUCTS; FORECASTS AND PURCHASE ORDERS

            2.1 Licensed Products to be Supplied. Medicis shall, and shall cause
its Affiliates to, purchase from Q-Med or any manufacturer designated by Q-Med
as permitted by the terms of this Agreement, and Q-Med shall sell, and shall
cause to have sold, to Medicis and its Affiliates, except as otherwise provided
herein, all of Medicis' and its Affiliates' requirements for the Licensed
Products during the Term as provided herein for marketing, use, import, offer
for sale, commercializing or otherwise disposing of and sale for Commercial
Distribution and Investigational Distribution in the Territory in accordance
with the terms of the Transaction Agreements. Medicis shall, and agrees to cause
its Affiliates to, solely and exclusively purchase the Licensed Products from
Q-Med or any manufacturer designated by Q-Med, and neither Medicis nor any of
its Affiliates shall have the right to purchase any Licensed Product or any
generic version thereof from, directly or indirectly, any other Person.

            2.2 Forecasts. (a) With respect to all Licensed Products to be
supplied for Commercial Distribution and Investigational Distribution in the
Territory, including any

                                       9



portion thereof, Medicis shall provide Q-Med with a forecast of Medicis' and its
Affiliate's estimated monthly requirements of the applicable Licensed Products
(with Licensed Products required for Commercial Distribution and Licensed
Products required for Investigational Distribution being reported as separate
line items) for the twelve (12) month period commencing on the date hereof in
substantially the form attached hereto as Schedule C, which forecast shall be
delivered by Medicis to Q-Med within fourteen (14) calendar days of the date
hereof. Medicis shall update such forecast on a monthly basis until such time as
Medicis is providing forecasts and placing Firm Orders pursuant to Section
2.2(b). Such updates shall be delivered to Q-Med on the fifth (5th) Business Day
prior to the commencement of the subsequent month. In addition, until such time
as Medicis is providing forecasts and placing Firm Orders pursuant to Section
2.2(b), Medicis may provide Q-Med with three (3) separate initial Firm Orders
for Licensed Products (one for Investigational Distribution in the Territory,
one for Commercial Distribution in Canada and one for Commercial Distribution in
the United States) at any time; provided that (i) Q-Med shall not be obligated
to supply Licensed Products in accordance with each such initial Firm Order
prior to the later of ten (10) weeks after (A) the date on which Medicis
provides Q-Med with such initial Firm Order or (B) the date that Medicis
provides the approved Labeling with respect to such initial Firm Order,
provided, that Q-Med shall use commercially reasonable efforts to supply such
Licensed Products in less than ten (10) weeks; (ii) Q-Med shall not be obligated
to supply Licensed Products in accordance with each such initial Firm Order
unless Medicis has made all applicable One Time Payments and Milestone Payments
then due under the terms of the License Agreement, including Section 8.5
thereof; (iii) if Medicis, by placing an initial Firm Order prior to receipt of
the applicable Regulatory Approval for such Licensed Products, requests that
Q-Med commence the Manufacture of any Licensed Products prior to the receipt of
the applicable Regulatory Approval for such Licensed Products, Medicis shall
bear any risks, including without limitation additional direct (which shall be
deemed to include labor) costs and expenses, of any changes required, including,
without limitation, any changes in Labeling, to comply with such Regulatory
Approvals subsequently received and in such event, Q-Med shall then commence
such Manufacture as so requested; (iv) with respect to SubQ, Q-Med shall not be
obligated to supply, in excess of * * * pursuant to each such initial Firm
Order; and (v) with respect to all other Licensed Products, Q-Med shall advise
Medicis of the maximum number of syringes that it may be obligated to deliver
pursuant to the applicable initial Firm Order within five (5) Business Days of
the date of such Initial Firm Order.

            (b) Except as provided in Section 2.2(a), on or before the fifth
(5th) Business Day prior to the first day of each calendar month, Medicis shall
give to Q-Med a forecast of Medicis' and its Affiliates' estimated monthly
requirements of the Licensed Products for the twelve (12) month period
commencing with the next succeeding calendar month (for example, a forecast
delivered on May 25 shall estimate the monthly requirements of Licensed Products
for the twelve (12) month period commencing July 1). The twelve (12) month
forecast delivered to Q-Med pursuant to the preceding sentence shall represent
Medicis' reasonable estimates of the quantity of the Licensed Products that
Medicis and its Affiliates will require during such twelve (12) month period to
which such forecast applies, and the forecast of its monthly requirements of the
Licensed Products during the first three (3) months of such twelve (12) month
period shall be reflected in a Firm Order accompanying such forecast.

            (c) Notwithstanding the foregoing, any Firm Order for any Licensed
Product placed for a one (1) month period in accordance with Section 2.2(b)
shall be between 80% and

                                       10



120% of the most recent forecast estimated quantity for such Licensed Product
for such one (1) month period provided by Medicis to Q-Med in accordance with
this Section 2.2 prior to the Firm Order being placed by Medicis. In the event
that Medicis shall submit a Firm Order that is below 80% of the applicable
forecast estimated quantity, Q-Med shall deliver to Medicis and Medicis shall be
required to purchase an amount equal to 80% of such applicable forecast
estimated quantity. To the extent that the Firm Order is for more than 120% of
the most recent forecast estimated quantity for a Licensed Product, Q-Med shall
not be obligated with respect to the excess over 120% to supply a greater
quantity than it is able to supply using its commercially reasonable efforts.

            (d) In addition to the foregoing forecast requirements, commencing
on the date hereof, on or before the fifth (5th) Business Day prior to the first
day of each calendar quarter, Medicis shall give to Q-Med a forecast of Medicis'
and its Affiliate's estimated quarterly requirements of the Licensed Products
for an additional thirty-six (36) month period beyond the twelve (12) month
periods in Section 2.2(a) and (b). The thirty-six (36) month forecast delivered
to Q-Med pursuant to this clause (d) shall represent Medicis' reasonable
estimates of the quantity of the Licensed Products that Medicis and its
Affiliates will require during such period to which such forecast applies,
provided that such forecast shall be for planning purposes of Q-Med only and
shall not constitute a Firm Order.

            (e) All forecasts to be provided or delivered by Medicis to Q-Med
pursuant to this Section 2.2 shall be in writing, which may be electronic.

            2.3 Capacity. (a) Q-Med shall use its commercially reasonable
efforts to obtain and maintain capacity or inventory sufficient to meet Medicis'
requirements as indicated in the combined forty-eight (48) month forecast
provided to Q-Med in accordance with Section 2.2(b) and (d). If at any time
Q-Med reasonably believes that Q-Med may not have sufficient capacity or
inventory to fulfill the requirements so forecasted by Medicis (a "CAPACITY
SHORTAGE"), whether due to insufficient manufacturing capacity or otherwise,
then Q-Med shall request written confirmation from Medicis' Chief Executive
Officer of Medicis' forecasted requirements for such forty-eight (48) month
period that give rise to such possible Capacity Shortage (the "CERTIFIED MEDICIS
REQUIREMENTS").

            (b) (i) If Q-Med reasonably determines after further consideration
      in light of such Certified Medicis Requirements that there will be a
      Capacity Shortage within the first twenty-four (24) month period covered
      by such Certified Medicis Requirements, Q-Med shall provide Medicis with
      notice thereof within five (5) Business Days of receipt of the Certified
      Medicis Requirements. If Q-Med has a plan of action with respect to such
      Capacity Shortage when it delivers such notice, Q-Med shall provide
      Medicis with a written outline of such plan and its reasonably supported
      conclusions relating thereto. Q-Med may take prompt action with respect to
      such plan or, if Q-Med desires, Q-Med may promptly convene a meeting
      between Medicis and Q-Med to discuss such plan. If Q-Med has not developed
      a plan of action at the time of its notice to Medicis of the Capacity
      Shortage, Q-Med shall promptly convene a meeting between Medicis and Q-Med
      to develop in mutual consultation a course of action with respect to such
      Capacity Shortage, such course of action to be reasonable. As soon as
      practicable after such meeting, Q-Med shall take commercially reasonable
      steps to carry out such mutually

                                       11



      determined plan of action. Q-Med shall be entitled to call a meeting at
      any time to discuss the amendment or revision of such mutually agreed plan
      of action. If Q-Med has not taken reasonably sufficient steps towards
      implementing the plan within one (1) month of the meeting, then Q-Med
      shall promptly furnish to an alternate manufacturer identified by Medicis
      with capacity sufficient to fulfill that portion of the Certified Medicis
      Requirements that Q-Med is unable to fulfill or, if the Certified Medicis
      Requirements are no longer applicable, the then current forecast provided
      under Section 2.2(b), all information and assistance necessary to qualify
      and operate such alternate manufacturer so proposed by Medicis, the
      selection of which shall be subject to Q-Med's prior consent, which
      consent shall not be unreasonably withheld or delayed. Notwithstanding the
      foregoing, promptly upon notice by Q-Med that such Capacity Shortage has
      been remedied such that Q-Med has capacity sufficient to meet that portion
      of the Certified Medicis Requirements that Q-Med was unable to fulfill or
      if the Certified Medicis Requirements are no longer applicable, the then
      current forecast provided under Section 2.2(b), Medicis shall resume, as
      promptly as is commercially reasonable, the use of Q-Med as the exclusive
      supplier of Medicis and its Affiliates.

            (ii) If Q-Med determines after further consideration in light of
      such Certified Medicis Requirements that there will be a Capacity Shortage
      between the twenty-fifth (25th) and thirty-sixth (36th) months of the
      period covered by such Certified Medicis Requirements, Q-Med shall provide
      Medicis with notice thereof within ten (10) Business Days of its receipt
      of the Certified Medicis Requirements and shall further consider such
      Capacity Shortage and shall develop a plan of action with respect thereto.
      If, within three (3) months after delivery of such Certified Medicis
      Requirements, Q-Med believes that there is no Capacity Shortage, Q-Med
      shall so inform Medicis in writing. If, within three (3) months after
      delivery of such Certified Medicis Requirements, Q-Med believes that there
      is a Capacity Shortage and Q-Med has developed a plan of action with
      respect thereto, Q-Med shall inform Medicis in writing of such plan of
      action. If, within three (3) months after delivery of such Certified
      Medicis Requirements, Q-Med has not developed a plan of action and/or
      taken action with respect to such Capacity Shortage, Q-Med shall convene a
      meeting between representatives of Q-Med and Medicis to consider the
      Capacity Shortage and to develop in mutual consultation an appropriate
      plan of action with respect thereto, such course of action to be
      reasonable. As soon as practicable after Q-Med and Medicis have developed
      a plan of action with respect to the Capacity Shortage, Q-Med shall take
      commercially reasonable steps to carry out such mutually determined plan
      of action. Q-Med shall be entitled to call a meeting at any time to
      discuss the amendment or revision of such mutually agreed plan of action.
      If Q-Med has not taken reasonably sufficient steps in accordance with such
      mutually determined plan of action, Medicis shall deliver a written notice
      thereof. Within ten (10) Business Days of its receipt of such notice,
      Q-Med shall provide reasonably sufficient evidence demonstrating its
      reasonable compliance with such plan. If Q-Med does not provide reasonably
      sufficient evidence within such period, then Q-Med shall promptly furnish
      to an alternate manufacturer identified by Medicis with capacity
      sufficient to fulfill that portion of the Certified Medicis Requirements
      that Q-Med is unable to fulfill or, if the Certified Medicis Requirements
      are no longer applicable, the then current forecast provided under Section
      2.2(b), all information and assistance necessary to qualify and operate
      such alternate manufacturer so proposed by Medicis, the selection of which
      shall

                                       12



      be subject to Q-Med's prior consent, which consent shall not be
      unreasonably withheld or delayed. Notwithstanding the foregoing, promptly
      upon notice by Q-Med that such Capacity Shortage has been remedied such
      that Q-Med has capacity sufficient to meet that portion of the Certified
      Medicis Requirements that Q-Med was unable to fulfill or, if the Certified
      Medicis Requirements are no longer applicable, the then current forecast
      provided under Section 2.2(b), Medicis shall resume, as promptly as is
      commercially reasonable, the use of Q-Med as the exclusive supplier of
      Medicis and its Affiliates.

            (iii) If Q-Med determines after further consideration in light of
      such Certified Medicis Requirements that there will be a Capacity Shortage
      after the thirty-seventh (37th) month of the period covered by such
      Certified Medicis Requirements, Q-Med shall provide Medicis with notice
      thereof within ten (10) Business Days of its receipt of the Certified
      Medicis Requirements and shall further consider such Capacity Shortage and
      shall develop a plan of action with respect thereto. If, within six (6)
      months after delivery of such Certified Medicis Requirements, Q-Med
      believes that there is no Capacity Shortage, Q-Med shall so inform Medicis
      in writing. If, within six (6) months after delivery of such Certified
      Medicis Requirements, Q-Med believes that there is a Capacity Shortage and
      Q-Med has developed a plan of action with respect thereto during such
      period, Q-Med shall inform Medicis in writing of such plan of action. If,
      within six (6) months after delivery of such Certified Medicis
      Requirements, Q-Med has not developed a plan of action and/or taken action
      with respect to such Capacity Shortage, Q-Med shall convene a meeting
      between representatives of Q-Med and Medicis to consider the Capacity
      Shortage and to develop in mutual consultation an appropriate plan of
      action with respect thereto, such course of action to be reasonable. As
      soon as practicable after Q-Med and Medicis have developed a plan of
      action with respect to the Capacity Shortage, Q-Med shall take
      commercially reasonable steps to carry out such mutually determined plan
      of action. Q-Med shall be entitled to call a meeting at any time to
      discuss the amendment or revision of such mutually agreed plan of action.
      If Q-Med has not taken reasonably sufficient steps in accordance with such
      mutually determined plan of action, Medicis shall deliver a written notice
      thereof. Within ten (10) Business Days of its receipt of such notice,
      Q-Med shall provide reasonably sufficient evidence demonstrating its
      reasonable compliance with such plan. If Q-Med does not provide reasonably
      sufficient evidence within such period, then Q-Med shall promptly furnish
      to an alternate manufacturer identified by Medicis with capacity
      sufficient to fulfill that portion of the Certified Medicis Requirements
      that Q-Med is unable to fulfill or, if the Certified Medicis Requirements
      are no longer applicable, the then current forecast provided under Section
      2.2(b), all information and assistance necessary to qualify and operate
      such alternate manufacturer so proposed by Medicis, the selection of which
      shall be subject to Q-Med's prior consent, which consent shall not be
      unreasonably withheld or delayed. Notwithstanding the foregoing, promptly
      upon notice by Q-Med that such Capacity Shortage has been remedied such
      that Q-Med has capacity sufficient to meet that portion of the Certified
      Medicis Requirements that Q-Med was unable to fulfill or, if the Certified
      Medicis Requirements are no longer applicable, the then current forecast
      provided under Section 2.2(b), Medicis shall resume, as promptly as is
      commercially reasonable, the use of Q-Med as the exclusive supplier of
      Medicis and its Affiliates.

                                       13



            (c) In addition to the requirements set forth in clauses (a) and (b)
above, in the event of a Capacity Shortage, Q-Med shall allocate to Medicis
capacity for each stock keeping unit ("SKU") of each Licensed Product based on
the forty-eight (48) month forecast referenced in the first sentence of clause
(a) above based on a fraction, the numerator of which shall be the Certified
Medicis Requirements for such SKU of Licensed Product for the period in question
and the denominator of which shall be the total forecasted requirements for
Q-Med's manufacturing facilities for all SKUs of such Licensed Product for the
period in question.

            (d) If Medicis receives a shipment of Licensed Products that
contains less than 90% of the monthly requirement of Licensed Product to be
delivered pursuant to the applicable Firm Order and Q-Med does not deliver such
missing Licensed Product within one (1) month of Q-Med's receipt of a written
notice from Medicis of such shortage, then Medicis shall be entitled to deliver
written notice to Q-Med of a Capacity Shortage. Upon deliver of such notice of a
Capacity Shortage, Section 2.3(b)(i) shall govern.

            2.4 Acceptance of Firm Order. Q-Med shall accept all Firm Orders
submitted in accordance with and on the terms set forth in this Agreement. No
terms and conditions contained in any Firm Order, acknowledgment, invoice, bill
of lading, acceptance or other preprinted form issued by either Party shall be
effective to the extent they are inconsistent with or modify the terms and
conditions contained herein.

            2.5 Delivery. All Licensed Products sold pursuant to this Agreement
shall be delivered to not more than ten (10) distribution centers in the
Territory by the means designated by Medicis and shall be delivered FCA Q-Med's
place of manufacture or such other manufacturing facility as permitted under
this Agreement. For the avoidance of doubt, Q-Med shall be responsible for
coordinating the transportation with the carriers designated by Medicis for the
delivery of the Licensed Products and for providing all export and import
documentation with respect to such Licensed Products.

                                  ARTICLE III

                          SUPPLY AND SERVICES CRITERIA

            3.1 Certain Q-Med Obligations. All Licensed Products supplied
hereunder shall (i) be in finished form for Commercial Distribution or (ii) be
in an appropriate form for Investigational Distribution, and with respect to
each of sub-clauses (i) and (ii), shall be Manufactured by Q-Med in conformity
with the terms and conditions of this Agreement, the Specifications and the
applicable Regulatory Approval.

            3.2 Shelf Life. (a) Unless otherwise agreed by the Parties in
writing and except as set forth in clause (b) below, Q-Med shall deliver to
Medicis Ordered Products with a remaining shelf life of not less than * * * from
the date of delivery to Medicis for Licensed Products having a Regulatory
Approval for shelf life (a "REGULATORY SHELF LIFE") equal to * * *; provided,
however, that in the event a Regulatory Shelf Life of any Licensed Product is
obtained which is greater than * * *, Q-Med shall deliver to Medicis Ordered
Products with a remaining shelf life not less than * * *. For example, if a
Licensed Product has a Regulatory Shelf Life of

                                       14



* * *, then Q-Med shall deliver Ordered Products with a remaining shelf life of
not less than * * *.

            (b) Unless otherwise agreed in writing by the Parties, for any
Licensed Product with a Regulatory Shelf Life that is less than * * *, Q-Med
shall deliver to Medicis Ordered Products with a minimum remaining shelf life
equal to the applicable * * *.

                                   ARTICLE IV

                                  CONSIDERATION

            4.1 * * *. (a) * * *

            (b) * * *

            (c) The Parties agree that the SubQ Unit Price and each Other
Licensed Product Price for purposes of investigational supplies thereof during
the Term shall be the Direct Costs therefor.

            4.2 Procedures for the Determination of A New SubQ Unit Price or New
Other Licensed Product Price. (a) * * * Fifteen (15) days following the date of
receipt of the Proposed Price Change Notice, the Party delivering the Proposed
Price Change Notice shall permit an independent certified public accounting firm
of nationally recognized standing, selected by the Party receiving the Proposed
Price Change Notice and reasonably acceptable to the other Party, at the expense
of the Party receiving the Proposed Price Change Notice, to have access during
normal business hours to such of the personnel and of the books and records of
Q-Med or Medicis, as the case may be, as may be reasonably necessary to verify
the accuracy of the information described in the Proposed Price Change Notice
and the compliance of the Proposed Price Change Notice to the requirements of
this Agreement including the definition of Manufacturing Direct Cost and the
other defined terms included therein. For the avoidance of doubt the accounting
firm shall have at least five (5) Business Days of such access. The accounting
firm shall disclose to Medicis or Q-Med, as the case may be, only whether the
information described in the Proposed Price Change Notice is accurate and the
specific details concerning discrepancies, if any. Each Party shall treat all
financial information subject to review under this Section 4.2 as Confidential
Supplier Information or Confidential Medicis Information, as the case may be,
and shall cause its accounting firm to retain all such financial information in
confidence. Thereafter, the Parties agree to negotiate a new SubQ Unit Price or
new Other Licensed Product Price, as the case may be, in accordance with Section
4.1 hereof, in good faith, such negotiations to commence within thirty (30) days
after the receipt of the Proposed Price Change Notice. If the Parties reach
agreement with respect to the applicable pricing within sixty (60) days after
receipt of the Proposed Price Change Notice, based on such agreement Medicis
shall receive a credit from or owe additional amounts to Q-Med retroactive to
the date of receipt of the Proposed Price Change Notice pursuant to this Section
4.2(a). * * *

            (b) If the Parties are unable to reach agreement with respect to the
applicable pricing pursuant to Section 4.2(a) within sixty (60) days after
receipt of the Proposed Price Change Notice, an independent arbitrator mutually
appointed by the Parties and expert in

                                       15



marketing and sales in the Territory shall be retained to determine the new SubQ
Unit Price or new Other Licensed Product Price, as the case may be, which shall
be determined on the basis of the Parties' Proposed Price Change Notice and
proposals submitted pursuant to this Section 4.2(b). The Parties shall each
submit one (1) proposal to the arbitrator who shall be required to select one
(1) of the submitted proposals, and the arbitrator shall not be entitled to
compromise between such proposals. The arbitrator's determination shall be made
within thirty (30) days of submission and shall be conclusive and binding upon
the Parties. With its proposal, each Party shall provide copies of those
portions of its books and records, any work papers, supporting documentation and
any other documentation supporting its proposal pursuant to this Section 4.2, as
it may determine; provided that such information and documentation shall be
provided to the other Party, except that the information and documentation
provided to the accounting firm pursuant to Section 4.2(a) hereof shall be
provided to the arbitrator, but shall not be provided to the other Party. The
arbitrator shall maintain the confidentiality of any information or
documentation it may receive pursuant to this Section 4.2(b) and shall not
disclose to the other Party the information and documentation provided to the
accounting firm pursuant to Section 4.2(a) hereof. All fees and expenses of the
arbitrator shall be paid by the Party whose proposal is not selected. Based on
the proposal which is selected, Medicis shall either receive a credit from or
owe additional amounts to Q-Med retroactive to the date of receipt of the
Proposed Price Change Notice.

            (c) * * *

            4.3 Payment Obligations. Invoices for Licensed Products accepted by
Medicis in accordance with Section 5.1(a) shall be submitted to Medicis upon
delivery by Q-Med of the Ordered Products and such invoices shall be payable in
SEK in full within thirty (30) days from the acceptance of the applicable
delivery in accordance with Section 5.1(a). Payment shall be made by Medicis by
wire transfer to an account designated in writing by Q-Med at least three (3)
Business Days prior to the date such payment is due or as specified in such
invoice; provided that Q-Med shall provide Medicis with a credit against the
next invoice for Licensed Products to be delivered to Medicis to the extent the
prior invoice includes a charge for Ordered Products not actually delivered. Any
required payment hereunder not made by Medicis on or before the date specified
in this Section 4.3 shall bear interest from the date such payment is due until
the date it is actually received by Q-Med at an annual rate equal to the rate of
interest per annum publicly announced from time to time by JPMorgan Chase Bank
as its prime rate in effect on the date such payment is due at its principal
office in New York City plus one percent (1%). Notwithstanding the foregoing, if
at any time Medicis has failed to make a payment in full when due in accordance
with the first and second sentence of this Section 4.3 (a "DELINQUENT PAYMENT")
and the aggregate amount of such Delinquent Payments exceeds 80% of the value of
the most recently placed Firm Order, Q-Med shall automatically be entitled to
pre-payment for all subsequent deliveries until such Delinquent Payment has been
paid in full with interest from and including the date such Delinquent Payment
was due (such interest to be determined in accordance with the immediately
preceding sentence) to but excluding the date of payment.

                                       16



                                    ARTICLE V

                   ACCEPTANCE OF Licensed PRODUCTS BY MEDICIS

            5.1 Receipt of Licensed Product; Acceptance; Licensed Product
Returns.

            (a) At least ten (10) Business Days prior to each shipment of
Licensed Products, Q-Med shall deliver either electronically (if possible), by
facsimile, provided that the receipt of such facsimile is promptly confirmed by
telephone, e-mail, or by overnight courier to Medicis (if requested by Medicis,
the expense of any such courier to be borne by Medicis), the following documents
and information with respect to each batch in such shipment (the "ORDER
INFORMATION"): (i) Certificate of Analysis (such Certificate of Analysis to
include, among other things, batch numbers, expiry date information and a
statement of conformance), (ii) such copies of all Labeling that will physically
accompany the Licensed Products (e.g., Package Insert), as are agreed upon by
the Parties from time to time, (iii) quantity of syringes to be delivered in
such shipment and (iv) reports of significant deviations and investigations into
such significant deviations. If Medicis determines to reject any batch, Medicis
shall notify Q-Med of Medicis' rejection of a batch within five (5) Business
Days following Medicis' receipt of the Order Information; provided that the
Order Information shall be the sole basis for such rejection. If no notice is
provided by Medicis within such time period, then Medicis shall be deemed to
have accepted the shipment. Any notice of rejection by Medicis shall be
accompanied by a reasonably detailed statement of its reasons for rejection.

            (b) Medicis shall be entitled to reject all or any portion of a
shipment of Licensed Products within ten (10) Business Days of Medicis' receipt
in the Territory of such shipment of Licensed Products based solely on obvious
physical, packaging or Labeling damage or defect that is evident upon visual
inspection of the packaged Licensed Products as shipped by Q-Med (unless such
obvious physical, packaging or Labeling damage or defect was attributable to an
act or omission of Medicis or any of its Affiliates or the carrier once the
shipment was received by such carrier). Without in any way limiting Q-Med's
replacement obligation as set forth in clause (d) below, if no notice is
provided by Medicis within such time period, then Medicis shall be deemed to
have accepted the entire shipment. Medicis shall provide Q-Med with written
notice of any such rejection within the period set forth above together with a
reasonably detailed statement to support any such rejection. Q-Med shall notify
Medicis as promptly as reasonably possible, but in any event within ten (10)
Business Days after receipt of such written notice, whether it agrees with
Medicis' assertions with respect thereto. If Q-Med agrees with such assertions,
all such rejected Licensed Products shall be returned to Q-Med together with the
notice of rejection, a copy of the delivery receipt and the reasonably detailed
statement of Medicis' reasons for rejection and Q-Med shall replace such
Licensed Products in accordance with Section 5.1(c) and shall reimburse Medicis
for the cost of shipping (including insurance). If Q-Med does not agree with
Medicis' assertions and Medicis accepts Q-Med's determination, then Medicis
shall be responsible for the price of the Licensed Product (including the
shipping cost and insurance). If Q-Med does not agree with Medicis' assertions
and Medicis does not accept Q-Med's determination, then the Parties shall refer
the dispute to an arbitrator pursuant to and in accordance with the provisions
set forth in Section 12.6. If the final arbitral award is in favor of Q-Med,
then Medicis shall be responsible for the price of the Ordered Products that are
the subject of such award (including the shipping cost and insurance) and any

                                       17



interest that has accrued from the date that is thirty (30) days after the
delivery by Q-Med of the Ordered Products FCA Q-Med's place of manufacture or
such other manufacturing facility as permitted under this Agreement (such
interest to be determined in accordance with Section 4.3). If the final arbitral
award is in favor of Medicis, then all Ordered Products that are the subject of
such award shall be returned to Q-Med and Q-Med shall replace such Ordered
Products in accordance with Section 5.1(c) below and shall reimburse Medicis for
the cost of shipping (including insurance). All replacement shipments provided
pursuant to this Section 5.1(b) shall also be subject to the procedures
contained in Section 5.1(a).

            (c) As soon as practicable upon receipt of a notice of rejection,
unless otherwise specified by Medicis, Q-Med shall use commercially reasonable
efforts to provide replacement Licensed Products for those rejected by Medicis
in the proposed original shipment pursuant to Section 5.1(a) or in the original
shipment pursuant to Section 5.1(b). Q-Med shall bear all expenses for such
replacement Licensed Product to the extent Medicis previously paid for any
corresponding nonconforming Licensed Product. Replacement shipments shall also
be subject to the procedures contained in Sections 5.1(a) and (b).

            (d) If it comes to Q-Med's attention that any Licensed Product
previously accepted by Medicis in accordance with Section 5.1(a) is
non-conforming with its Specifications, Q-Med shall provide prompt notice
thereof to Medicis and Medicis shall, at Q-Med's expense, return any such
non-conforming inventory to Q-Med. Q-Med shall use commercially reasonable
efforts to provide within thirty (30) days replacement Licensed Products for
such non-conforming Licensed Products and shall bear all expenses (including for
shipping and insurance) for such replacement Licensed Products. Such replacement
shipments shall also be subject to the procedures contained in Sections 5.1(a)
and (b).

            (e) All Licensed Products provided in replacement shipments pursuant
to Sections 5.1(c) or (d) above shall have a minimum remaining shelf life equal
to the remaining shelf life of the Licensed Product replaced thereby; provided
that remaining shelf life of the replacement Licensed Product shall be measured
from the date of the receipt in the Territory by Medicis of such replacement
Licensed Product and shall be compared to the remaining shelf life of the
Licensed Product to be replaced, measured from the date of the notice of the
need to replace such Licensed Product, whether delivered by Medicis pursuant to
Section 5.1(b) above, or Q-Med pursuant to Section 5.1(d) above.

                                   ARTICLE VI

                   PRODUCT DEVELOPMENT AND REGULATORY MATTERS

            6.1 Compliance with Law.

            (a) General. Q-Med and Medicis shall each comply in all material
respects with all applicable Laws that pertain to the activities for which Q-Med
and Medicis are each responsible under this Agreement. The termination or
expiration of this Agreement shall not relieve either Party of its
responsibility to comply in all material respects with any regulatory
requirements associated with Licensed Products.

                                       18



            (b) Manufacture of Licensed Products. Q-Med and Medicis shall each
operate in substantial compliance with QSR requirements and the QSRC
requirements applicable to its activities with respect to Licensed Products.
Each Party shall bear its own costs and expenses related to such QSR/QSRC
compliance. Q-Med shall inform Medicis of any material issues raised by the FDA,
the TPD, a Governmental Authority in Sweden or a Notified Body, in each case in
connection with Manufacturing compliance for the Licensed Product, and shall
provide Medicis with copies of any correspondence (including, but not limited
to, e-mails) related thereto.

            (c) Supply of Licensed Products. Q-Med shall supply Licensed
Products for Commercial Distribution that conform to the conditions of the
applicable Regulatory Approvals. Q-Med shall maintain appropriate establishment
registration with the FDA and TPD when Manufacturing Licensed Products supplied
under this Agreement. Q-Med shall supply Licensed Products for Investigational
Distribution that conform to the conditions of the applicable Regulatory
Approval, including but not limited to, the quality controls described therein
(or appropriate quality controls for an IDE Application deemed approved pursuant
to the requirements set forth in 21 C.F.R. Part 812 or Part 3 of the Canadian
Medical Device Regulations, where appropriate).

            (d) Maintenance of Regulatory Approvals. After obtaining Regulatory
Approvals for the Licensed Products, Medicis shall use commercially reasonable
efforts to maintain such Regulatory Approvals in good standing in order to
ensure the continued lawful Commercial Distribution of the Licensed Products and
in the event that the Regulatory Approvals may be transferred to Q-Med or that
Q-Med may obtain duplicate PMA Approvals in good standing as contemplated in
Section 3.1 or 6.3 of the License Agreement.

            (e) Notification to Q-Med. Medicis shall inform Q-Med of any
material issues raised by the FDA, the TPD or Environmental Protection Agency in
the Territory, in each case in connection with non-financial regulatory
compliance and shall provide Q-Med with copies of any correspondence (including,
but not limited to, e-mails) related thereto.

            6.2 Steering Committee. The Parties recognize that the development
and marketing of the Licensed Products in the Territory and regulatory
compliance with respect thereto will require significant good faith, mutual
cooperation and joint decision-making. The Parties shall use the existing
Steering Committee to serve as the primary vehicle for such mutual cooperation
and joint decision-making. By way of clarification, the Steering Committee is
intended to have maximum flexibility to delegate its activities in order to
enable the Parties to cooperate, make decisions and implement them in a manner
that is timely, efficient and expeditious.

            6.3 Steering Committee Jurisdiction. Except as otherwise provided
for herein, all significant decisions with respect to the development of the
Licensed Products and Improvements thereof within the Territory shall be vested
in the Steering Committee as set forth below. The Steering Committee shall also
be responsible for supervising and coordinating cooperative regulatory
compliance activity; provided that, nothing in this Section 6.3 is intended to
relieve either Party of its obligation to ensure that its own activities comply
in all material

                                       19



respects with the FDCA and FDA's regulations thereunder and/or Canada's FDA
and/or regulations thereunder (e.g. QSR/QSRC requirements).

            (a) * * *(i) * * *

            (ii)  * * *

            (iii) * * *

            (iv)  * * *

            (v) At either Party's request, the Steering Committee may revisit
      any decision in light of experience, market conditions or other
      developments.

            (b) * * * (i) * * *

            (ii)  * * *

            (iii) * * *

            (c)   * * *

            (i)   * * *. * * *

            (ii)  * * *

            (iii) * * *. * * *

            (iv)  * * *. * * *

            (v) Corrections and Removals. (1) The Parties shall establish a
      coordinated tracking system and appropriate distribution records for all
      Licensed Products so as to permit successful tracking in the event of a
      correction or removal (i.e., field action); (2) if either Party becomes
      aware of any defect, problem or adverse condition in any Licensed Product,
      whether inside or outside the Territory, that Party shall promptly notify
      the other Party; (3) Medicis shall determine whether a correction or
      removal involving a Licensed Product in the Territory is warranted and
      shall supervise and coordinate any such action, appropriate record keeping
      and the reporting thereof to the FDA or the TPD, if required; and (4) to
      the extent a Party is responsible for the underlying cause of a correction
      or removal such Party shall bear the cost and expenses of the same
      (including out-of-pocket expenses incurred by the other Party in
      cooperating with such correction or removal).

            (vi)  * * *. * * *

            (vii) * * *

            6.4 Audits and Inspections. (a) Q-Med shall provide Medicis or
Medicis's representatives reasonable access upon reasonable prior notice to
inspect, review and audit the premises where the Licensed Products are being
tested, handled, stored, designed, distributed

                                       20



and/or Manufactured for the sole purpose of confirming that all Licensed
Products for the Territory tested, handled, stored, designed, distributed and/or
Manufactured at such facility are tested, handled, stored, designed, distributed
and/or Manufactured in accordance with the FDCA and FDA's regulations thereunder
and with Canada's FDA and/or regulations thereunder. To the extent that in
connection with such inspection any confidential Manufacturing information will
be inspected, reviewed or audited, a Third Party representative of Medicis bound
by the confidentiality obligations described in Section 11.2 hereof shall review
and inspect the applicable facility and records and to meet with Q-Med's
personnel solely for the purpose of confirming that Q-Med's Manufacturing and
record-keeping is compliant with the FDCA and FDA's regulations thereunder and
with Canada's FDA and/or regulations thereunder; provided that either Party has
the option to delete or redact information not relating to the Licensed
Products. Such inspections, reviews and audits shall occur upon not less than
thirty (30) days' prior written notice to Q-Med, shall only be conducted during
normal business hours and shall not unreasonably disrupt the normal operations
of Q-Med; provided that Q-Med shall be entitled to instruct Medicis to conduct
such inspection at an alternate date if Q-Med is currently undergoing an
inspection. Such inspections may be conducted only once every six (6) months,
except that Medicis may conduct follow-up inspections on less than thirty (30)
days' notice directed at significant or critical quality issues observed during
the initial inspection or brought to Medicis's attention through customer
complaints or FDA or TPD communications or enforcement actions or otherwise.

            (b) Medicis will cause such Third Party representatives to enter
into agreements with Q-Med with respect to the proprietary and confidential
nature of such information, which agreements shall, among other things, prohibit
the disclosure of such information to Medicis. Such representatives will be
bound by such obligations and will follow such security and facility access
procedures as are designated by Q-Med. Q-Med may require that at all times
Medicis representatives be accompanied by a Q-Med representative and that
Medicis representatives not enter areas of the facility used in the production
of the Licensed Products at times other than when the production of the Licensed
Products are occurring.

            (c) Medicis shall provide Q-Med or Q-Med's representatives
reasonable access upon reasonable prior notice to inspect, review and audit the
premises where the Licensed Products are being tested, handled, stored, or
distributed for the purpose of confirming that all Licensed Products tested,
handled, stored, or distributed at such facility are tested, handled, stored,
and/or distributed in accordance with the FDCA and FDA's regulations thereunder
and with Canada's FDA and/or regulations thereunder. In connection with such
inspection, review or audit, Medicis shall allow Q-Med or its representatives to
review and inspect the applicable facility and records and to meet with
Medicis's personnel solely for the purpose of confirming that Medicis's
procedures and record-keeping are compliant with the FDCA and FDA's regulations
thereunder and with Canada's FDA and/or regulations thereunder. Such
inspections, reviews and audits shall occur upon not less than thirty (30) days'
prior written notice to Medicis, shall only be conducted during normal business
hours and shall not unreasonably disrupt the normal operations of Medicis. Such
inspections may be conducted only once every six (6) months, except that Q-Med
may conduct follow-up inspections directed at significant or critical quality
issues observed during the initial inspection or brought to Q-Med's attention
through customer complaints or FDA or TPD communications or enforcement actions
or otherwise.

                                       21



            (d) Each Party shall promptly notify the other Party when an FDA or
a TPD inspection of its facilities (or an inspection by Third Parties in
accordance with the FDA regulations or Canada's FDA or regulations, as
applicable, where such inspection pertains to the Licensed Products, is expected
or underway, and will promptly provide such other Party with copies of all
regulatory correspondence, Establishment Inspection Reports, Form 483s, and
Warning Letters issued by FDA or the TPD (or the Third Party inspector) in
connection with any such inspection and pertaining to Licensed Products.

            (e) Each Party shall bear its own costs and expenses in connection
with audits and FDA or TPD inspections of its facilities.

                                   ARTICLE VII

                REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS

            7.1 Q-Med Representations. Q-Med hereby represents and warrants to
Medicis that:

            (a) Corporate Organization and Authority. Q-Med is a company duly
organized, validly existing and in good standing under the laws of the Kingdom
of Sweden and has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by Q-Med of this Agreement, the performance by Q-Med of its obligations
hereunder, and the consummation by Q-Med of the transactions contemplated hereby
have been duly authorized by all requisite corporate action. This Agreement has
been duly executed and delivered by Q-Med and, assuming the due authorization,
execution and delivery thereof by Medicis, constitutes a legal, valid and
binding obligation of Q-Med, enforceable against Q-Med in accordance with its
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium, or other Laws of general
application relating to or affecting enforcement of creditors' rights and Laws
concerning equitable remedies.

            (b) No Conflict. As of the date of this Agreement, the execution,
delivery and performance by Q-Med of this Agreement and the performance by Q-Med
of the transactions contemplated hereby does not, with or without the giving of
notice or the passage of time or both, violate, conflict with or cause a breach
or termination of or constitute a default under (i) the provisions of any Law
applicable to Q-Med or its properties or assets; (ii) the provisions of the
constituent organizational documents or other governing instruments of Q-Med;
(iii) any note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which Q-Med is a party or by which it is bound or
subject; or (iv) any judgment, decree, order or award of any court or
Governmental Authority applicable to Q-Med or its properties or assets.

            (c) Q-Med possesses and has continuously maintained all permits,
authorizations and licenses issued by Governmental Authorities (other than the
FDA and the TPD) necessary for the conduct of Q-Med's business as currently
conducted, except where the failure to possess or maintain such permits,
authorizations and licenses would not, individually

                                       22



or in the aggregate, have a material adverse effect on the ability of Q-Med to
perform its obligations hereunder.

            7.2 Medicis Representations. Medicis hereby represents and warrants
to Q-Med that it is a corporation duly organized, validly existing and in good
standing under the laws of jurisdiction of its organization and has all
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery by Medicis of this
Agreement, the performance by Medicis of its obligations hereunder, and the
consummation by Medicis of the transactions contemplated hereby have been duly
authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by Medicis and, assuming the due authorization, execution
and delivery thereof by Q-Med, constitutes a legal, valid and binding obligation
of Medicis, enforceable against Medicis in accordance with its terms, except to
the extent that such enforcement may be subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other Laws of general application
relating to or affecting enforcement of creditors' rights and Laws concerning
equitable remedies.

            7.3 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY
PROVIDED HEREIN OR IN THE OTHER TRANSACTION AGREEMENTS, (I) Q-MED MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER AT LAW OR IN EQUITY,
RELATED TO THE LICENSED PRODUCTS, INCLUDING, WITHOUT LIMITATION, ANY
REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR ANY OTHER MATTER, (II) Q-MED
MAKES NO, AND HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE REGARDING THE LICENSED PRODUCTS AND (III) THE LICENSED PRODUCTS ARE
CONVEYED ON AN "AS IS" "WHERE IS" BASIS AND MEDICIS SHALL RELY UPON ITS OWN
EXAMINATION THEREOF. Without limiting the foregoing, Medicis acknowledges that
it has not and is not relying upon any implied warranty of merchantability or
fitness for a particular purpose, or upon any representation or warranty
whatsoever as to the prospects (financial, regulatory or otherwise) or the
reliability, suitability, ability to produce a particular result, or the
likelihood of commercial success of the Licensed Products after the date of this
Agreement, except that Medicis may rely on the representations and warranties
contained herein and in the other Transaction Agreements. This provision shall
not affect the rights or obligations of either Party hereto with respect to any
other Transaction Agreement.

            7.4 Non-Compete. (a) Except as otherwise provided in this Section
7.4(a), commencing on the date hereof and ending upon the termination of this
Agreement pursuant to Section 8.2(d) or 8.2(e), Q-Med shall not, and shall cause
its subsidiaries and any of its Affiliates who have agreed to be bound by any
provision of this Agreement pursuant to Section 12.21 not to, directly or
indirectly, engage in business in direct competition in the Territory with the
Licensed Products for use in the Field; provided that any non-approved use (or
other use not in accordance with the Labeling) by any Third Party shall not be
deemed to be a violation of Q-Med's duty not to compete. Notwithstanding the
immediately preceding sentence, Q-Med, its subsidiaries and Affiliates may,
directly or indirectly, engage in business in direct competition in the
Territory and in the Field with only such Licensed Products as to which the
exclusive license

                                       23



rights have been terminated pursuant to and in accordance with Section 3.1 of
the License Agreement from and after the date of such termination.

            (b) Commencing on the Closing Date and ending upon the expiration of
the License Agreement, Medicis shall not, and shall cause its subsidiaries and
any of its Affiliates who have agreed to be bound by any provision of this
Agreement pursuant to Section 12.21 not to, directly or indirectly * * *.
Notwithstanding the foregoing, in the event of a Third Party Transfer effected
in accordance with the terms and conditions of Section 12.2, the business of
such Third Party transferee as conducted as of the date of such Third Party
Transfer shall not be deemed to constitute a violation of this Section 7.4(b).

            7.5 Licensed Products. Q-Med shall convey good title to the Licensed
Products upon delivery of the Licensed Products to Medicis in accordance with
this Agreement and such Licensed Products shall be free and clear of any
security interest, claim, lien or encumbrance.

                                  ARTICLE VIII

                              TERM AND TERMINATION

            8.1 Term. Except as provided in Section 8.4, and unless earlier
terminated in accordance with Sections 8.2 or Section 8.3, this Agreement shall
have a term ("TERM") beginning on the date hereof and ending on the later to
occur of (a) the ten (10) year anniversary of the date of Launch in the United
States of the first Licensed Product and (b) expiration, abandonment or final
adjudication of invalidity of the last Licensed Patent in the Licensed Rights;
provided, however, that Medicis may, upon at least twelve (12) months' written
notice prior to the expiration of the Term to Q-Med, extend the Term for an
additional four (4) year period following the otherwise applicable expiration
date.

            8.2 Termination by Q-Med. This Agreement may be terminated by Q-Med,
at its option:

            (a) if Medicis breaches its obligations to pay any material amounts
owing to Q-Med under this Agreement, including, without limitation, its
obligation to make any Delinquent Payments with interest as provided in Section
4.3, and such breach continues for ten (10) Business Days after written notice
of such breach was provided to Medicis by Q-Med;

            (b) if Medicis commits a material breach of any of its other
obligations under this Agreement, and fails to (i) cure such breach within
thirty (30) days of receipt of written notice of such breach; or (ii) commence
cure of such breach and make substantial progress towards cure within thirty
(30) days of receipt of such notice, and cure such breach within thirty (30)
additional days thereafter, such thirty (30) day period to apply only to the
extent such breach in either of (i) or (ii) is curable;

            (c) upon the insolvency of Medicis; an assignment by Medicis for the
benefit of its creditors; the commencement against Medicis of a voluntary or
involuntary proceeding under any bankruptcy, insolvency, liquidation or similar
Law, upon the appointment with respect

                                       24



to Medicis of a successor, trustee, custodian, sequestrator or similar official
or upon the dissolution of Medicis;

            (d) if the License Agreement is terminated pursuant to Section
6.2(a) thereof (the termination right set forth in this clause (d), the "SPECIAL
TERMINATION PROVISION"); provided, that this Special Termination Provision is
the sole remedy under this Agreement in the event of such a termination; or

            (e) if there shall have been a Transfer by Medicis pursuant to a
Change in Control (other than a Volitional Change in Control) in violation of
Section 12.2.

            8.3 Termination by Medicis. This Agreement may be terminated by
Medicis, at its option:

            (a) if Q-Med commits a material breach of its obligations under this
Agreement, and fails to (i) cure such breach within thirty (30) days of receipt
of written notice of such breach; or (ii) commence cure of such breach and make
substantial progress towards cure within thirty (30) days of receipt of such
notice, and cure such breach within thirty (30) additional days thereafter, such
thirty (30) day period to apply only to the extent such breach in either of (i)
or (ii) is curable;

            (b) upon the insolvency of Q-Med; an assignment by Q-Med for the
benefit of its creditors; the commencement against the Q-Med of a voluntary or
involuntary proceeding under any bankruptcy, insolvency, liquidation or similar
Law, upon the appointment with respect to Q-Med of a successor, trustee,
custodian, sequestrator or similar official or upon the dissolution of Q-Med; or

            (c) if there shall have been a Transfer by Q-Med pursuant to a
Change in Control (other than a Volitional Change in Control) in violation of
Section 12.2.

            8.4 Effect of Termination or Expiration. (a) Upon termination of
this Agreement pursuant to Section 8.2(b) or (c) or 8.3(a), (b) or (c), Q-Med
will furnish to Medicis a complete inventory of all work-in-progress for the
Manufacture of the Licensed Product and an inventory of all finished Licensed
Product. Unless otherwise agreed to between the Parties, all stock on hand as of
the termination of this Agreement will be dealt with promptly as follows:

            (i) Licensed Products Manufactured pursuant to Firm Orders accepted
      by Q-Med will be delivered by Q-Med to Medicis, whereupon Medicis will pay
      Q-Med therefor in accordance with the terms of this Agreement; and

            (ii) Work-in-progress commenced by Q-Med against accepted Firm
      Orders accepted by Q-Med or work-in-progress or finished Licensed Product
      commenced or finished in reliance on the quantity of Licensed Product
      forecasted for the current calendar month and the immediately succeeding
      three (3) calendar months in the forecast delivered to Q-Med on or before
      the first day of the current calendar month will be completed by Q-Med and
      delivered to Medicis, whereupon Medicis will pay Q-Med therefor in
      accordance with the terms of this Agreement.

                                       25



            (b) Upon termination of this Agreement by Q-Med pursuant to Section
8.2(a) or (d), Medicis shall immediately return to Q-Med all finished Licensed
Product then held by Medicis. Medicis shall bear all expenses for transportation
of such Licensed Products and Medicis shall pay to Q-Med an amount equal to
Q-Med's cost for all Licensed Products Manufactured pursuant to Firm Orders from
Medicis, work-in-progress commenced by Q-Med against accepted Firm Orders from
Medicis and work-in-progress or finished Licensed Product commenced or finished
in reliance on the quantity of Licensed Product forecasted for the current
calendar month and the immediately succeeding three (3) calendar months in the
forecast delivered to Q-Med on or before the first day of the current calendar
month.

            (c) Upon termination of this Agreement pursuant to Section 8.2 or
8.3, each of Medicis and Q-Med will immediately at its expense return to the
other Party all proprietary and confidential documents, work papers and other
material of the other Party and its Affiliates relating to the transactions
contemplated hereby obtained from that other Party or its Affiliates pursuant to
this Agreement, whether so obtained before or after the execution hereof, and
all copies, extracts or other reproductions, in whole or in part thereof which
may have been made by or on behalf of Medicis or Q-Med or their respective
representatives, as the case may be, and shall deliver to the other Party or
destroy all notes or memorandum or other stored information of any kind
containing, reflecting or derived from such documents, work papers and other
material, except that one archival copy may be retained by each Party's outside
counsel or in-house counsel. The return or destruction, as applicable, of such
documents, work papers and other material (and all copies, extracts or other
reproductions in whole or in part thereof) pursuant to this Section 8.4(c) shall
be certified in writing by an authorized officer supervising the same. This
Section 8.4(c) shall not apply to information obtained pursuant to any other
Transaction Agreement. Notwithstanding such return or destruction, each Party
will continue to be bound by its obligations of confidentiality under Article XI
herein. Each Party shall not use or disclose to any Person any information
derived from such confidential and proprietary documents, work papers and other
material of the other Party and shall be responsible for preventing the
disclosure of any such information as provided in Article XI.

            (d) (i) Upon termination of this Agreement by reason of Section 8.2
      or 8.3, all obligations of the Parties hereunder shall terminate, except
      for Article XI [Confidentiality], Sections 7.4 [Non-Compete], 8.4 [Effect
      of Termination or Expiration], 12.6 [Arbitration], 12.12 [Expenses] and
      12.20 [Publicity], and the continuing regulatory compliance obligations of
      the Parties set forth in Section 6.1(a) and the indemnity obligations of
      the Parties set forth in Article IX; provided, however, that termination
      pursuant to Section 8.2 or 8.3 will not relieve a defaulting or breaching
      Party from any liability to the other Party hereto, including the
      obligation to pay invoiced amounts when due; provided, further, that upon
      termination of this Agreement by reason of Section 8.2(d) or (e), all
      obligations pursuant to Section 7.4(a) [Non-Compete] shall immediately
      terminate and six (6) months after the termination of this Agreement, all
      obligations pursuant to Section 7.4(b) [Non-Compete] shall terminate.

            (ii) Upon termination of this Agreement by reason of Section 8.1,
      all obligations of the Parties hereunder shall terminate, except for
      Article XI [Confidentiality], Sections 7.4(a) [Non-Compete], 8.4 [Effect
      of Termination or Expiration], 12.6 [Arbitration], 12.12 [Expenses] and
      12.20 [Publicity], and the

                                       26



      continuing regulatory compliance obligations of the Parties set forth in
      Section 6.1(a) and the indemnity obligations of the Parties set forth in
      Article IX; provided, however, that termination pursuant to Section 8.1
      will not relieve a defaulting or breaching Party from any liability to the
      other Party hereto, including the obligation to pay invoiced amounts when
      due.

                                   ARTICLE IX

                                 INDEMNIFICATION

            9.1 Indemnification by Q-Med. (a) Q-Med shall indemnify, defend and
hold harmless Medicis, its Affiliates and their respective directors, officers,
stockholders, employees, agents and representatives (the "MEDICIS INDEMNIFIED
PARTIES"), from and against any Losses that they may incur resulting from any
Action to the extent arising out of or due to (i) any breach of any
representation, warranty, covenant or other agreement under this Agreement by
Q-Med or any of its Affiliates to the extent such Affiliate is bound hereunder
(other than the breach of Sections 3.1, 3.2 and 6.1(b) and (c) for which the
sole remedy shall be the remedy set forth in Section 5.1(c)) (provided, that for
purposes of this Section 9.1(a), Section 7.1(c) shall be read without regard to
qualification with respect to material adverse effect), (ii) any Product Claim
by a patient to the extent such injury or harm was solely and directly caused by
the use of any Licensed Product; provided that such Licensed Product shall have
at all times been handled, stored, used and otherwise managed in accordance with
the Labeling or clinical protocols, as applicable; and (iii) the marketing,
import, sale, offer for sale, use, storage or possession of Licensed Products
outside of the Territory by Q-Med or its Affiliates, or their respective
licensees, successors and assigns or their respective customers or end-users.

            (b) In addition to the remedies set forth in clause (a) hereof, in
the event of a final arbitral award pursuant to Section 12.6 that a material
breach (other than a willful material breach which is addressed by Section
10.1(b)) by Q-Med of its obligations to supply the Licensed Products to Medicis
in accordance with Article II of this Agreement for a six (6) month period has
occurred, Q-Med shall obtain and qualify an alternate manufacturer able to
fulfill Medicis' requirements as forecasted by Medicis in accordance with
Sections 2.2(b) and (d). If Q-Med has not taken reasonably sufficient action to
qualify such an alternate manufacturer within one (1) month of such final
arbitral award, then Q-Med shall promptly furnish to an alternate manufacturer
as identified by Medicis all information and assistance necessary to qualify and
operate such alternate manufacturer. Notwithstanding the foregoing, promptly
upon notice by Q-Med that such material breach has been cured, Medicis shall use
its commercially reasonable efforts to resume the use of Q-Med as exclusive
supplier.

            (c) Notwithstanding anything to the contrary contained herein, (i)
Losses shall not include loss of profits or consequential damages unless a final
arbitral award is issued pursuant to Section 12.6 determining that the breach by
Q-Med giving rise to such Losses was an intentional and willful breach of a
material obligation under this Agreement and (ii) after the consummation of a
Transfer to a Third Party, with respect to any final arbitral award pursuant to
Section 12.6 that determines that such Third Party has intentionally and
willfully breached any of its material obligations under this Agreement, Losses
arising out of or due to such intentional and willful breach of a material
obligation under this Agreement shall be deemed to include loss of

                                       27



profits, consequential damages and such other damages, fees, penalties,
deficiencies, losses and expenses as the arbitral tribunal making such award may
determine.

            (d) Q-Med and its Affiliates shall have no liability under this
Section 9.1 to the extent that a Medicis Indemnified Party has been paid
pursuant to the License Agreement for an indemnifiable claim involving the
identical substantive issue.

            9.2 Indemnification by Medicis. (a) Medicis shall indemnify, defend
and hold harmless Q-Med, its Affiliates and their respective directors,
officers, stockholders, employees, agents and representatives (the "Q-MED
INDEMNIFIED PARTIES"), from and against any Losses that they may incur resulting
from any Action to the extent arising out of or due to (i) any breach of any
representation, warranty, covenant or other agreement under this Agreement by
Medicis or any of its Affiliates to the extent such Affiliate is bound under
this Agreement or (ii) with respect to obtaining Regulatory Approvals for the
first of the Licensed Products in accordance with Section 6.3(b)(iii) hereof,
clinical trials conducted by or on behalf of Medicis or other services performed
by or on behalf of Q-Med in accordance with Section 6.3(b)(iii) hereof, except
(x) as otherwise provided in Section 9.1(a) hereof, and (y) to the extent
arising from Q-Med's own negligence or willful misconduct.

            (b) Notwithstanding anything to the contrary contained herein, (i)
Losses shall not include loss of profits or consequential damages unless a final
arbitral award is issued pursuant to Section 12.6 determining that the breach by
Medicis giving rise to such Losses was an intentional and willful breach of a
material obligation under this Agreement and (ii) after the consummation of a
Transfer to a Third Party in accordance with Section 12.2, with respect to any
final arbitral award pursuant to Section 12.6 that determines that such Third
Party has intentionally and willfully breached any of its material obligations
under this Agreement, Losses arising out of or due to such intentional and
willful breach of a material obligation under this Agreement shall be deemed to
include loss of profits, consequential damages and such other damages, fees,
penalties, deficiencies, losses and expenses as the arbitral tribunal making
such award may determine.

            (c) Medicis and its Affiliates shall have no liability under this
Section 9.2 to the extent that a Q-Med Indemnified Party has been paid pursuant
to the License Agreement for an indemnifiable claim involving the identical
substantive issue.

            9.3 Notice of Claims. If there occurs an event which any of the
Persons to be indemnified under this Article IX asserts is indemnifiable
pursuant to Section 9.1 or 9.2 (the "INDEMNIFIED PARTY"), the Party or Parties
seeking indemnification shall so notify the Party from whom indemnification is
sought (the "INDEMNIFYING PARTY") promptly in writing describing such Loss, the
amount or estimated amount thereof, if known or reasonably capable of
estimation, and the method of computation of such Loss, all with reasonable
particularity and containing a reference to the provisions of this Agreement or
any other agreement or instrument delivered pursuant hereto in respect of which
such Loss shall have occurred. If any Action is instituted by or against a Third
Party with respect to which the Indemnified Party intends to claim any liability
as a Loss under this Article IX, the Indemnified Party shall promptly notify the
Indemnifying Party of such Action and tender to the Indemnifying Party the
defense of such Action. A failure by the Indemnified Party to give notice and to
tender the defense of the Action

                                       28



in a timely manner pursuant to this Section 9.3 shall not limit the obligation
of the Indemnifying Party under this Article IX, except to the extent such
Indemnifying Party is materially prejudiced thereby.

            9.4 Control of Claims. The Indemnifying Party under this Article IX
shall have the right, but not the obligation, to conduct and control, through
counsel of its choosing, any Action for which indemnification is sought pursuant
to this Article IX with respect to a Third Party claim (a "THIRD PARTY
INDEMNIFIABLE CLAIM"), and if the Indemnifying Party elects to assume the
defense thereof, the Indemnifying Party shall not be liable to the Party or
Parties seeking indemnification hereunder for any legal expenses of other
counsel or any other expenses subsequently incurred by such Party or Parties in
connection with the defense thereof; provided that, if the Indemnified Party has
been advised in writing by outside counsel that there is a potential conflict
between the interests of the Indemnifying Party and the Indemnified Party, the
reasonable out-of-pocket fees and expenses of one separate counsel for the
Indemnified Party shall be paid by the Indemnifying Party and such separate
counsel shall be selected by the Indemnified Party in its sole discretion.
Notwithstanding the foregoing, the reasonable legal fees and expenses of counsel
selected by the Indemnified Party in its sole discretion in connection with a
Third Party Indemnifiable Claim as to which the Indemnifying Party does not
assume the defense or is not entitled to assume the defense shall be considered
Losses for purposes of this Article IX. The Indemnifying Party may compromise or
settle such Action; provided that the Indemnifying Party shall give the
Indemnified Party advance notice of any proposed compromise or settlement;
provided, further, that the Indemnifying Party shall not compromise or settle
any Third Party Indemnifiable Claim without the prior written approval of the
Indemnified Party, such approval not to be unreasonably withheld or delayed,
unless all relief provided is paid or satisfied in full by the Indemnifying
Party. No Indemnified Party may compromise or settle any Third Party
Indemnifiable Claim without the prior written consent of the Indemnifying Party.
If the Indemnifying Party elects not to control or conduct the defense or
prosecution of a Third Party Indemnifiable Claim, the Indemnifying Party
nevertheless shall have the right to participate in the defense or prosecution
of any Third Party Indemnifiable Claim and, at its own expense, to employ
counsel of its own choosing for such purpose. The Parties hereto shall cooperate
with each other and their respective counsel in the defense, settlement,
negotiation or prosecution of a Third Party Indemnifiable Claim.

            9.5 Indemnification Calculations. The amount of any Losses for which
indemnification is provided under this Article IX shall be computed net of any
insurance proceeds received by the Indemnified Party in connection with such
Losses. If an Indemnified Party receives insurance proceeds in connection with
Losses for which it has received indemnification, such Party shall refund to the
Indemnifying Party the amount of such insurance proceeds when received, up to
the amount of indemnification received. An Indemnified Party shall use its
commercially reasonable efforts to pursue insurance claims with respect to any
Losses.

            9.6 Exclusive Remedies. Except as otherwise set forth herein and for
any available equitable remedies, the remedies set forth in this Article IX will
be the exclusive remedies available to the Parties hereto with respect to any
Losses or any other damages, costs or expenses of any kind or nature or any
other claim or remedy directly or indirectly resulting from, arising out of or
relating to any of this Agreement (including alleged breaches of representation,

                                       29



warranty, covenant or any other term or provision or for any alleged
misrepresentation), and the transactions contemplated hereby; provided that
nothing herein shall limit in any way any Party's remedies in respect of fraud
by the other Party in connection herewith or in connection with the transactions
contemplated hereby. Notwithstanding anything to the contrary in this Agreement,
the Parties hereby agree that any and all Actions resulting from, arising out of
or based upon the provisions of this Agreement may be asserted or brought solely
under and in accordance with the terms of this Agreement.

            9.7 Survival. The representations and warranties of the Parties
contained in this Agreement shall survive until the eighteen (18) month
anniversary of termination or expiration of this Agreement pursuant to Section
8.1, 8.2 or 8.3 and the covenants to be performed hereunder shall survive until
the date that is six (6) months after the end of the applicable period for
performance thereof.

                                    ARTICLE X

                                CERTAIN COVENANTS

            10.1 Manufacturing Option.

            (a) Q-Med hereby grants to Medicis an option (the "OPTION") to
obtain a license commencing on the date that is * * * from the expiration date
of the Term without giving effect to any extensions thereof, to make and have
made, develop and improve by itself or on its behalf in the Territory, the
Licensed Products. Such license (the "MANUFACTURING LICENSE") shall be granted
by Q-Med within * * * of the date of Q-Med's receipt from Medicis of an exercise
notice (the "EXERCISE NOTICE"), and shall include the terms set forth on
Schedule D hereto and any other terms and conditions negotiated in good faith
and agreed to by the Parties during such * * * period. The Parties hereby agree
that this Section 10.1 imposes an enforceable obligation to grant the
Manufacturing License based on the terms set forth in Schedule D and to
negotiate in good faith such additional terms as may be agreed to by the
Parties. Medicis shall deliver the Exercise Notice no less than * * * prior to
the date on which Medicis intends to commence to make or to have made, develop
and improve the Licensed Products pursuant to the Option; provided that Medicis
shall not deliver the Exercise Notice earlier than the later to occur of * * *.
Medicis may deliver the Exercise Notice at any time from and after the date
referred to in the immediately preceding sentence and before the expiration of
the Term without giving effect to any extensions thereof. Medicis and Q-Med will
fully cooperate in obtaining all required Regulatory Approvals in connection
with Medicis' lawful manufacture of the Licensed Products for Commercial
Distribution and Investigational Distribution; provided that Medicis will pay
the cost and expenses of obtaining such approvals.

            (b) Notwithstanding the foregoing, Medicis shall have * * * the
Exercise Notice and Q-Med shall grant the Manufacturing License on the terms set
forth in Schedule D within ninety (90) days of receipt of such notice in the
event of (i) a final arbitral award pursuant to Section 12.6 determining that
Q-Med has intentionally and willfully breached a material obligation related to
the Manufacture or supply of Licensed Products under this Agreement; provided
that Medicis shall bear the burden of proof with respect to the determination
that any such breach was intentional, willful and material or (ii) upon Q-Med
entering into a liquidation

                                       30



process due to bankruptcy. In the event that Medicis has the right to
immediately deliver the Exercise Notice in accordance with clause (i) of this
Section 10.1(b), Medicis shall also concurrently have the right to deliver a
notice to Q-Med and/or its Affiliates which shall immediately terminate any and
all licenses granted by Medicis to Q-Med and/or its Affiliates pursuant to the
terms hereof or of the License Agreement.

            10.2 Back-up Facility. The Parties acknowledge and agree that
Q-Med's efforts to date to construct a back-up facility to Manufacture Licensed
Products (the "NEW FACILITY") and to obtain the necessary Regulatory Approvals
from the FDA and the TPD for such New Facility are satisfactory for purposes of
this Agreement as of the date hereof. * * *

            10.3 Third Party Contractors. Q-Med shall have the right in
connection with its obligations hereunder to contract with its Affiliates and/or
one or more Third Parties for the Manufacture and supply of the Licensed
Products in finished form to Medicis; provided, however, that: (i) Q-Med shall
cause such contractor to comply fully with the terms and conditions set forth in
this Agreement with respect to the Manufacture and supply of such Licensed
Products; (ii) Q-Med shall remain fully responsible for the Manufacture and
supply of such Licensed Products to Medicis; and (iii) the use of such
contractor shall not increase the cost of the Licensed Products to Medicis in
excess of a cost increase otherwise permitted by this Agreement. Q-Med shall
bear the costs and expense of any required Regulatory Approvals due to the
contracting with any Affiliate and/or Third Party for the Manufacture and supply
of the Licensed Products. Prior to supplying Medicis with Licensed Products
Manufactured by a non-Affiliate Third Party, Q-Med must submit the contractor's
name to Medicis for reasonable approval, such approval not to be unreasonably
withheld or delayed. If Medicis reasonably objects to Q-Med's use of any
non-Affiliate Third Party for the Manufacture and supply of Licensed Products,
Medicis shall have no obligation to accept any Licensed Products Manufactured by
such non-Affiliated Third Party. The foregoing shall not affect, apply to,
prevent or otherwise limit Q-Med's right to select and employ Third Party
suppliers and subcontractors to provide ingredients, components, parts, and
processing activities to aid Q-Med's manufacturing process.

                                   ARTICLE XI

                                 CONFIDENTIALITY

            11.1 Q-Med's Obligation. Except for the proper exercise of any
rights granted or reserved under other provisions of this Agreement, Q-Med
agrees that it shall keep confidential, and shall cause its officers, employees,
directors and counsel to keep confidential and shall not publish or otherwise
divulge to a Third Party, other than any agents or representatives of Q-Med
(provided that such agents and representatives are informed of the confidential
and proprietary nature of such information and agree in writing to the
conditions set forth in this Article XI; and provided, further, that Q-Med shall
be responsible for any breach of this Section 11.1 by such representatives and
agents), or use for itself, unless Medicis shall have given its prior written
approval, any information (and all tangible and intangible embodiments thereof)
of a confidential and proprietary nature relating to Medicis' and its
Affiliates' business

                                       31



or operations, including non-public information concerning Medicis' products,
processes, customers and suppliers and the products and processes of Medicis'
customers and suppliers furnished to Q-Med by Medicis in connection with this
Agreement (any of the foregoing, "CONFIDENTIAL MEDICIS INFORMATION"); provided,
however, that Q-Med shall have the right to disclose any Confidential Medicis
Information provided hereunder if such disclosure is necessary (a) in connection
with the securing of any Regulatory Approvals or other governmental approval
necessary for the performance by Q-Med of any of its obligations hereunder or
under any other agreement with Medicis, (b) for the purpose of complying with
applicable Laws and governmental regulations or (c) by Law or legal process.
Q-Med shall promptly notify Medicis of Q-Med's intent to make any disclosure of
Confidential Medicis Information prior to making such disclosure so as to allow
Medicis adequate time to take whatever action Medicis may deem to be appropriate
to protect the confidentiality of the Confidential Medicis Information and Q-Med
will cooperate and provide any assistance that Medicis may reasonably request in
connection with the foregoing. For the avoidance of confusion, all information
provided by Medicis to Q-Med in connection with this Agreement shall be deemed
Confidential Medicis Information unless Q-Med can demonstrate that such
information is available to it from sources other than Medicis that are not
under a duty of confidentiality with respect thereto. Q-Med shall use
Confidential Medicis Information only in connection with and for the purposes
reflected in this Agreement and the other Transaction Agreements and for no
other purpose. The confidentiality obligations set forth in this Section 11.1
shall continue in effect during the Term and for a period of ten (10) years
after the end of the Term except that the confidentiality obligations with
respect to any Confidential Medicis Information that constitutes a trade secret
shall continue in effect for so long as such information remains a trade secret.

            11.2 Medicis' Obligation. Except for the proper exercise of any
rights granted or reserved under other provisions of this Agreement and except
for the information referenced in Section 11.3 which shall be subject to Section
11.3, Medicis agrees that it shall keep confidential, and shall cause its
officers, employees, directors and counsel to keep confidential and shall not
publish or otherwise divulge to a Third Party, other than any agents or
representatives of Medicis (provided that such agents and representatives are
informed of the confidential and proprietary nature of such information and
agree in writing to the conditions set forth in this Article XI; and provided,
further, that Medicis shall be responsible for any breach of this Section by
such representatives and agents), or use for itself, unless Q-Med shall have
given its prior written approval, any information (and all tangible and
intangible embodiments thereof) of a confidential and proprietary nature
relating to Q-Med's and its Affiliates' business or operations, including
non-public information concerning the Licensed Rights, the Licensed Products or
other products of Q-Med and its Affiliates, processes of Q-Med and its
Affiliates, customers and suppliers and the products and processes of Q-Med's
customers and suppliers, furnished to Medicis by Q-Med in connection with this
Agreement (any of the foregoing, "CONFIDENTIAL SUPPLIER INFORMATION"); provided,
however, that Medicis shall have the right to disclose any Confidential Supplier
Information provided hereunder if such disclosure is necessary (a) in connection
with the securing of any Regulatory Approvals or other governmental approval
necessary for the performance by Medicis of any of its obligations hereunder or
under any other agreement with Q-Med, (b) for the purpose of complying with
applicable Laws and governmental regulations or (c) by Law or legal process.
Medicis shall promptly notify Q-Med of Medicis' intent to make any disclosure of
Confidential Supplier

                                       32



Information prior to making such disclosure so as to allow Q-Med adequate time
to take whatever action Q-Med may deem to be appropriate to protect the
confidentiality of Confidential Supplier Information and Medicis will cooperate
and provide any assistance that Q-Med may reasonably request in connection with
the foregoing. For the avoidance of confusion, all information provided by Q-Med
to Medicis in connection with this Agreement (included information subject to
Section 11.3) shall be deemed Confidential Supplier Information unless Medicis
can demonstrate that such information is available to it from sources other than
Q-Med that are not under a duty of confidentiality with respect thereto. Medicis
shall use Confidential Supplier Information only in connection with and for the
purposes reflected in this Agreement and the other Transaction Agreements and
for no other purpose. The confidentiality obligations set forth in this Section
11.2 shall continue in effect during the Term and for a period of ten (10) years
after the end of the Term except that the confidentiality obligations with
respect to any Confidential Supplier Information that constitutes a trade secret
shall continue in effect for so long as such information remains a trade secret.

            11.3 Manufacturing Data and other Information. In addition to any of
the foregoing confidentiality obligations, Medicis agrees that it shall keep
confidential and shall not use or disclose, and shall cause its officers,
employees, directors and counsel to keep confidential and to not use or
disclose, any information or data (and all tangible and intangible embodiments
thereof) of a confidential and proprietary nature relating to the Manufacture of
the Licensed Products, or any other information or data related to the
manufacture of any other products by Q-Med and/or its Affiliates of a
confidential and proprietary nature, including any such information to which
Medicis has access by virtue of the Regulatory Approvals for the Licensed
Products. Notwithstanding the foregoing, Medicis shall have the right to use,
and, to the extent required to have Licensed Products made in accordance with
the Manufacturing License, disclose (provided that the Person to whom such
disclosure is made is informed of the confidential and proprietary nature of
such information and agrees in writing to be bound by the conditions set forth
in this Section 11.3; provided, further, that Medicis agrees in writing to be
responsible for any breach of these provisions by such Person) such information
or data related to the Manufacture of Licensed Products that it may have access
to by virtue of the Regulatory Approvals related to the Licensed Products (i) in
the event that Q-Med has failed to comply with its obligation to provide an
alternate manufacturer with the information required pursuant to Section 9.1(b)
within the time period set forth in Section 9.1(b) or (ii) Medicis has exercised
the Option in accordance with Section 10.1(b) herein. Notwithstanding the
foregoing, Medicis shall have the right to disclose any such information or data
provided hereunder if such disclosure is necessary (a) in connection with the
securing of any Regulatory Approval or other governmental approval necessary for
the performance by Medicis of any of its obligations hereunder or under any
other agreement with Q-Med or its Affiliates, (b) for the purpose of complying
with applicable Laws and governmental regulations or (c) by Law or legal
process. Medicis shall promptly notify Q-Med of Medicis' intent to make such
disclosure prior to making such disclosure so as to allow Q-Med adequate time to
take whatever action Q-Med may deem to be appropriate to protect the
confidentiality of such information and Medicis will cooperate and provide any
assistance that Q-Med may reasonably request in connection with the foregoing.
Medicis shall not be prohibited from using or disclosing any such information
that (a) is or has become known to the public other than through a breach of
this Agreement or (b) lawfully was disclosed to Medicis on a non-confidential
basis by a Third Party not prohibited from disclosing such information by a
legal, contractual or fiduciary obligation. Within the limits set forth in this
Section 11.3, Medicis

                                       33



shall be entitled to use such information to the extent necessary to perform its
obligations under this Agreement and the other Transaction Agreements.

            11.4 Permitted Disclosure Or Use Of Information. Nothing in this
Article XI shall prevent the disclosure or use of Confidential Medicis
Information or Confidential Supplier Information, as the case may be, that (a)
is or has become known to the public other than through a breach of this
Agreement or (b) lawfully was disclosed to the disclosing Party on a
non-confidential basis by a Third Party not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation.

            11.5 Use Of Information to Perform Obligations under this Agreement.
Within the limits set forth in this Article XI, each Party shall be entitled at
all times to use all Confidential Medicis Information or Confidential Supplier
Information, as the case may be, provided by the other Party to the extent
necessary to perform its obligations under this Agreement or any other
Transaction Agreement.

                                   ARTICLE XII

                                  MISCELLANEOUS

            12.1 Force Majeure. No Party shall be liable to another for its
failure to perform any of its obligations hereunder if such failure is caused by
contingencies beyond such Party's control, including, but not limited to, acts
of God, fire, flood, wars, acts of terrorism, sabotage, strike and government
actions. Any Party asserting its inability to perform any obligation hereunder
as a result of any such contingency shall promptly notify the other Party of the
existence of any such contingency that prevents performance and the extent of
such Party's inability to perform. The non-performing Party shall use its
reasonable best efforts to avoid or remove such causes of non-performance
obligation as soon as commercially practicable.

            12.2 Assignment. Except as expressly otherwise provided herein, the
Parties may only Transfer their respective rights and obligations hereunder in
accordance with this Section 12.2.

            (a) Each of Q-Med and Medicis shall be entitled to Transfer its
rights or obligations under this Agreement without the written consent of
Medicis or Q-Med, as the case may be, to an Affiliate of Medicis Pharmaceutical
or Q-Med, as the case may be, provided that Q-Med or Medicis Pharmaceutical, as
the case may be, directly or indirectly, through one or more intermediaries,
owns or controls greater than fifty percent (50%) of the voting securities or
economic interest in such Affiliate and such Affiliate is able to provide and at
all times update a valid Form W-8BEN in accordance with U.S. Treasury Regulation
1.1441-1(e)(4)(ii) (a "PERMITTED TRANSFEREE") for so long as such Affiliate
continues to be a Permitted Transferee; provided, further, that such Transfer
shall be null and void ab initio and of no further force and effect unless (i)
such Transfer was affected in accordance with the terms and conditions of this
Agreement, (ii) in connection with such Transfer, Q-Med executes and delivers to
Medicis a guarantee substantially in the form attached hereto as Exhibit A, and
(iii) the Permitted Transferee, if not already a Party hereto, shall have
executed and delivered to Medicis or Q-Med, as the case may be, as a condition
precedent to such Transfer, an instrument or instruments

                                       34



reasonably satisfactory to Q-Med or Medicis, as the case may be, confirming that
the Permitted Transferee shall be bound by the terms of this Agreement to the
same extent applicable to the transferring Party, as if such Permitted
Transferee was originally a Party hereto. Any such Permitted Transferee shall,
and Q-Med or Medicis, as the case may be, shall cause such Permitted Transferee
to, assign or transfer back to (or to another Permitted Transferee of the
transferred Party) its rights and obligations hereunder prior to such Permitted
Transferee ceasing to be a Permitted Transferee of Q-Med or Medicis, as the case
may be. Upon such Permitted Transferee ceasing to be a Permitted Transferee
hereunder, any Transfer of rights and obligations hereunder shall be null and
void from inception and of no further force or effect. A transferring party
shall remain directly liable for the performance by its Permitted Transferee of
all obligations of such transferring Party under this Agreement. No Transfer to
a Permitted Transferee hereunder shall relieve Q-Med or Medicis of its
obligations pursuant to this Agreement.

            (b) Commencing on the date on which all of the One Time Payments
(other than the * * * Payment (as such term is defined in the License
Agreement), which * * * Payment shall only be required to be paid and received
as a condition to Transfer if as of the date of Transfer, such * * * Payment is
then due and payable under the terms of the License Agreement) and the First
Milestone Payment to be paid pursuant to the License Agreement have been paid to
and received by Q-Med or its Affiliates (provided that all such payments may be
prepaid at any time, regardless of whether such payments are then due under such
agreements), Medicis or its Permitted Transferees shall be entitled, in
accordance with this clause (b) to Transfer its rights and obligations under
this Agreement to a Third Party, subject to the prior written consent of Q-Med;
provided, further, that (i) in the event of a Volitional Change in Control such
Transfer shall be null and void ab initio and of no further force and effect
unless (A) such Transfer was effected in accordance with the terms and
conditions of this Agreement and (B) the Third Party shall have executed and
delivered to Q-Med as a condition precedent to such Transfer, an instrument or
instruments reasonably satisfactory to Q-Med confirming that the Third Party
shall be bound by the terms of this Agreement to the same extent applicable to
Medicis or its Permitted Transferee as if such Third Party was originally a
Party hereto and that such Third Party is, or as of the date of the proposed
Transfer will be, a party to the License Agreement and (ii) in the event of a
Change in Control (other than a Volitional Change in Control) such Transfer
shall give rise to a right of termination pursuant to Section 8.2(d) herein
unless such Transfer was effected in accordance with the terms and conditions of
this Agreement. The Parties agree that Q-Med may only withhold its consent in
the event that Q-Med reasonably determines (such determination to be made
without unreasonable delay, and such consent, or the withholding thereof, to be
promptly communicated once determined) that the proposed Third Party transferee
* * *, (iv) does not have financial condition at least comparable to that of
Medicis as of the Closing Date or (v) has been or is currently debarred under
the authority of the FDCA or Canada's FDA and/or regulations thereunder.

            (c) Q-Med or its Permitted Transferee shall be entitled to Transfer
its rights and obligations under this Agreement to a Third Party, subject to the
prior written consent of Medicis; provided that (i) in the event of a Volitional
Change in Control such Transfer shall be null and void ab initio and of no
further force and effect unless (A) such Transfer was effected in accordance
with the terms and conditions of this Agreement and (B) the Third Party shall
have executed and delivered to Medicis as a condition precedent to such
Transfer, an instrument or

                                       35



instruments reasonably satisfactory to Medicis confirming that the Third Party
shall be bound by the terms of this Agreement to the same extent applicable to
Q-Med or its Permitted Transferee as if such Third Party was originally a Party
hereto and that such Third Party has, or as of the date of the proposed Transfer
will have, the know-how and patents necessary to fulfill its obligations under
and in accordance with this Agreement and (ii) in the event of a Change in
Control (other than a Volitional Change in Control) such Transfer shall give
rise to a right of termination pursuant to Section 8.3(c) herein unless such
Transfer was effected in accordance with the terms and conditions of this
Agreement. The Parties agree that Medicis may only withhold its consent in the
event that Medicis reasonably determines (such determination to be made without
unreasonable delay, and such consent, or the withholding thereof, to be promptly
communicated once determined) that (i) the proposed Third Party transferee does
not have the financial condition to perform Q-Med's obligations under this
Agreement, (ii) if Q-Med is not to be the surviving entity upon the consummation
of such proposed Transfer, upon the consummation of such proposed Transfer the
successor entity will not have a manufacturing capacity at least comparable to
Q-Med's and its Affiliates' manufacturing capacity immediately prior to such
proposed Transfer, (iii) such Transfer has not received all required Regulatory
Approvals, or, if Q-Med and/or one of its Affiliates is not to be the surviving
entity upon the consummation of such proposed Transfer, upon the consummation of
such proposed Transfer, the proposed Third Party transferee will not have all
Regulatory Approvals required for its performance of this Agreement or (iv) such
proposed Third Party transferee has been or is currently debarred under the
authority of the FDCA or under Canada's FDA and/or regulations thereunder.

            (d) Subject to the provisions of this Section 12.2, this Agreement
shall be binding upon and inure to the benefit of the successors and assigns of
each of the Parties.

            (e) Notwithstanding anything to the contrary contained elsewhere
herein, Q-Med shall be entitled to engage a Third Party as provided in Sections
2.3, 9.1(b) and 10.3 herein to supply Medicis with Licensed Products for use in
accordance with the terms and conditions of this Agreement and such action shall
not be deemed a violation of this Section 12.2; provided that in such event
Q-Med not be released from its obligations hereunder.

            (f) Other than as set forth in clause (e) above, Q-Med and Medicis,
as the case may be, and each of their respective present and former officers,
directors, employees and Affiliates shall be released and discharged of its
respective rights and obligations pursuant to this Agreement and from any and
all claims, rights, causes of actions or suits and recoveries related thereto
upon the consummation of a Transfer to a Third Party in accordance with the
terms and conditions set forth herein.

            12.3 Independent Contractor. The Parties shall each be an
independent contractor in the performance of their respective obligations
hereunder, and, the provisions hereof are not intended to create any
partnership, joint venture, agency or employment relationship between the
Parties. Each Party shall be responsible for and shall comply with all state,
local, federal and foreign laws pertaining to employment taxes, income
withholding and other employment related statutes applicable to that Party.
Except as is expressly set forth herein, neither Party will have any right by
virtue of this Agreement to bind the other Party in any manner whatsoever.

                                       36



            12.4 Notices. All notices or other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the Party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service, or
if sent by facsimile; provided that the facsimile is promptly confirmed by
telephone confirmation thereof, to the Person at the address set forth below, or
such other address as may be designated in writing hereafter, in the same
manner, by such Person.

            If to Q-Med:

                   Q-Med AB
                   Seminariegatan 21
                   752 28 Uppsala, Sweden
                   Attention: Chief Executive Officer
                   Telephone No.: * * *
                   Facsimile No.: * * *

            with a copy to (which shall not constitute notice):

                   Simpson Thacher & Bartlett LLP
                   425 Lexington Avenue
                   New York, New York 10017
                   Attention: Richard A. Miller
                   Telephone No.: (212) 455-7150
                   Facsimile No.: (212) 455-2502

            If to Medicis:

                   Medicis Aesthetics Holdings Inc.
                   8125 N. Hayden Road
                   Scottsdale, Arizona 85258-2463
                   Attention: Jonah Shacknai
                   Telephone No.: * * *
                   Facsimile No.: * * *

            with a copy to (which shall not constitute notice):

                   Akin Gump Strauss Hauer & Feld LLP
                   590 Madison Avenue
                   New York, New York 10022
                   Attention: Susan Cohen
                   Telephone No.: (212) 872-1000
                   Facsimile No.: (212) 872-1002

            12.5 Governing Law. This Agreement shall in all respects be governed
by and construed in accordance with the Laws of the State of New York, excluding
any Law that would result in the application of the Laws of any jurisdiction
other than the State of New York and the

                                       37



application of the 1980 United Nations Convention on Contracts for the
International Sale of Goods.

            12.6 Arbitration. The Parties agree that any dispute arising out of
or in connection with this Agreement, or the breach, termination, or invalidity
hereof, shall be resolved as follows. In the event of a dispute between the
Parties, either Party may initiate the dispute resolution procedures of this
Section 12.6 by providing written notice (the "NOTICE OF CLAIM") to the other
Party identifying the dispute and stating the desire to resolve the dispute.
After receiving the Notice of Claim, respondent will respond in writing by
stating its position and setting forth a proposed resolution of the dispute. If
claimant and respondent are not able to resolve the dispute within twenty (20)
days thereafter, the matter in dispute shall be settled by arbitration in
accordance with the Rules of Arbitration of the International Chamber of
Commerce (the "ICC"). The arbitral tribunal shall be comprised of three
arbitrators; the Party nominated arbitrators shall be appointed in accordance
with the Rules of the ICC. The Party nominated arbitrators will have thirty (30)
days to appoint a chair who shall have relevant expertise in the subject matter
of the dispute and the applicable laws of the Territory. If they are unable to
make such appointment within that time, then the chair shall be appointed in
accordance with the Rules of the ICC, provided that the chair appointed by the
ICC shall have relevant expertise in the subject matter of the dispute and the
applicable laws of the Territory. The place of arbitration shall be Stockholm,
Sweden. The language to be used in the arbitral proceedings shall be English.
The Parties agree that the losing Party shall bear the cost of the arbitration
filing and hearing fees, the cost of the arbitrators and the ICC administrative
expenses and the attorney's fees and reasonable associated costs and expenses of
each Party. The Parties agree to reasonable document discovery, provided the
requesting Party makes a showing of relevance and need to the tribunal.
Notwithstanding the foregoing, either Party may seek an immediate injunction
from a court of competent jurisdiction (i) to prevent the disclosure of
Confidential Medicis Information or Confidential Supplier Information, as
applicable, in violation of Article XI herein or (ii) to prevent an assignment
of this Agreement in violation of Section 12.2 herein.

            12.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same agreement.

            12.8 Headings. The heading references herein are for convenience
purposes only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.

            12.9 Entire Agreement. The Transaction Agreements, each of their
appendices, exhibits, schedules and certificates, and all documents and
certificates delivered or contemplated in connection herewith and therewith
constitute the entire agreement between the Parties with respect to the subject
matter hereof and supersede all prior agreements or understandings of the
Parties relating thereto.

            12.10 Sales and Use Taxes. Medicis shall be responsible for the
payment of any sales and use taxes on the Licensed Products delivered by Q-Med
to Medicis.

                                       38



            12.11 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
Parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Parties shall be enforceable to the fullest
extent permitted by Law.

            12.12 Expenses. Except as set forth in this Agreement, Q-Med and
Medicis will each bear their own expenses and the expenses of their respective
Affiliates incurred in connection with the negotiation and preparation of this
Agreement.

            12.13 Further Actions. Q-Med and Medicis each hereby agrees to use
all reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or proper and execute and deliver such
documents and other papers as may be required to make effective the transactions
contemplated by this Agreement.

            12.14 Waiver. Any term or provision of this Agreement may be waived
at any time by the Party entitled to the benefit thereof only by a written
instrument executed by such Party. No delay on the part of Q-Med or Medicis in
exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of either Q-Med or Medicis of any
right, power or privilege hereunder operate as a waiver of any other right,
power or privilege hereunder nor will any single or partial exercise of any
right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.

            12.15 Amendment. This Agreement may be modified or amended only by
written agreement of the Parties hereto signed by authorized representatives of
the Parties hereto and specifically referencing this Agreement.

            12.16 No Third Party Rights. Other than as set forth in Article IX
and Section 12.21, no provision of this Agreement will be deemed or construed in
any way to result in the creation of any rights or obligations in any Person not
a Party to this Agreement.

            12.17 Construction. This Agreement will be deemed to have been
drafted by both Q-Med and Medicis and will not be construed against either Party
as the draftsperson hereof. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless business days are specified.

            12.18 Enforcement. The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the Parties shall be entitled to specific performance of the terms of this
Agreement, this being in addition to any other remedy to which they are entitled
at law or in equity.

                                       39



            12.19 Appendices, Exhibits, Schedules and Certificates. Each
appendix, exhibit, schedule and certificate attached hereto is incorporated
herein by reference and made a part of this Agreement.

            12.20 Publicity. Neither Party shall issue or release any media
release or public announcement (including, without limitation, any announcements
made via any posting on the World Wide Web or Internet), or other similar
publicity announcing the existence of this Agreement or relating to any term or
condition of this Agreement or the relationships created by this Agreement
without three (3) Business Days' prior written notice, including by e-mail, to
the other Party and the prior agreement of the other Party on the relevant
wording relating to the Agreement or term or condition of the Agreement.
Notwithstanding the foregoing, each Party shall have the right to issue media
releases immediately and without the prior consent of the other Party that
disclose any information required by the rules and regulations of the Securities
and Exchange Commission, the Stockholm Stock Exchange or applicable Law;
provided that the disclosing Party shall notify the other Party, including by
e-mail, no later than simultaneously with such issuance of such issuance and
shall use commercially reasonable efforts to provide a copy of the relevant
wording relating to the Agreement, or any term or condition thereof or the other
Party prior to the disclosure thereof. Q-Med shall contact Medicis' Investor
Relations Group for approval. Medicis shall contact * * * for approval.

            12.21 Certain Affiliate Transfers. Neither Party shall (1) invest,
directly or indirectly, in an Affiliate which has operations or conducts
activities in the field of Aesthetic Enhancement, or (2) transfer or make
available any of its activities, operations or assets in the field of Aesthetic
Enhancement (including research and development, marketing, know-how or other
intellectual property, management of regulatory relations and protection of
intellectual property) to an Affiliate, without causing such Affiliate to enter
into an agreement for the benefit of the other Party by which such Affiliate
agrees to be bound by the provisions hereof in all relevant respects to the same
effect as if such Affiliate had originally been a party hereto; provided, that
Sections 7.4(a) or (b), as applicable, and Article XI shall be deemed in all
cases to be relevant.

            12.22 Prior Transactions. Each Party acknowledges and agrees, on
behalf of itself and each of its respective subsidiaries, that (a) nothing in
any of the Transaction Agreements or in any other agreement, instrument or other
document delivered in connection herewith or therewith (the "OTHER PAPERS"), and
(b) nothing discussed or delivered in connection with the negotiation of the
Transaction Agreements or the Other Papers, including any correspondence,
spreadsheets, notes, reports, memoranda or any full or partial drafts or prior
versions of the Transaction Agreements or the Other Papers (the matters referred
to in clause (a) and (b) are collectively, the "INADMISSIBLE MATTERS"), shall be
admissible in any action, suit or proceeding relating to only the Prior Supply
Agreement or the agreements entered into in connection therewith, unless the
Parties otherwise agree in a writing referring to this Section 12.22; provided,
however, that if an action, suit or proceeding relates in part to the Prior
Supply Agreement (or the agreements entered into in connection therewith) and in
part to any other matter, none of the Inadmissible Matters shall be admissible
with respect to claims or defenses relating to the Prior Supply Agreement (or
the agreements entered into in connection therewith). Each Party covenants and
agrees, on behalf of itself and each of its respective subsidiaries, that it and
they will not, directly or indirectly, do or cause to be done or omit to do

                                       40



anything, the doing, causing or omitting of which would provide in discovery or
introduce into evidence any of the Inadmissible Matters in any action, suit or
proceeding relating to only the Prior Supply Agreement (or the agreements
entered into in connection therewith), except as may be required by Law pursuant
to a Third Party subpoena; provided, however, that if an action, suit or
proceeding relates in part to the Prior Supply Agreement (or the agreements
entered into in connection therewith) and in part to any other matter, none of
the Inadmissible Matters shall be admissible with respect to claims or defenses
relating to the Prior Supply Agreement (or the agreements entered into in
connection therewith), except as may be required by Law pursuant to a Third
Party subpoena.

                                       41



            IN WITNESS WHEREOF, the Parties have duly executed this Agreement as
of the day and year first above written.

                                     Q-MED AB

                                     By:    /s/ Bengt Agerup
                                        ----------------------------------------
                                        Name: Bengt Agerup
                                        Title: CEO

                                     MEDICIS AESTHETICS HOLDINGS INC.

                                     By:    /s/ Mark A. Prygocki, Sr.
                                        ----------------------------------------
                                        Name: Mark A. Prygocki, Sr.
                                        Title: Vice President

EX-10.103

                                                                  EXHIBIT 10.103

[THE OMITTED PORTIONS INDICATED BY AN ASTERISK HAVE BEEN SEPARATELY FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT PURSUANT TO RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.]

                     INTELLECTUAL PROPERTY LICENSE AGREEMENT

            This INTELLECTUAL PROPERTY LICENSE AGREEMENT (this "AGREEMENT") is
dated this 15th day of July 2004, between Q-Med AB, a company organized under
the laws of the Kingdom of Sweden with corporate registration number 556258-6882
("Q-MED" or "LICENSOR"), and Medicis Aesthetics Holdings Inc., a corporation
organized under the laws of the State of Delaware ("MAHI" or "LICENSEE").

                                    RECITALS

            WHEREAS, Licensor desires to grant, and Licensee desires to accept,
the rights and licenses set forth herein with respect to the Licensed Rights,
Licensed Regulatory Data and certain Website Content (as each such term is
defined below); and

            WHEREAS, Licensee desires to grant, and Licensor desires to accept,
the rights and licenses set forth herein with respect to certain portions of the
Territory Specific Materials, Licensee Regulatory Materials (as each such term
is defined below) and certain Website Content.

            NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, intending to be legally bound hereby, the Parties hereto
hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

      1.1 Definitions. As used in this Agreement, the following terms shall have
the meanings set forth or as referenced below:

            "ACCOUNT" shall have the meaning set forth in Section 8.2.

            "ACCOUNTING FIRM" shall have the meaning set forth in Section 8.5.

            "ACTION" shall mean any action, claim, suit, litigation,
arbitration, investigation, notification, audit or other proceeding brought in
law or at equity by a Governmental Authority or other Person.

            "ADVERTISING" shall have the meaning set forth in the Supply
Agreement.

            "AESTHETIC ENHANCEMENT" shall mean the alteration of the visual
appearance, visual form, visual size, or visual shape of the naked human body or
any of its components; provided that Aesthetic Enhancement shall not be deemed
to include modification of the functions, restoration of the functions,
adjustment of the functions or correction of the functions of the human body or
any of its component parts.



            "AFFILIATE" of a Person shall mean, with respect to any Person, any
other Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person. As
used in this definition, the term "CONTROL" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting securities, by
contract, or otherwise.

            "AGERUP LETTER AGREEMENT" shall mean that certain letter from Bengt
Agerup to Medicis, dated as of the Closing Date.

            "AGREEMENT" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.

            "BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banks in Sweden or New York are authorized or obligated by Law or
executive order to remain closed.

            "CANADIAN STUDY" shall have the meaning set forth in Section 2.1(c).

            "CANADA'S FDA" shall mean Canada's Food and Drugs Act, R.S.C. 1985,
c. F-27, as amended.

            "CAP" shall have the meaning set forth in Section 10.1(b).

            "CHANGE IN CONTROL" shall mean (a) the disposition of all or
substantially all of the outstanding shares, assets or business of a Party or
Medicis on a consolidated basis; or (b) any transaction or event (or series of
transactions or events) as a result of which any Person (other than an Affiliate
of such Party or Medicis), acting singly or as a part of a "partnership, limited
partnership, syndicate or group" (within the meaning of Section 13(d)(3) of the
United States Securities Exchange Act of 1934, as amended): (i) acquires (by
purchase, merger, consolidation or otherwise) or for the first time controls or
is able to vote (directly or through nominees, beneficial ownership, proxy or
contract) fifty percent (50%) or more of the aggregate of all outstanding equity
securities of a Party or Medicis; or (ii) acquires (by purchase, merger,
consolidation or otherwise) equity securities of a Party or Medicis with the
right to, or for the first time is otherwise able to, nominate or designate
(directly or through nominees, beneficial ownership, proxy or contract) at least
fifty percent (50%) of the nominees to the board of directors of such Party or
Medicis, in each of (a) or (b), in the event that Licensor, Licensee or Medicis,
as the case may be, was not a party to the applicable transaction and/or such
transaction was not approved by the Board of Directors of Licensor, Licensee or
Medicis, as the case may be.

            "CIPO" shall mean the Canadian Intellectual Property Office.

            "CLAIMING PARTY" shall have the meaning set forth in Section 8.5.

            "CLOSING" shall have the meaning set forth in Section 7.1.

            "CLOSING DATE" shall have the meaning set forth in Section 7.1.

                                       2



            "COMPETING PRODUCT" shall have the meaning set forth in Section
3.13.

            "COMPLAINING PARTY" shall have the meaning set forth in Section
3.10(b).

            "CONFIDENTIAL LICENSEE INFORMATION" shall have the meaning set forth
in Section 9.1.

            "CONFIDENTIAL LICENSOR INFORMATION" shall have the meaning set forth
in Section 9.2.

            "CONFIDENTIALITY AGREEMENT" shall have the meaning set forth in the
Supply Agreement.

            "CONTRACT YEAR" shall have the meaning set forth in Section 8.2.

            "DILIGENCE DEFAULT" shall have the meaning set forth in Section 3.1.

            "DISPUTED LICENSE PAYMENT" shall have the meaning set forth in
Section 8.5.

            "FDA" shall mean the United States Food and Drug Administration.

            "FDCA" shall mean the United States Federal Food, Drug, and Cosmetic
Act of 1938, as amended (21 U.S.C. ss.ss. 301 et. seq.).

            "FIELD" shall mean Aesthetic Enhancement.

            "FOOD AND DRUGS ACT" shall mean the Canadian Food and Drugs Act of
1985, as amended (R.S., c. F-27).

            "GOVERNMENTAL AUTHORITY" shall mean any supranational, national,
federal, state, provincial or local judicial, legislative, executive or
regulatory authority.

            "GUARANTEE" shall mean the guarantee dated as of the Closing Date
from Medicis to Q-Med.

            "HIGHEST MILESTONE" shall have the meaning set forth in Section 8.2.

            "IMPROVEMENTS" shall mean any replacements, improvements or
modifications, including without limitation new indications or new uses, in each
case in the Field.

            "INDEMNIFIED PARTY" shall have the meaning set forth in Section 10.3
herein.

            "INDEMNIFYING PARTY" shall have the meaning set forth in Section
10.3 herein.

            "JOINTLY OWNED IMPROVEMENTS" shall have the meaning set forth in
Section 2.3(c).

            "LABELING" shall have the meaning set forth in the Supply Agreement.

                                       3



            "LAUNCH" of a Licensed Product shall mean the first offer for sale
of the Licensed Product to the trade.

            "LAWS" shall mean all applicable laws, statutes, rules, regulations,
ordinances and other pronouncements of law of any Governmental Authority.

            "LIBOR RATE" shall have the meaning set forth in Section 8.2(b)
herein.

            "LICENSED KNOW-HOW" shall mean, except to the extent published or
otherwise known, all of Licensor's and its Affiliates' proprietary know-how,
trade secrets, unpatented inventions, technical data, formulations, technical
information and business and marketing information which Licensor or any of its
Affiliates now own or have the right to license, or hereafter acquire or obtain
the right to license during the Term, but only to the extent necessary or
reasonably useful, in the ordinary course of Licensee's business, for marketing,
using, distributing, importing, offering for sale, selling, commercializing or
otherwise disposing of the Licensed Products in the Field in the Territory,
including sales and marketing materials, medical, clinical, toxicological
testing, scientific data and injection techniques relating to the Licensed
Products; provided, that the Licensed Know-How shall not include (a) information
that Licensor is under an obligation to unrelated Third Parties not to disclose,
such as patient data and (b) the Licensed Regulatory Data.

            "LICENSED PATENTS" shall mean the U.S. Patent, U.S. Patent
Application and Canadian Patent Application set forth on Schedule A attached
hereto and any other patent or patent application or rights thereunder in the
Territory that covers the manufacture, use, import or sale of the Licensed
Products, together with any extensions, publications, reissues, continuations,
divisionals, continuations-in-part, reexamination certificates, substitutions or
renewals, supplemental protection certificates or certificates of inventions
thereof owned by Licensor or any of its Affiliates, or under which Licensor or
any of its Affiliates has the right to grant licenses in the Territory, as of
the date hereof or during the Term; provided, that the Licensed Patents shall
not include the Licensed Regulatory Data.

            * * *

            * * *

            "LICENSED RIGHTS" shall mean the Licensed Patents and the Licensed
Know-How.

            "LICENSEE INDEMNIFIED PERSONS" shall have the meaning set forth in
Section 10.1.

            * * *

            "LICENSEE MARKS" shall have the have the meaning set forth in
Section 3.2.

            "LICENSEE REGULATORY MATERIALS" shall have the have the meaning set
forth in Section 2.3(b)(ii).

            "LICENSEE TRADE DRESS" shall have the have the meaning set forth in
Section 3.2.

                                       4



            "LICENSES" shall mean the licenses granted by Licensor to Licensee
herein.

            "LICENSOR INDEMNIFIED PERSONS" shall have the meaning set forth in
Section 10.2.

            "LICENSOR MARKS" shall have the have the meaning set forth in
Section 3.2.

            "LICENSOR TRADE DRESS" shall have the have the meaning set forth in
Section 3.2.

            "LOSS" or "LOSSES" shall mean any and all damages, fines, fees,
penalties, deficiencies, losses and expenses, including reasonable legal fees
and expenses, but excluding loss of profits or other special, punitive or
consequential damages.

            "MACROLANE SIDE LETTER" shall mean that certain letter from Medicis
to Q-Med, dated as of the Closing Date.

            "MANUFACTURE" shall have the meaning set forth in the Supply
Agreement.

            "MEDICIS" shall mean Medicis Pharmaceutical Corporation, a Delaware
corporation.

            "MASTER FILES" shall have the meaning set forth in the Supply
Agreement.

            "MILESTONE" shall have the meaning set forth in Section 8.2.

            "MILESTONE PAYMENT" shall have the meaning set forth in Section 8.2.

            "NET REVENUES" shall mean, with respect to any Licensed Product, the
gross sales of such Licensed Product invoiced by Licensee and/or its Affiliates
to Licensee's and/or its Affiliates' customers who are not Affiliates, less, to
the extent actually paid or accrued net of payments by Licensee and/or its
Affiliates (as applicable), (a) normal and customary credits, allowances,
discounts and rebates to, and chargebacks from the account of, such customers
for spoiled, damaged, out-dated and returned Licensed Product; (b) normal and
customary freight and insurance costs incurred in transporting such Licensed
Product to and from such customers; (c) normal and customary cash, quantity and
trade discounts, rebates and other price reductions or special programs for such
Licensed Product; and (d) excise, sales, use, value-added and other direct taxes
(but not income taxes of any kind) imposed upon the sale of such Licensed
Product to such customers. For avoidance of doubt, Licensee shall calculate Net
Revenues for purposes of this Agreement according to U.S. generally accepted
accounting principles applied on a consistent basis and in a manner consistent
with Medicis' calculations of consolidated net revenues and consistent with the
numbers used to consolidate net revenues reported in Medicis' periodic reports
with the United States Securities and Exchange Commission.

            "NON-COMPETE PERIOD" shall have the meaning set forth in Section
3.13(b).

            "ONE TIME PAYMENT" shall have the meaning set forth in Section 8.1.

            * * *

                                       5



            "OTHER PARTY" shall have the meaning set forth in Section 8.5.

            "OUT-OF-FIELD USE" shall have the meaning set forth in Section
3.10(b).

            "PARTY" shall mean Licensor or Licensee and, when used in the
plural, means both Licensor and Licensee or their respective Permitted
Transferees or Third Party transferees, in each case upon the consummation of a
Transfer in accordance with the terms and conditions herein.

            "PATENT REQUEST" shall have the meaning set forth in Section 3.7.

            "PAYMENT DATE" shall have the meaning set forth in Section 8.5.

            "PAYMENT TERM" shall commence on the Closing Date and, unless this
Agreement is earlier terminated pursuant to Section 6.2, last until * * *.

            "PERMITTED TRANSFEREE" shall mean any Affiliate of the Licensor or
Medicis, as applicable, of whom the Licensor or Medicis, as applicable, directly
or indirectly, through one or more intermediaries, owns or controls more than
fifty percent (50%) of the voting securities or economic interest in such
Affiliate and such Affiliate is able to provide and at all times update a valid
Form W-8BEN in accordance with U.S. Treasury Regulation 1.1441-(e)(4)(ii), for
so long as such Affiliate continues to be a Permitted Transferee; provided, that
the Licensor or Licensee, as applicable, shall remain directly liable for the
performance by the Permitted Transferee of all obligations of the Licensor or
Licensee, as applicable, under this Agreement and no Transfer to a Permitted
Transferee hereunder shall relieve the Licensor or Licensee, as applicable, of
its obligations pursuant to this Agreement.

            "* * * PAYMENT" shall have the meaning set forth in Section 8.1.

            * * *

            "PMA APPLICATION" shall have the meaning set forth in the Supply
Agreement.

            "PMA APPROVALS" shall have the meaning set forth in the Supply
Agreement.

            "PERSON" shall mean any individual, firm, corporation, partnership,
limited liability company, trust, joint venture or other entity or organization.

            "PREVIOUS LICENSE AGREEMENT" shall mean the Amended and Restated
Intellectual Property License Agreement between Q-Med and HA North American
Sales AB, dated March 6, 2003 (as the same may be amended from time to time in
accordance with its terms).

            "PREVIOUS LICENSE LETTER AGREEMENT" shall mean that certain letter
from Medicis to Q-Med, dated as of the Closing Date.

            "PREVIOUS SUPPLY AGREEMENT" shall mean that certain Supply Agreement
dated as of March 7, 2003, between Medicis and Q-Med, as the same may be amended
from time to

                                       6



time in accordance with its terms.

            "PROMOTIONAL LABELING" shall have the meaning set forth in the
Supply Agreement.

            "REGULATORY APPROVALS" shall have the meaning set forth in the
Supply Agreement.

            "RESPONSIBLE PARTY" shall have the meaning set forth in Section
3.10(b).

            "RETURN PAYMENT" shall have the meaning set forth in Section 8.2.

            "STEERING COMMITTEE" shall have the meaning set forth in the Supply
Agreement.

            "SUPPLY AGREEMENT" shall mean the Supply Agreement, dated as of the
Closing, between Q-Med and MAHI (as the same may be amended from time to time in
accordance with its terms).

            "TERM" shall have the meaning set forth in Section 6.1.

            "TERRITORY" shall mean the United States, including its territories
and possessions, and Canada.

            "TERRITORY SPECIFIC MATERIALS" shall have the meaning set forth in
Section 2.3(b)(i).

            "THIRD ANNIVERSARY" shall have the meaning set forth in Section 10.1
herein.

            "THIRD PARTY" shall mean any Person who or which is neither a Party
nor an Affiliate of a Party.

            "THIRD PARTY INDEMNIFIABLE CLAIM" shall have the meaning set forth
in Section 10.4 herein.

            "TPD" shall mean Canada's Therapeutic Products Directorate.

            "TRANSACTION AGREEMENTS" shall mean this Agreement, the Supply
Agreement, the Macrolane Side Letter, the Previous License Letter Agreement, the
Guarantee and the Confidentiality Agreement.

            "TRANSFER" shall mean any Change in Control or Volitional Change in
Control of a Party or a transfer or assignment by a Party of its rights and
obligations under this Agreement; provided, however, that for purposes of this
Agreement the actions set forth in Section 2.1 hereof shall not be deemed to be
a Transfer.

            "USPTO" shall mean the United States Patent and Trademark Office.

            "VOLITIONAL CHANGE IN CONTROL" shall mean (a) the disposition of all
or substantially all of the outstanding shares, assets or business of a Party or
Medicis on a

                                       7



consolidated basis; or (b) any transaction or event (or series of transactions
or events) as a result of which any Person (other than an Affiliate of such
Party or Medicis), acting singly or as a part of a "partnership, limited
partnership, syndicate or group" (within the meaning of Section 13(d)(3) of the
United States Securities Exchange Act of 1934, as amended): (i) acquires (by
purchase, merger, consolidation or otherwise) or for the first time controls or
is able to vote (directly or through nominees, beneficial ownership, proxy or
contract) fifty percent (50%) or more of the aggregate of all outstanding equity
securities of a Party or Medicis; or (ii) acquires (by purchase, merger,
consolidation or otherwise) equity securities of a Party or Medicis with the
right to, or for the first time is otherwise able to, nominate or designate
(directly or through nominees, beneficial ownership, proxy or contract) at least
fifty percent (50%) of the nominees to the board of directors of such Party or
Medicis, in each of (a) or (b),in the event that Licensor, Licensee or Medicis,
as the case may be, was a party to the applicable transaction or of which the
Board of Directors of Licensor, Licensee or Medicis, as the case may be, shall
have approved.

            "WEBSITE CONTENT" shall have the meaning set forth in Section 2.5.

      1.2 Other Definitional Provisions.

      (a) The words "HEREOF", "HEREIN", "HERETO" and "HEREUNDER" and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement unless otherwise
indicated.

      (b) The terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.

      (c) The term "INCLUDING" shall mean "INCLUDING, WITHOUT LIMITATION."

      (d) When a reference is made in this Agreement to an Article, a Section or
Schedule, such reference shall be to an Article of, a Section of or a Schedule
to, this Agreement unless otherwise indicated.

                                   ARTICLE II
                             LICENSE AND RESERVATION

      2.1 Grant of Licenses to Licensee.

      (a) Grant of License to Licensed Rights. Subject to the terms and
conditions of this Agreement, Licensor grants to Licensee, effective as of the
Closing Date, a payment bearing, exclusive (even as to Licensor and its
Affiliates), nonsublicensable (except as permitted in Section 12.1) and
nonassignable (except as permitted in Section 12.1) license to the Licensed
Rights in the Field in the Territory (i) to market, use, distribute, import,
offer for sale, sell, commercialize or otherwise dispose of, but not to make or
have made, Licensed Products in the Territory, itself or to have such done on
its behalf; (ii) to market, use, distribute, offer for sale, sell, commercialize
or otherwise dispose of Licensed Products in the Territory via the Internet,
itself or to have such done on its behalf, provided that any web site owned and
operated by or on behalf of Licensee is directed solely to users in the
Territory, and provided, further, that Licensee may only ship Licensed Products
or direct promotional materials related thereto to locations within the
Territory; and (iii) to conceive, but not develop, Improvements to the Licensed
Rights

                                       8



except that Licensee may develop Improvements and conduct clinical development
(or have such development done on its behalf) only to the extent expressly
provided herein and in Article VI of the Supply Agreement, provided with respect
to (iii) herein that (x) Licensor remains the sole source of development work
for Licensee unless otherwise provided herein or in Article VI of the Supply
Agreement or Licensor is unable to provide Licensee with the research and
development reasonably required by Licensee, in which case the Steering
Committee shall select a contract laboratory to provide development work under
Licensor's supervision and (y) Licensor retains ownership of all Improvements,
as set forth in Section 2.3 herein, except as expressly provided herein and in
Article VI of the Supply Agreement. For avoidance of doubt, Licensee
acknowledges and agrees that the right to develop in accordance with Section
2.1(a)(iii) shall not include a right for Licensee to modify or develop changes
to the formulation, primary packaging, or manufacturing processes for Licensed
Products. Licensee shall not use the Licensed Rights outside the Territory for
any purpose or in the Territory for any purpose other than as specifically
authorized herein.

      (b) Grant of License to Licensed Regulatory Data. Subject to the terms and
conditions of this Agreement, Licensor grants to Licensee, effective as of the
Closing Date, a payment bearing, exclusive (even as to Licensor and its
Affiliates), nonsublicensable (except as permitted in Section 12.1) and
nonassignable (except as permitted in Section 12.1) license in the Field in the
Territory to copy, reference and otherwise use the Licensed Regulatory Data, but
only to the extent recommended or suggested by the FDA or TPD or as necessary or
reasonably useful for the purpose of conducting clinical trials and obtaining
and maintaining Regulatory Approvals for the Licensed Products in the Field in
the Territory pursuant to this Agreement and the Supply Agreement.

      (c) Limited Exception to Exclusivity. Notwithstanding the exclusive rights
granted in Section 2.1(b), the Parties agree that Licensor and its Affiliates
shall have the right to complete the clinical study in Canada titled * * * in
progress as of the date hereof (the "CANADIAN STUDY"). For the avoidance of
doubt, the data, materials and other results of the Canadian Study shall be
owned by Licensor and deemed to be "Licensed Regulatory Data" for purposes of
this Agreement without any additional consideration on the part of Licensee.

      (d) Rights at End of Payment Term. As of the expiration of the Payment
Term, the Licenses shall be deemed fully paid up and irrevocable (except as
otherwise provided in Section 6.2) for the remainder of the Term.

      2.2 Reservation of Rights. Other than as expressly stated herein or in the
Previous License Agreement, Licensee shall have no other right to use or
interest in the Licensed Rights or Licensed Regulatory Data. Specifically,
Licensee shall not have any interest in any other patents, trademarks or other
intellectual property owned, licensed, developed or controlled by Licensor,
other than as expressly provided in this Agreement, the Previous License
Agreement or other valid written agreements. Licensee undertakes not to make,
market, use, import, offer for sale, sell or in any other way take any action to
commercialize the Licensed Products, Licensed Regulatory Data or Licensed Rights
outside the Territory. Each Party shall use commercially reasonable efforts to
direct to the other Party customer requests for Licensed Products received
through each Party's customer service that relate, in case of the Licensee,
requests outside the Territory and, in the case of Licensor, requests in the
Territory, in each case only to the extent

                                       9



that such referral does not violate or conflict with any confidentiality
obligations binding on the directing Party. The Parties intend that this
Agreement shall not restrict Licensor's freedom to make, use, import, offer for
sale, sell, practice or otherwise commercialize the Licensed Products, Licensed
Regulatory Data or Licensed Rights (a) within the Field outside the Territory or
(b) outside the Field whether or not in the Territory. Except as specifically
provided herein or in Article VI of the Supply Agreement, Licensee grants no
rights of ownership, use or otherwise in Licensee's patents, trademarks,
know-how or other intellectual property.

      2.3 Ownership of Intellectual Property.

      (a) Licensor's Ownership. Licensee acknowledges and agrees that, as
between Licensee and Licensor, Licensor is the sole owner of the Licensed Rights
and Licensed Regulatory Data and any Improvements to the Licensed Rights or
Licensed Regulatory Data, including without limitation products in whole or in
part based on, utilizing or otherwise incorporating the Licensed Rights or
Licensed Regulatory Data, whether conceived, created or developed by Licensor or
Licensee, except as expressly provided herein and in Article VI of the Supply
Agreement. Licensee shall not directly or indirectly question, attack, contest,
or in any other manner impugn the validity, enforceability, registration or
Licensor's ownership of, or right to use the Licensed Rights and Licensed
Regulatory Data and any Improvements thereupon (other than the Improvements
owned by Licensee as expressly provided herein and in Article VI of the Supply
Agreement), including without limitation products in whole or in part based on,
utilizing or otherwise incorporating the Licensed Rights and Licensed Regulatory
Data, nor shall Licensee willingly become an adverse party to Licensor in any
Action contesting the validity or enforceability of, or Licensor's ownership of
or rights in, the Licensed Rights and Licensed Regulatory Data, except that
Licensee shall be permitted to be an adverse party in connection with a
defensive counterclaim, and to assert any claim or defense in any Action based
on any dispute arising out of or in connection with this Agreement, or the
breach, termination, or invalidity hereof.

      (b) Licensee's Ownership. Licensor acknowledges and agrees that, as
between Licensor and Licensee, Licensee shall have the right to create, develop
and acquire (itself or to have such done on its behalf) and own all right, title
and interest, and goodwill as applicable, in the following that are created,
developed or acquired by or on behalf of Licensee (and, to the extent that any
of the following constitute Improvements to the Licensed Rights or Licensed
Regulatory Data, such Improvements):

            (i) "TERRITORY SPECIFIC MATERIALS" which shall mean: (A) trademarks
      and trade dress for or utilized with the Licensed Products in the
      Territory (including, for the avoidance of doubt, the mark "SUBQ" or any
      mark containing the term "SUBQ"), but excluding the Licensor trademarks
      used in accordance with Section 3.2(a) e.g., NASHA or Licensor corporate
      identifier; (B) website content for the Licensed Products in the
      Territory; and (C) marketing, sales and promotional materials for the
      Licensed Products in the Territory, including Advertising and Promotional
      Labeling;

            (ii) * * *

                                       10



            (iii) Improvements conceived by Licensee that are not in whole or in
      part based on, do not utilize or do not otherwise incorporate, the
      Licensed Rights or Licensed Regulatory Data.

      For avoidance of doubt, Licensee acknowledges and agrees that Licensee's
ownership of the Improvements and materials included in the Territory Specific
Materials or Licensee Regulatory Materials does not imply ownership of the
Licensed Rights or Licensed Regulatory Data or any other Improvements or
materials. Licensor shall not directly or indirectly question, attack, contest,
or in any other manner impugn the validity, enforceability, registration or
Licensee's ownership of, or right to use the Territory Specific Materials or
Licensee Regulatory Materials nor shall Licensor willingly become an adverse
party to Licensee in any Action contesting the validity or enforceability of, or
Licensee's ownership of or rights in, the Territory Specific Materials or
Licensee Regulatory Materials, except that Licensor shall be permitted to be an
adverse party in connection with a defensive counterclaim, and to assert any
claim or defense in any Action based on any dispute arising out of or in
connection with this Agreement, or the breach, termination, or invalidity
hereof.

      (c) Joint Ownership. The following Improvements shall be jointly owned by
the Parties: (i) Improvements to the Licensed Rights, Licensed Regulatory Data
or Licensee Regulatory Materials that the Parties' designees on the Steering
Committee mutually agree shall be jointly owned by the Parties for the purpose
of avoiding prior art status, under 35 U.S.C. ss. 102(e), and (ii) clinical data
developed by the Parties that the Parties' designees on the Steering Committee
mutually agree shall be jointly owned pursuant to Article VI of the Supply
Agreement (the "JOINTLY OWNED IMPROVEMENTS").

      2.4 Improvements.

      (a) Rights to Improvements. Notwithstanding the foregoing, any
Improvements to the Licensed Rights or Licensed Regulatory Data, including
Licensor's undivided interest in the Jointly Owned Improvements, made by or for
Licensor during the Term (other than the Improvements owned by Licensee as
expressly provided herein and in Article VI of the Supply Agreement) shall be
made available to Licensee and be deemed included within the scope of the
Licensed Rights or Licensed Regulatory Data, as applicable, without any
additional consideration on the part of Licensee. Without limiting the
generality of the foregoing and except for the Improvements owned by Licensee as
expressly provided herein and in Article VI of the Supply Agreement, Licensee
agrees not to, and not to assist any Third Party to, apply to register or
register title to any intellectual property rights in the Licensed Rights or
Licensed Regulatory Data or any Improvements thereupon, including Improvements
to Licensed Products that are, in whole or in part, based on, utilizing or
otherwise incorporating the Licensed Rights or Licensed Regulatory materials,
except for the Improvements owned by Licensee as expressly provided herein and
in Article VI of the Supply Agreement.

      (b) Certain Improvements Relating to * * *. If, in order to obtain * * *
for the Licensed Products, Licensor develops an Improvement to the Licensed
Products for * * * use and such Improvement has an average particle size larger
than * * *, then such Improvement will be deemed a Licensed Product under this
Agreement and the Supply Agreement notwithstanding its average particle size or
any other provision of this Agreement or the Supply Agreement to the

                                       11



contrary, and the definition of "Licensed Product" herein and in the Supply
Agreement and Section 2.1(a) hereof shall be automatically amended as necessary
to include such Improvement, provided, however that in the event * * * are
achieved with a Licensed Product having an average particle size equal to or
less than * * *, this Section 2.4(b) shall not apply and shall be of no force or
effect. For the avoidance of doubt, nothing in this Section 2.4(b) or this
Agreement is intended to require Licensor to develop an Improvement to the
Licensed Products having an average particle size larger than * * *.

      (c) Grant Back License Outside the Territory. Subject to the terms and
conditions of this Agreement and to the extent that Licensee has the right to
grant license rights therein, Licensee grants to Licensor, effective as of
Closing Date, a fully paid-up, exclusive outside the Territory for all purposes,
nonsublicensable (except as permitted in Section 12.1) and nonassignable (except
as permitted in Section 12.1) license to make, market, use, distribute, import,
offer for sale, sell, commercialize or otherwise dispose of (i) all of the
Territory Specific Materials, except for the trademarks and trade dress for the
Licensed Products specified in Section 2.3(b)(i)(A) and the website content
specified in Section 2.3(b)(i)(B); (ii) all of the Licensee Regulatory Materials
except for the Regulatory Approvals and Opt Out Data; and (iii) Licensee's
undivided interest in the Jointly Owned Improvements. For the avoidance of
doubt, subject to the terms and conditions of this Agreement and to the extent
that Licensee has the right to grant license rights therein, Licensee grants to
Licensor, effective as of Closing Date, a fully paid-up, exclusive outside the
Territory for all purposes, nonsublicensable (except as permitted in Section
12.1) and nonassignable (except as permitted in Section 12.1) license to make,
market, use, distribute, import, offer for sale, sell, commercialize or
otherwise dispose of the Licensee Regulatory Materials (except for the
Regulatory Approvals and Opt Out Data), including, for the avoidance of doubt,
the regulatory and clinical data and materials generated in accordance with
Section 6.3(b)(iii) of the Supply Agreement.

      (d) Grant Back License Inside the Territory Outside the Field. Subject to
the terms and conditions of this Agreement and to the extent that Licensee has
the right to grant license rights therein, Licensee grants to Licensor,
effective as of Closing Date, a fully paid-up, exclusive inside the Territory
outside the Field, nonsublicensable (except as permitted in Section 12.1) and
nonassignable (except as permitted in Section 12.1) license to make, market,
use, distribute, import, offer for sale, sell, commercialize or otherwise
dispose of (i) all of the Licensee Regulatory Materials except for the
Regulatory Approvals and Opt Out Data; and (ii) Licensee's undivided interest in
the Jointly Owned Improvements. For the avoidance of doubt, subject to the terms
and conditions of this Agreement and to the extent that Licensee has the right
to grant license rights therein, Licensee grants to Licensor, effective as of
Closing Date, a fully paid-up, exclusive inside the Territory outside the Field,
nonsublicensable (except as permitted in Section 12.1) and nonassignable (except
as permitted in Section 12.1) license to make, market, use, distribute, import,
offer for sale, sell, commercialize or otherwise dispose of the Licensee
Regulatory Materials (except for the Regulatory Approvals and Opt Out Data)
including, for the avoidance of doubt, the regulatory and clinical data and
materials generated in accordance with Section 6.3(b)(iii) of the Supply
Agreement.

      (e) Grant Back License to the Opt Out Data. Subject to the terms and
conditions of this Agreement and to the extent that Licensee has the right to
grant license rights therein, Licensee grants to Licensor, effective as of
Closing Date, a fully paid-up, exclusive inside the

                                       12



Territory outside the Field and outside the Territory, nonsublicensable (except
as permitted in Section 12.1) and nonassignable (except as permitted in Section
12.1) license to access and use the Opt Out Data solely for the purpose of
complying with the safety reporting requirements of the FDA, TPD, or an
equivalent regulatory body in a country outside the Territory; provided, that
the Opt Out Data shall not include data or information owned by Third Parties or
that Licensee is under an obligation at law or to Third Parties not to disclose
(e.g., protected patient identification information). For purposes of the
preceding sentence, "Third Party" shall not include contract laboratories or
other agents acting on behalf of Licensee or its Affiliates. Notwithstanding the
foregoing, with respect to data or information owned by Third Parties or that
Licensee is under an obligation to Third Parties not to disclose, Licensee shall
use commercially reasonable efforts to cause such Third Parties to provide
letters of authorization granting necessary rights of reference or permission to
disclose (e.g., to their confidential information).

      2.5 Website Content and URLs.

      (a) Cross License. To the extent a Party or an Affiliate of a Party has
the right to grant licenses to the content for its website that describes a
Licensed Product ("WEBSITE CONTENT"), such Party grants the other Party,
effective as of the Closing Date, a fully paid-up, non-exclusive,
nonsublicensable (except as permitted in Section 12.1) and nonassignable (except
as permitted in Section 12.1) license to use such Website Content in connection
with the marketing, offering for sale, and distribution of the Licensed
Products, which license shall include the right to copy, prepare derivative
works and publicly display such Website Content. The licensor of such Website
Content shall in all instances act reasonably to provide materials embodying the
Website Content to the licensee of such content and in allowing the licensee of
the Website Content to display such content as provided in all cases at the
licensee's reasonable request and sole expense. Prior to copying the Website
Content of the other Party or its Affiliates, the licensee of the Website
Content shall send the licensor an email describing the Website Content it wants
to copy, and the licensor shall, within five (5) Business Days, provide the
licensee with its commentary, updates and notes, if any, on the Website Content
identified in the licensee's email.

      (b) Conditions to License. The license granted to Licensee in Section
2.5(a) is subject to the conditions that (i) any website owned or operated by or
on behalf of Licensee that displays Website Content (A) is directed solely to
users in the Territory, and (B) contains a prominent disclaimer to the effect
that any Website Content is directed solely to users in the United States or
Canada; (ii) any website owned or operated by or on behalf of Licensor that
displays Website Content (A) is directed solely to users outside the Territory,
and (B) contains a translation of Licensee's Website Content into a language
other than the English language or a prominent disclaimer to the effect that any
Website Content written in the English language is not directed to users in the
United States or Canada.

      (c) Access to Websites. It is understood and agreed that it shall not be a
breach of this Section 2.5 if (i) users outside the Territory are able to gain
access to websites owned or operated by or on behalf of Licensee, provided that
Licensee does not take any affirmative measures to target such users and takes
commercially reasonable measures to respond only to users located within the
Territory, for example, by declining to provide additional information to users
who identify themselves as being located outside the Territory, or (ii) users in
the Territory

                                       13



are able to gain access to websites owned or operated by or on behalf of
Licensor, provided that Licensor does not take any affirmative measures to
target such users and takes commercially reasonable measures to respond only to
users located outside the Territory, for example, by declining to provide
additional information to users who identify themselves as being located in the
Territory. Licensor and Licensee shall ensure that their respective websites
substantially comply with the applicable FDA and the applicable TPD
requirements. Licensor shall not, and shall cause its licensees not to, register
or use (i) any Licensee Mark in any URL or domain name, or (ii) any trademark
for a Licensed Product in any URL or domain name that contains the international
extension ".us" (for the United States) or ".ca" (for Canada).

                                   ARTICLE III
                                   OBLIGATIONS

      3.1 Diligence Efforts.

      (a) Diligence Obligations of the Parties. Licensee shall use commercially
reasonable efforts to obtain Regulatory Approvals for the Licensed Products in
the Territory, to bring Licensed Products to market, and to maximize sales of
Licensed Products in the Territory. At a minimum, it is Licensee's obligation
under this Section 3.1(a) to adopt and implement efforts to bring Licensed
Products to market and to maximize sales for each Licensed Product hereunder
that are reasonably equivalent to the sales and other efforts and sales
strategies adopted and implemented by Licensee's Affiliate pursuant to the
Previous License Agreement with regard to the launch and ongoing sales efforts
for Restylane;(TM) provided, however, that Licensee may adjust its efforts under
this Agreement to account for the differences in the products and the market
opportunities therefor. In the event the product currently marketed in Europe
under the trademark Restylane SubQ does not meet the requirements of * * *,
Licensor shall use commercially reasonable efforts to develop at least one
Licensed Product having * * *.

      (b) Diligence Default. In the event that Licensor believes that Licensee
has committed a material breach of its obligations under Section 3.1(a) for a
particular Licensed Product and Licensor provides Licensee with written notice
of such alleged material breach, and Licensee thereafter fails to effect a cure
of such alleged material breach within thirty (30) days of receipt of the
written notice from Licensor, Licensor may invoke the dispute resolution
procedures set forth in Article XI. If, in a final arbitral decision, the
arbitral tribunal determines that Licensee has committed a material breach of
its obligations in Section 3.1(a) with respect to a particular Licensed Product
(a "DILIGENCE DEFAULT"), Licensor shall have the exclusive remedies specified in
Sections 3.1(c) and 3.1(d).

      (c) Termination of Exclusive Rights. In the event a Diligence Default has
occurred, Licensor may (i) terminate the exclusive rights granted in Section 2.1
hereof for that particular Licensed Product by sending written notice of such
termination to Licensee, and (ii) obtain a duplicate PMA Approval with respect
to such Licensed Product in accordance with Section 3.1(d) only for purposes of
obtaining and maintaining approval to market and distribute such Licensed
Product in the Territory. If Licensor terminates the exclusive rights granted in
Section 2.1 hereof for a particular Licensed Product, such license with respect
to such Licensed Product shall continue in effect but shall become nonexclusive
with regard to such Licensed Product only.

                                       14



      (d) Duplicate PMA Approvals.

            (i) For purposes of this Section 3.1(d), "Licensor" shall refer to
      "Licensor or its licensee." The procedure for obtaining duplicate PMA
      Approvals in the event of a Diligence Default shall be as follows:

            (A) Pursuant to the FDA's existing procedure, Licensor shall prepare
            and file a complete original PMA Application based upon a right of
            reference to the information in Licensee's Regulatory Approvals for
            the nonexclusive Licensed Product. Licensee shall cooperate fully to
            ensure that such PMA Application is complete, accurate and
            acceptable for filing under 21 C.F.R. ss. 814.12. Licensee shall
            promptly provide all necessary letters of authorization granting
            rights of reference, shall use commercially reasonable efforts to
            cause Third Parties to provide letters of authorization granting
            necessary rights of reference (e.g., to their Master Files) and
            otherwise shall use commercially reasonable efforts to enable
            Licensor to fully comply with and pursue the FDA requirements for
            obtaining duplicates of the original PMA Approvals in accordance
            with the terms of this Agreement. Licensee shall promptly cooperate
            with Licensor's efforts and the FDA procedures as reasonably
            requested by Licensor and as necessary to obtain such duplicate PMA
            Approvals.

            (B) The FDA generally refers to the foregoing procedure as licensing
            of a PMA Approval, with the owner of the original Regulatory
            Approval as the licensor and the owner of the newly issued PMA
            Approval as the licensee. These terms are not used in this Section
            3.1(d) in order to avoid confusion with this Agreement and terms
            related hereto.

            (ii) Upon the completion of the procedures referenced in Section
      3.1(d)(i), above: (A) Licensor shall have irrevocable ownership of its
      duplicate Regulatory Approvals for the sole purpose of marketing and
      distributing the nonexclusive Licensed Product and (B) Licensor's
      distribution (or distribution by its other licensees and/or agents) of
      such nonexclusive Licensed Products in the United States shall be
      conducted under the Regulatory Approvals that Licensor owns.

            (iii) As applicable, both Parties shall provide all necessary
      letters of authorization granting rights of reference, shall use
      commercially reasonable efforts to cause Third Parties to provide letters
      of authorization granting necessary rights of reference (e.g., to their
      Master Files) and otherwise shall cooperate fully in complying with the
      FDA requirements for obtaining duplicate PMA Approvals in accordance with
      the terms of this Agreement.

      (e) Exclusive Remedies. The remedies specified in Sections 3.1(b), 3.1(c)
and 3.1(d), shall be the exclusive remedy in the event of a Diligence Default
notwithstanding any other rights, powers, remedies and privileges that may be
available to Licensor under this Agreement (including, without limitation,
Article X hereof), the Transaction Agreements or Laws of any Governmental
Authority. If, following a Diligence Default, the exclusive license rights
granted in Section 2.1 hereof for a particular Licensed Product become
nonexclusive in accordance with

                                       15



Section 3.1(c), Licensee shall have no further obligations under Section 3.1(a)
for that Licensed Product.

      3.2 Markings and Trade Dress.

      (a) Licensee shall use commercially reasonable efforts to substantially
comply with all patent marking and placement of corporate identifiers and
identifiers of NASHA technology on the packaging and package inserts of the
Licensed Products as required by applicable Law in the U.S. and Canada. Licensee
shall use and display on all packaging and package inserts of the Licensed
Products Licensor corporate identifiers and identifiers of NASHA technology that
are reasonably requested by Licensor and are of a size, format and location
appropriate for said packaging as reasonably determined by Licensee, provided
that such identifiers shall be displayed in a reasonably prominent manner.
Licensee shall not use or display Licensor's corporate identifiers or
identifiers of NASHA technology other than on promotional literature, packaging
and package inserts, without Licensor's express written consent, and in any
event shall not use or display Licensor's corporate identifiers or identifiers
of NASHA technology in a manner inconsistent with Licensor's use and display
thereof. It shall not be considered a breach by Licensee of this Section 3.2 if,
through inadvertence or Third Party error, such identifiers are not, or are
incorrectly, displayed on a small number of promotional literature, packages or
package inserts of the Licensed Products.

      (b) Licensee shall have the right to adopt, own for registration and use
for Licensed Products, in each case solely in the Territory, (i) trademarks
owned or controlled by Licensor and used to brand the Licensed Products outside
the Territory or trademarks substantially similar thereto (the "LICENSOR MARKS)
and/or the trade dress owned or controlled by Licensor and used in connection
with the Licensed Products outside the Territory, or trade dress substantially
similar thereto (the "LICENSOR TRADE DRESS"); or (ii) trademarks distinctive to
Licensee, provided such trademarks are not confusingly similar to the Licensor
Marks existing and publicly known (the "LICENSEE MARKS) and/or trade dress
distinctive to Licensee, provided such trade dress is not confusingly similar to
the Licensor Trade Dress existing and publicly known (the "LICENSEE TRADE
DRESS") and provided further that Licensee (x) shall bear its own expenses with
regard to adoption or modification of Licensee Marks and Licensee Trade Dress,
and (y) shall not adopt a Licensee Trade Dress which is incompatible with or
unduly burdensome on Licensor's packaging or other equipment. For the avoidance
of doubt, Licensee may adopt any combination of the foregoing (e.g., the
Licensee Marks with the Licensor Trade Dress or the Licensor Marks with the
Licensee Trade Dress).

      (c) In the event that Licensee adopts the Licensor Marks to brand and
market the Licensed Products in the Territory, the Parties agree that Licensor
shall, and shall cause its Third Party licensees to, refrain from adopting new
trademarks, or changing or modifying the existing trademarks, for any product of
Licensor that is distributed inside the Territory (either inside or outside the
Field) in a way as to make it confusingly similar to the marks adopted by
Licensee, provided that Licensor shall be free to change, modify or adapt its
trademarks used in connection with its products outside the Territory, even if
such changes, modifications or adaptations result in trademarks that are
confusingly similar to the trademarks used by Licensee in connection with
Licensed Products within the Territory.

                                       16



      (d) In the event that Licensee elects to adopt the Licensor Trade Dress
for use in connection with the Licensed Products in the Territory, the Parties
agree that each Party shall be free to change, modify or adapt its trade dress
used in connection with its products, even if such changes, modifications or
adaptations result in trade dress that is confusingly similar to the trade dress
used by the other Party in connection with its products; provided however
Licensor shall, and shall use commercially reasonable efforts to cause its Third
Party licensees to, refrain from modifying the Licensor Trade Dress in a way
identical to Licensee's modifications of Licensor Trade Dress adopted by the
Licensee.

      (e) In the event that Licensee adopts the Licensee Marks or Licensee Trade
Dress to brand and market the Licensed Products in the Territory, the Parties
agree that Licensor shall, and shall cause its Third Party licensees to, refrain
from adopting new trademarks or trade dress or changing or modifying the
existing trademarks or trade dress, for any product of Licensor that is
distributed either in or outside the Territory in a way as to make it identical
or confusingly similar to the Licensee Marks or Licensee Trade Dress.

      3.3 Protection of Intellectual Property. Licensee shall take such action
as Licensor reasonably requests in writing, at Licensor's expense except as
otherwise determined by the Steering Committee in accordance with the Supply
Agreement, to assist Licensor in obtaining, registering and perfecting the
Licensed Rights and disclosing pertinent information and executing documents in
connection therewith.

      3.4 Compliance With Relevant Law. Licensor and Licensee shall each comply
in all material respects with all applicable Laws that pertain to the activities
for which Licensor and Licensee are each responsible under this Agreement.

      3.5 Prosecution and Maintenance of Licensed Patents. Subject to the terms
and conditions of this Agreement, Licensor shall use reasonable best efforts to
prosecute and maintain all Licensed Patents in the Territory in Licensor's name
in accordance with the applicable terms set forth herein. Except as otherwise
set forth in Section 4.2 herein with respect to Actions for the infringement,
misappropriation or impairment of or damage to the Licensed Rights, Licensor
shall be responsible for all actions and costs associated with maintaining the
enforceability and validity of the Licensed Patents, and paying maintenance fees
and/or annuities, and all other costs required to maintain the Licensed Patents.
Licensor shall use reasonable best efforts to prosecute each of the Licensed
Patents either to issuance or until administrative appeals to the Board of
Patent Appeals and Interferences or its Canadian equivalent are exhausted.
Except as provided in Section 3.7 herein with regard to patent applications
requested by Licensee, the preparation and filing of any new patent applications
shall be entirely and solely at Licensor's discretion.

      3.6 Correspondence Relating to Patent Prosecution. Licensor shall deliver
to Licensee, or counsel designated by Licensee, copies of all non-privileged
correspondence to and from the USPTO and CIPO relating to the Licensed Patents
in the Territory, as well as all non-privileged correspondence with the World
Intellectual Property Organization relating to any International Application
designating the United States or Canada, and all non-privileged correspondence
with any national or regional patent office containing any information that may
reasonably be material to the validity, scope or enforceability of the Licensed
Patents, relating to

                                       17



applications corresponding to or claiming priority with or from the Licensed
Patents. Such correspondence shall be delivered promptly after the origination
or receipt of such correspondence. With respect to the Licensed Patents,
Licensee or counsel designated by Licensee shall have the right to submit
comments on such correspondence to Licensor within fifteen (15) Business Days
after Licensor sends such correspondence to Licensee or counsel designated by
Licensee. If Licensee or counsel designated by Licensee timely submits comments
to Licensor, and subject always to the best judgment of Licensor and its
counsel, Licensor shall use commercially reasonable efforts to incorporate all
reasonable comments in its further correspondence with the USPTO or CIPO,
provided incorporation of the comments would not unreasonably delay, burden or
increase the expense of the prosecution of pending patent applications.

      3.7 Divisional, Continuation and New Patent Applications. From time to
time Licensee may desire that Licensor file a divisional, continuation or new
application for patent in the Territory embodying an invention conceived by
Licensee and in whole or in part based on, utilizing or otherwise incorporating
the Licensed Rights. In such circumstances, Licensee shall submit to the
Steering Committee, in accordance with the Supply Agreement, a request for
patent filing detailing the invention, the effect of the invention on the
commercialization of the Licensed Products in the Territory (if any) and any
information known to Licensee regarding the novelty, non-obviousness and general
patentability of the invention (a "PATENT REQUEST"). Licensee and Licensor shall
cause their respective designees on the Steering Committee, in accordance with
the Supply Agreement, to decide whether or not to approve the Patent Request,
taking into consideration both any effect on the commercialization of the
Licensed Products in the Territory and the patentability of the invention
proposed for patenting. If the Steering Committee in accordance with the Supply
Agreement approves a Patent Request, Licensor shall use commercially reasonable
efforts to timely file a patent application based on the invention detailed
therein and to diligently prosecute such application to issuance, provided that
Licensee shall pay all reasonable costs related to any patent application filed
pursuant to a Patent Request and any patent that issues therefrom to the extent
the application and patent relate exclusively to the Territory. To the extent
the application and any patent that issues therefrom are relevant to the
worldwide market, Licensee and Licensor shall cause their respective designees
on the Steering Committee to determine the appropriate allocation of cost as
between Licensee and Licensor. Notwithstanding Licensee's payment of prosecution
and maintenance fees, any patent application embodying an invention in whole or
in part based on, utilizing or otherwise incorporating the Licensed Rights,
filed pursuant to a Patent Request, or otherwise, and any patent that issues
therefrom shall be owned in its entirety by Licensor unless the Parties'
designees on the Steering Committee mutually agree that such application or
patent shall be jointly owned for the purpose of avoiding prior art status, such
as under 35 U.S.C. ss. 102(e). For the avoidance of doubt, the Parties intend
that Licensee has the right, on its own and at its sole expense, to prosecute
patents based on its own inventions to the extent, and only to the extent, such
inventions are not in whole or in part based on, do not utilize, and do not
otherwise incorporate the Licensed Rights.

      3.8 March In Rights. If and only if Licensor is unwilling or unable due to
Licensor's bankruptcy, insolvency, appointment of receiver or similar proceeding
to maintain the Licensed Patents to the extent relevant to the Licensed Products
in the Territory, Licensee shall have the

                                       18



right to prosecute and maintain such Licensed Patents in the Territory, provided
that in all events, ownership of all rights in and to such Licensed Patents
shall remain with Licensor.

      3.9 Provision of Licensor Information and Access to Licensor Employees.

      (a) Licensor shall, promptly after the Closing Date and at Licensee's sole
expense, use commercially reasonable efforts to deliver to Licensee
documentation of (1) the Licensed Know-How and Licensed Regulatory Data to the
extent such documentation (i) exists and (ii) is not subject to confidentiality
restrictions preventing its disclosure to Licensee and (2) any material
published by Licensor related to the Licensed Products, including but not
limited to marketing and sales materials, to the extent such documentation (i)
exists and (ii) is reasonably requested by Licensee for its use in the
marketing, use, distribution, importation, offering for sale, sale,
commercialization or other disposition of the Licensed Products in the
Territory. Licensor shall use commercially reasonable efforts to supplement such
documentation when new documentation reflecting the Licensed Know-How or
Licensed Regulatory Data becomes available to Licensor. For the avoidance of
doubt, Licensor shall have no obligation to author, create or produce initial or
supplemental documentation to the extent such documentation does not otherwise
exist, but Licensor agrees to share with Licensee such documentation related to
the marketing, use, distribution, importation, offering for sale, sale,
commercialization or other disposition of the Licensed Products in the Territory
as now exists or is hereafter created, other than documentation that Licensor is
under an obligation to unrelated Third Parties not to disclose, such as patient
data. All such documentation shall be provided by Licensor to the Licensee in
the form of one copy only in the English language or in another language if no
English copy exists.

      (b) From time to time Licensor shall use commercially reasonable efforts
to provide Licensee reasonable access, at Licensee's sole expense, to relevant
employees designated by Licensor as having knowledge of Licensed Know-How or
Licensed Regulatory Data that are not reduced to writing and is reasonably
requested by Licensee for its use in the marketing, use, distribution,
importation, offering for sale, sale, commercialization or other disposition of
the Licensed Products in the Territory, to allow Licensee to meet and interview
such employees to enable Licensee to better practice the Licenses granted under
Section 2.1, provided that, if not otherwise agreed between the Parties, (i) the
total of such meetings shall be limited to no more than five (5) days per annum
or, in any year in which Licensee shall Launch a Licensed Product, no more than
ten (10) days per annum, of which no more than two (2) days at a time shall be
consecutive; (ii) such meetings shall occur upon not less than thirty (30) days'
prior notice to Licensor; (iii) such meeting shall only be conducted during
normal business hours; and (iv) such meetings shall not unreasonably disrupt or
interfere with Licensor's normal operations. For the avoidance of doubt, meeting
of the Steering Committee shall not be counted in the calculations set forth in
this Section 3.9(b).

      3.10 Policing of Products.

      (a) The Parties shall use commercially reasonable efforts to police the
Licensed Products and their channels of trade to ensure that (i) Licensor and
its Affiliates, licensees or designees do not sell, offer for sale, import,
market, distribute or have distributed, or otherwise dispose of Licensed
Products within the Territory; and (ii) Licensee and its Affiliates, licensees

                                       19



or designees do not sell, offer for sale, import, market, distribute or have
distributed, or otherwise dispose of Licensed Products outside the Territory.

      (b) The Parties shall use commercially reasonable efforts to police their
products to ensure that (i) products sold by Licensor and its Affiliates,
licensees or designees, other than Licensed Products sold by Licensee and its
Affiliates, licensees or designees, are not used in the Field in the Territory;
and (ii) Licensed Products sold by Licensee and its Affiliates, licensees or
designees are not used outside the Field in the Territory (in either case an
"OUT-OF-FIELD USE"). In the event that either Party (the "COMPLAINING PARTY")
believes that products sold by the other Party (the "RESPONSIBLE PARTY") or its
Affiliates, licensees or designees in the Territory have been or are being used
for an Out-of-Field Use, the Complaining Party shall present the Responsible
Party with the full, complete and most probative evidence of such Out-of-Field
Use available to the Complaining Party. If, after review of the proof presented
by the Complaining Party, the Responsible Party agrees that products sold by
itself or its Affiliates, licensees or designees in the Territory have been or
are being used for an Out-of-Field Use, such Responsible Party shall compensate
the Complaining Party for the lost profits suffered by the Complaining Party due
to the Out-of-Field Use of products sold directly by such Responsible Party or
its Affiliates, licensees or designees in the Territory. If, after review of the
proof presented by the Complaining Party, the Responsible Party refuses to
compensate the Complaining Party for its lost profits in accordance with this
Section 3.10(b), the Parties shall submit their claims to arbitration in
accordance with the dispute resolution provisions of Article XI herein.

      3.11 Tax Certificate. Licensor shall provide Licensee with a properly
executed and valid Form W-8BEN and shall continue to update such Form W-8BEN
throughout the Term of this Agreement in accordance with U.S. Treasury
Regulation 1.1441-1(e)(4)(ii).

      3.12 Other Agreements. Within thirty (30) days of the Closing Date,
Licensor shall deliver to Licensee a draft trademark license agreement pursuant
to which Licensee will receive a fully paid license to use the "NASHA" mark.
Following the Closing Date and prior to the date that the first Milestone
Payment is due in accordance with Article VIII hereof, the Parties shall execute
and deliver all documents, instruments and certificates required in connection
with establishing the Account contemplated by Section 8.2(a).

      3.13 Non-Compete Undertaking of Licensee.

      (a) During the Non-Compete Period (as defined below), Licensee agrees that
it will not sell, or enter into definitive agreements to sell, a Competing
Product. As used in this Section 3.13, the term "COMPETING PRODUCT" shall mean a
product for * * *.

      (b) As used in this Section 3.13, the term "NON-COMPETE PERIOD" shall mean
* * *.

                                   ARTICLE IV
                         INFRINGEMENT OF LICENSED RIGHTS

                                       20



            4.1 Obligations. Each Party shall promptly notify the other Party in
writing of any actual or potential infringement, misappropriation or impairment
of or damage to the Licensed Rights, or threatened Action against a Party that
the Party's acts under or related to the Licensed Rights infringe,
misappropriate, impair or otherwise damage the intellectual property rights of a
Third Party, of which the Party is or becomes aware.

            4.2 Actions. Licensor shall have the exclusive right to bring an
Action for the infringement or misappropriation or impairment of or damage to
the Licensed Rights and shall use all reasonable, diligent efforts to pursue
parties who have infringed, misappropriated, impaired or otherwise damaged the
Licensed Rights known to Licensor or identified in writing to Licensor by
Licensee. Licensor shall bear all expenses, have complete control over, and
recover all proceeds, settlements and damages with respect to any such Action,
provided that, if such infringement, misappropriation, impairment or damage is
due in whole or in part to the actions or inactions of Licensee, Licensee shall
reimburse Licensor for such expenses, including reasonable attorney's fees and
expenses, in proportion to the degree to which Licensee's actions or inactions
contributed to such infringement, misappropriation, impairment or damage.
Licensee agrees to cooperate fully with Licensor at Licensor's expense in any
such Action, and to be joined as a party in such Action where required by Law.
If Licensor fails to provide Licensee with evidence reasonably sufficient to
Licensee that Licensor has undertaken demonstrable and reasonable efforts to
abate and investigate an infringement, misappropriation, impairment or damage
reported by Licensee in writing to Licensor within sixty (60) days after it
receives a written request from Licensee to do so, or if Licensor fails to bring
an Action in the Field in the Territory to abate an infringement,
misappropriation, impairment or damage within ninety (90) days after it receives
a written request from Licensee to do so, or if Licensor discontinues the
prosecution of any such Action after filing, Licensee may, in its discretion,
undertake such Action as it deems necessary to enforce the Licensed Rights. In
such case, Licensee shall bear all expenses and recover all proceeds,
settlements and damages with respect to any such Action, and Licensor shall
assist Licensee, upon Licensee's request, at Licensee's sole expense in taking
any action to enforce the Licensed Rights and shall consent to be joined as a
party in such Action where required by Law. In any Licensee-brought Action,
Licensee shall promptly send to Licensor a true copy of any and all notices or
communications between Licensee and the Third Party infringer as well as a true
copy of any and all pleadings, motions or other filings in or related to the
Action. To the extent that there are communications not in writing, Licensee
shall periodically, but at least monthly, provide to Licensor a report of all
material communications bearing upon the current status of the dispute as
between Licensee and the Third Party infringer, and any steps bearing upon
resolution of that dispute. In no event shall either Party settle any Action
referred to in this Section 4.2 with any Third Party, which settlement would
materially affect any of the rights of the other Party (as determined by that
Party in its reasonable discretion) under this Agreement, without the prior
approval of the other Party, which approval shall not be unreasonably withheld
or delayed.

                                    ARTICLE V
                    REPRESENTATIONS, WARRANTIES AND COVENANTS

      5.1 Representations and Warranties of Licensor. Licensor hereby represents
and warrants to Licensee that:

                                       21



      (a) Corporate Organization and Authority. Licensor is a company duly
organized, validly existing and in good standing under the Laws of the Kingdom
of Sweden and has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution and delivery
by Licensor of this Agreement, the performance by Licensor of its obligations
hereunder, and the consummation by Licensor of the transactions contemplated
hereby have been duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by Licensor and, assuming the due
authorization, execution and delivery hereof by Licensee, constitutes a legal,
valid and binding obligation of Licensor, enforceable against Licensor in
accordance with its terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium, or
other Laws of general application relating to or affecting enforcement of
creditors' rights and Laws concerning equitable remedies.

      (b) No Conflict. The execution, delivery and performance by Licensor of
this Agreement and the consummation by Licensor of the transactions contemplated
hereby do not and will not, with or without the giving of notice or the passage
of time or both, violate, conflict with or cause a breach or termination of or
constitute a default under (i) the provisions of any Law applicable to Licensor
or its properties or assets; (ii) the provisions of the constituent
organizational documents or other governing instruments of Licensor; (iii) any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which Licensor is a party or by which Licensor, the Licensed
Products, the Licensed Regulatory Data or the Licensed Rights are bound or
subject; or (iv) any judgment, decree, order or award of any court or
Governmental Authority applicable to Licensor or its properties or assets.

      (c) Governmental and Third Party Consents. No consent, approval, exemption
or authorization is required to be obtained from, no notice is required to be
given to and no filing is required to be obtained from, any Third Party or
Governmental Authority by virtue of the execution and delivery of this
Agreement.

      (d) Litigation. Except as set forth in Schedule 5.1(d), (i) there are no
Actions pending, or to Licensor's or its Affiliates' knowledge threatened, which
could reasonably be expected to have, individually or in the aggregate, a
material adverse effect on the prospects or condition of the Licensed Products,
Licensed Regulatory Data or the Licensed Rights nor (ii) to Licensor's or its
Affiliates' knowledge, do circumstances exist which are reasonably likely to
result in any Action of the kind described in clause (i) above.

      (e) Licensor Know-How and Licensed Regulatory Data. The Licensed Know-How
and Licensed Regulatory Data, to the extent constituting or containing trade
secret information, are not, as of the date hereof, readily ascertainable by
proper means by those who can obtain economic value from its knowledge or use
and Licensor has taken steps reasonable under the circumstances to ensure that
the Licensed Know-How and Licensed Regulatory Data, to the extent constituting
or containing trade secret information, have been maintained in confidence.

      (f) Licensed Rights and Licensed Regulatory Data. Licensor is the sole and
exclusive owner of, and has all rights, title and interest in and to, or has the
exclusive right to license the Licensed Rights and the Licensed Regulatory Data
in the Territory. No Actions are pending, or to Licensor's or its Affiliates'
knowledge threatened against Licensor alleging the

                                       22



Licensed Rights or Licensed Regulatory Data in any respect are an infringement,
misappropriation or impairment or have otherwise caused damage to any Third
Party or any Third Party's intellectual property rights, or that challenge
Licensor's ownership of, or the enforceability or validity of the Licensed
Rights or Licensed Regulatory Data. To the best of Licensor's or its Affiliates'
knowledge after due inquiry, the Licensed Rights and Licensed Regulatory Data do
not and will not infringe, constitute a misappropriation or impairment of or
otherwise cause damage to or interfere with any patent, copyright, trademark,
design right or other intellectual property rights of any other Person in the
Territory. Licensor has complied and will, during the Term, comply in all
material respects with all provisions of the patent acts, regulations, and
statutes regarding the procurement and maintenance of, all Licensed Rights and
Licensed Regulatory Data in the Territory. Licensor is in compliance and will,
during the Term, remain in compliance with that certain settlement agreement
dated September 28, 1999, between Licensor and Biomatrix, Inc. in settlement of
Civil Case #99-CV-2021 in the U.S. District Court for the District of New Jersey
(Newark), Biomatrix, Inc. v. Bengt Agerup, et al., Filed May 3, 1999. Licensor
has not specifically admitted that any claim of an unexpired patent or pending
patent application included within the Licensed Patents is invalid or
unenforceable through reissue, disclaimer (other than that in U.S. Patent No.
5,827,937 and Canadian Patent Application No. 2,226,488, wherein a disclaimer
has been filed with respect to claim 4) or otherwise. Licensor has adopted and
will use measures reasonable under the circumstances to enforce non-disclosure
and confidentiality policies and has obtained agreements from employees,
consultants and others relating to such matters that are reasonable under the
circumstances to protect its rights in and to the Licensed Rights and Licensed
Regulatory Data.

      (g) Third Party Rights. Neither Licensor nor its Affiliates have granted
to any Third Party or Affiliate any rights or licenses or have otherwise taken
any action that conflicts with or materially adversely affects the rights and
Licenses granted to Licensee under this Agreement and will not grant any such
rights or licenses to any Third Party during the Term.

      (h) Schedules. All schedules in this Agreement are complete and correct.
Schedule A contains a complete and correct list of all U.S. and Canadian patents
and patent applications owned by Licensor or any of its Affiliates that cover
the marketing, manufacture, use, distribution, importation, offering for sale,
sale, commercialization or other disposition of the Licensed Products in the
Field in the Territory.

      (i) Government Authority. Neither Licensor nor any of its Affiliates is
aware of any Action or pending or threatened Action by any Governmental
Authority, including, but not limited to, the TPD (as defined in the Supply
Agreement) or FDA, that would prohibit or disapprove of the sale of the Licensed
Products in the Territory. Licensor is not aware that any Governmental
Authority, including, but not limited to, the TPD and FDA, would have a basis
for prohibiting or not approving the sale of the Licensed Products in the
Territory.

      (j) Trademarks. Neither Licensor nor any of its Affiliates has, directly
or indirectly, registered, or filed applications for the registration of, the
mark "SUBQ" or any mark containing the term "SUBQ" with any Governmental
Authority in the Territory.

      5.2 Representations and Warranties of Licensee. Licensee represents and
warrants

                                       23



to Licensor that:

            (a) Corporate Organization and Authority. Licensee is a company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite power and authority to
execute and deliver this Agreement and to perform its obligations hereunder. The
execution and delivery by Licensee of this Agreement, the performance by
Licensee of its obligations hereunder, and the consummation by Licensee of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and delivered by
Licensee and, assuming the due authorization, execution and delivery hereof by
Licensor, constitutes a legal, valid and binding obligation of Licensee,
enforceable against Licensee in accordance with its terms, except to the extent
that such enforcement may be subject to applicable bankruptcy, insolvency,
reorganization, moratorium, or other Laws of general application relating to or
affecting enforcement of creditors' rights and Laws concerning equitable
remedies.

      (b) No Conflict. The execution, delivery and performance by Licensee of
this Agreement and the consummation by Licensee of the transactions contemplated
hereby do not and will not, with or without the giving of notice or the passage
of time or both, violate, conflict with or cause a breach or termination of or
constitute a default under (i) the provisions of any Law applicable to Licensee
or its properties or assets; (ii) the provisions of the constituent
organizational documents or other governing instruments of Licensee; (iii) any
note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which Licensee is a party or by which Licensee, the Licensed
Products or the Licensed Rights are bound or subject; or (iv) any judgment,
decree, order or award of any court or Governmental Authority applicable to
Licensee or its properties or assets.

      (c) Governmental and Third Party Consents. No consent, approval, exemption
or authorization is required to be obtained from, no notice is required to be
given to and no filing is required to be obtained from, any Third Party or
Governmental Authority by Licensee by virtue of the execution and delivery of
this Agreement.

      5.3 NO OTHER REPRESENTATIONS OR WARRANTIES. EXCEPT AS EXPRESSLY SET FORTH
HEREIN AND IN THE OTHER TRANSACTION AGREEMENTS, (I) LICENSOR MAKES NO
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER AT LAW OR IN EQUITY,
RELATED TO THE LICENSED RIGHTS OR LICENSED PRODUCTS, INCLUDING WITHOUT
LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR ANY OTHER MATTER, (II)
LICENSOR MAKES NO, AND HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY,
INCLUDING ANY IMPLIED WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE REGARDING THE LICENSED RIGHTS AND LICENSED PRODUCTS, (III)
THE LICENSED RIGHTS ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS EFFECTIVE AS OF
THE CLOSING DATE AND LICENSEE SHALL RELY UPON ITS OWN EXAMINATION THEREOF, (IV)
LICENSEE MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, EITHER AT LAW
OR IN EQUITY, RELATED TO THE LICENSEE LICENSED RIGHTS, INCLUDING WITHOUT
LIMITATION, ANY

                                       24



REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR ANY OTHER MATTER, (V) LICENSEE
MAKES NO, AND HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE REGARDING THE LICENSEE LICENSED RIGHTS, AND (VI) THE LICENSEE LICENSED
RIGHTS ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS EFFECTIVE AS OF THE DATE ANY
LICENSE TO THE LICENSEE LICENSED RIGHTS BECOMES EFFECTIVE AND LICENSOR SHALL
RELY UPON ITS OWN EXAMINATION THEREOF. Without limiting the foregoing, each
Party acknowledges that it has not and is not relying upon any implied warranty
of merchantability or fitness for a particular purpose, or upon any
representation or warranty whatsoever as to the prospects (financial, regulatory
or otherwise) or the reliability, suitability, ability to produce a particular
result, and validity, regarding the Licensed Rights or the Licensee Licensed
Rights, as the case may be, after the date of this Agreement, except that
Licensee may rely on the representations and warranties contained herein and in
the other Transaction Agreements. This provision shall not affect the rights or
obligations of either Party hereto with respect to any other Transaction
Agreement.

      5.4 Disclaimer of Consequential, Incidental and Contingent Damages. Except
as otherwise expressly provided herein, to the extent permitted by Law, neither
Party shall be subject to, and each Party hereby disclaims, liability for all
consequential, incidental and contingent damages whatsoever of the other Party
or any of its Affiliates arising out of or relating to action or inaction under,
performance or non-performance of, or the breach of, this Agreement.

                                   ARTICLE VI
                                TERM; TERMINATION

      6.1 Term. The term of this Agreement ("TERM") commences on the date hereof
and, unless earlier terminated pursuant to Section 6.2, lasts until the last to
occur of (a) the last Licensed Patent in the Licensed Rights expires, is
abandoned or is finally adjudicated invalid and (b) the first to occur of (i)
all of the Licensed Know-How becomes publicly available, other than by a breach
by either Party of its obligations under Article IX herein, or (ii) one hundred
(100) years from the date hereof.

      6.2 Termination.

            (a) Licensor may terminate this Agreement effective upon written
notice to Licensee if Licensee breaches its obligation to pay to Licensor any
One Time Payment or Milestone Payment when due in accordance with this
Agreement, including Section 8.5 hereof, and has not cured such breach within
five (5) Business Days after receipt of written notice of such breach from
Licensor.

            (b) Either Party may terminate this Agreement if there shall have
been a Transfer by the other Party pursuant to a Change in Control (other than a
Volitional Change in Control) in violation of Section 12.1.

                                       25



      6.3 Effect of Termination. Upon the termination of this Agreement in
accordance with Section 6.2(a) by Licensor, Licensee shall (a) cease all use of
the Licensed Rights, Licensed Regulatory Data, Licensor Marks and Licensor's
Website Content and promptly return all originals and copies of any Licensed
Know-How, Licensed Regulatory Data and Licensor Confidential Information in its
possession or control to Licensor, and (b) transfer to Licensor the then
existing Regulatory Approvals for the Licensed Products and Improvements thereof
in the Territory pursuant to the FDA and TPD procedures for such transfers;
provided, that if the TPD procedures prohibit the transfer of the Regulatory
Approval in Canada to Licensor, Licensee shall grant Licensor a right of
reference with respect to the Canadian Regulatory Approval and any Licensee
Regulatory Materials to the extent necessary to obtain a duplicate Canadian
Regulatory Approval, and, for avoidance of doubt, to at least the same extent
necessary to obtain a duplicate PMA Approval under the provisions of Section
3.1(d) herein, for purposes of obtaining and maintaining approval to market and
distribute such Licensed Product in Canada.

      6.4 Survival. Article IX [Confidentiality], Article X [Indemnification]
and Article XI [Dispute Resolution], and Sections 12.8 [Expenses] and 12.15
[Publicity] shall survive the expiration or termination of this Agreement for
any reason; provided, however, that termination pursuant to Section 6.2 will not
relieve a defaulting or breaching Party from any liability to the other Party
hereto.

                                   ARTICLE VII
                        CLOSING AND CONDITIONS TO CLOSING

      7.1 Closing. The closing of the transactions contemplated hereby (the
"CLOSING") will take place at the offices of Akin Gump Strauss Hauer & Feld LLP,
at 590 Madison Avenue, New York, NY 10022, or at such other place as may be
mutually agreeable in writing by the Parties, on the date hereof (the "CLOSING
DATE"). At the Closing, the Parties will duly execute and deliver all documents
and instruments required to be delivered, and the Licensee will make all
payments required to be paid by the Licensee at the Closing under Section
8.1(a)(i), in each case as provided in this Agreement. The Closing of the
transactions contemplated hereby shall be deemed to have occurred as of 12:01
a.m. (New York City time) on the Closing Date.

      7.2 Method of Payment. Except with respect to the payment due on the
Closing Date, all amounts payable by Licensee hereunder shall be paid in United
States Dollars by wire transfer in immediately available funds to such bank
account as designated from time to time in writing by Licensor to Licensee at
least three (3) Business Days prior to the date such payment is due.

      7.3 Conditions of the Licensee's Obligations at Closing. The obligations
of Licensee under this Agreement are subject to the fulfillment at or before the
Closing of each of the following conditions, any of which may be waived in
writing by Licensee:

      (a) Supply Agreement. Licensor shall have entered into the Supply
Agreement.

      (b) Macrolane Side Letter. Licensor shall have entered into the Macrolane
Side Letter.

      (c) Previous License Letter Agreement. Licensor shall have entered into
the Previous

                                       26



License Letter Agreement.

      (d) Agerup Letter Agreement. Bengt Agerup shall have entered into the
Agerup Letter Agreement.

      (e) Tax Certificate. Licensor shall have provided Licensee with a properly
executed and valid Form W-8BEN.

      (f) Injunctions. At the Closing there shall not be in effect any Law or
any order, writ, injunction, decree, stipulation, determination or award entered
by or with any Governmental Authority ("GOVERNMENTAL ORDER") directing that the
transactions provided for herein not be consummated as provided herein or which
has the effect of rendering it impossible to consummate the transactions
provided for herein.

      (g) Certificate. Licensor shall deliver to Licensee a certificate of an
authorized board member of Licensor certifying and attaching: (i) Licensor's
organizational documents as in effect as of the date hereof, (ii) a copy of the
minutes of the meeting at which Licensor's board authorized the transactions
contemplated by this Agreement, and (iii) a copy of a power of attorney executed
on behalf of Licensor's board delegating the power to bind Licensor to
Licensor's officers signing this Agreement and any other documents, instruments
or certificates executed and delivered by Licensor at Closing.

      (h) Opinion. Licensee shall have received an opinion from Simpson Thacher
& Bartlett LLP and Advokatfirman Vinge KB, each in a form reasonably acceptable
to Licensee.

      7.4 Conditions of the Licensor's Obligations at Closing. The obligations
of Licensor under this Agreement are subject to the fulfillment at or before the
Closing of each of the following conditions, any of which may be waived in
writing by Licensor:

      (a) Supply Agreement. Licensee shall have entered into the Supply
Agreement.

      (b) Macrolane Side Letter. Licensee shall have entered into the Macrolane
Side Letter.

      (c) Previous License Letter Agreement. Licensee shall have entered into
the Previous License Letter Agreement.

      (d) Guarantee. Medicis shall have entered into the Guarantee.

      (e) Injunctions. At the Closing there shall not be in effect any Law or
Governmental Order directing that the transactions provided for herein not be
consummated as provided herein or which has the effect of rendering it
impossible to consummate such transactions.

      (f) Certificate. Licensee shall deliver to Licensor a certificate of an
authorized board member of Licensee certifying and attaching: (i) Licensee's
organizational documents as in effect as of the date hereof, (ii) the board
resolutions of Licensee authorizing the transactions contemplated by this
Agreement and (iii) the incumbency of Licensee's officers signing this Agreement
and any other documents, instruments or certificates executed and delivered by

                                       27



Licensee at Closing.

      (g) Opinion. Licensor shall have received an opinion from Akin Gump
Strauss Hauer & Feld LLP in a form reasonably acceptable to Licensor.

                                  ARTICLE VIII
                                  LICENSE FEES

      8.1 One Time Payments.

      (a) Subject to the terms and conditions of this Agreement, Licensee shall
pay to Licensor the following one time payments as set forth below (each, a "ONE
TIME PAYMENT"):

            (i) Thirty Million United States Dollars (U.S.$30,000,000.00) shall
      be paid to Licensor upon the Closing Date.

            (ii) Ten Million United States Dollars (U.S.$10,000,000.00) shall be
      paid to Licensor, promptly, and in any event within five (5) Business Days
      of the date upon which * * *.

            (iii) Twenty Million United States Dollars (U.S.$20,000,000.00)
      shall be paid to Licensor, promptly, and in any event within five (5)
      Business Days after the date of receipt by Licensee of written notice from
      the FDA * * *.

            (iv) Twenty Million United States Dollars (U.S.$20,000,000.00) shall
      be paid to Licensor, promptly, and in any event within five (5) Business
      Days of the Launch in the United States of the first Licensed Product.

      (b) For the avoidance of doubt, the Parties acknowledge and agree that the
use of the term "first Licensed Product" hereinabove means that Licensor shall
not be entitled to any other One Time Payments in respect of any other Licensed
Products.

      8.2 * * *

      8.3 Certain Tax Matters.

      (a) All payments under Sections 8.1 and 8.2 hereof shall be made net of
any amounts required to be withheld by Licensee or Licensor pursuant to the Laws
of any Governmental Authority.

      (b) Licensee shall for all purposes be the owner of all amounts held in
the Account prior to distribution and shall be responsible to timely pay all
taxes required with respect to income thereon, provided that any distributions
from the Account made to either Party shall be made net of any amounts required
to be withheld pursuant to the Laws of any Governmental Authority.

      8.4 Audit Rights.

                                       28



      (a) Upon the written request of Licensor and not more than once in each
Contract Year, Licensee shall permit an independent certified public accounting
firm or, as applicable, regulatory consulting firm of nationally recognized
standing, selected by Licensor and reasonably acceptable to Licensee, at
Licensor's expense, to have access during normal business hours to such of the
books and records and regulatory files of Licensee as may be reasonably
necessary to (i) verify the accuracy of the Net Revenues achieved in any
Contract Year ending not more than thirty-six (36) months prior to the date of
such request, and (ii) verify receipt of the notice from the FDA specified in
Section 8.1(a)(iii) hereof and for no other purpose. The accounting firm or
regulatory consulting firm, as applicable shall disclose to Licensor only (x)
whether the Net Revenues achieved are equal to the Net Revenues reported by
Licensee to Licensor and the specific details concerning discrepancies, if any,
and (y) whether Licensee has received the notice specified in Section
8.1(a)(iii) hereof. No other information shall be shared.

      (b) If such accounting firm concludes that the Net Revenues reported by
Licensee to Licensor during the audited period was incorrect or such regulatory
consulting firm concludes that the notice from the FDA specified in Section
8.1(a)(iii) hereof was actually received by Licensee, Licensee shall pay such
additional Milestone Payments as applicable to the audited Net Revenues (or, in
the case of receipt of the notice from the FDA specified in Section 8.1(a)(iii),
the applicable One Time Payment) within thirty (30) days of the date Licensor
delivers to Licensee such accounting firm's or, as applicable, such regulatory
consulting firm's written report so concluding. Notwithstanding the foregoing,
upon such accounting firm's conclusion that the Net Revenues reported by
Licensee to Licensor during the audited period was incorrect or such regulatory
consulting firm's conclusion that the notice from the FDA specified in Section
8.1(a)(iii) hereof was actually received by Licensee, Licensor may immediately
commence Dispute Resolution under Section 8.5 herein. The fees charged by such
accounting firm or, as applicable, such regulatory consulting firm shall be paid
by Licensor; provided, however, if the audit discloses that the Net Revenues
reported by Licensee for such audited period are less than ninety-five percent
(95%) of the Net Revenues actually achieved during such period or if the audit
discloses that the notice from the FDA specified in Section 8.1(a)(iii) was
actually received by Licensee, Licensee shall pay the reasonable fees and
expenses charged by such accounting firm or, as applicable, such regulatory
consulting firm.

      (c) Licensor shall treat all financial or regulatory information subject
to review under this Section 8.4 as Licensee Confidential Information, and shall
cause its accounting firm to retain all such financial information in
confidence.

      8.5 Dispute Resolution.

      (a) In the event of a dispute between the Parties as to whether any One
Time Payment or Milestone Payment (a "DISPUTED LICENSE PAYMENT") is then due and
owing from either Licensee or Licensor (with respect to a Return Payment), as
the case may be, the Party claiming the Disputed License Payment is then due
(the "CLAIMING PARTY") shall, send a notice with respect thereto to the other
Party (the "OTHER PARTY").

      (b) If the Parties have not resolved the matters in dispute within five
(5) Business Days of the Other Party's receipt of such notice, then on such
fifth (5th) Business Day the matter or matters in dispute shall be submitted to
an independent certified public accounting firm of

                                       29



recognized international standing mutually agreeable to the Parties (or, if the
Parties cannot agree, then one selected mutually by the Parties' auditors) (the
"ACCOUNTING FIRM"). The Parties will cooperate with each other and each other's
authorized representatives and with the Accounting Firm during the term of its
engagement and each of the Parties may make a written submission. Each Party may
provide the Accounting Firm all relevant books and records, any work papers,
supporting documentation and any other documentation used in determining whether
a Disputed License Payment is due. The Accounting Firm shall make a final and
binding determination as to the matter or matters in dispute within 30 days of
its appointment and shall send written notice thereof to the Parties within such
30-day period (subject to the right of either Party to appeal the Accounting
Firm's determination pursuant to the arbitration procedures set forth in Article
XI hereof).

      (c) In the event that the Accounting Firm determines that the Disputed
License Payment is then due to the Claiming Party, within three (3) Business
Days of receipt of written notice of such determination from the Accounting Firm
(the "PAYMENT DATE"), the Other Party shall pay to the Claiming Party the
Disputed License Payment (together with any interest accrued thereon at an
annual rate equal to the rate of interest per annum publicly announced from time
to time by JPMorgan Chase Bank as its prime rate in effect on the date such
payment is due at its principal office in New York City plus one percent (1%)
from the date such Disputed License Payment should have been paid pursuant to
Sections 8.1 or 8.2 up to the date such Disputed License Payment is actually
paid, but excluding the date such payment is made) and the Other Party shall
promptly pay the fees and expenses of the Accounting Firm. Notwithstanding any
other remedy available to Licensor under this Section, in the event that the
Accounting Firm determines that a Disputed License Payment is due to Licensor
and Licensee does not pay such Disputed License Payment to Licensor within three
(3) Business Days of receipt of written notice from the Accounting Firm of such
determination, Licensor, in its sole discretion may terminate this Agreement in
accordance with Section 6.2(a) herein without the need to give the notice
required by Section 6.2(a) or provide the opportunity to cure required by
Section 6.2(a). In the event that the Accounting Firm determines that the
Disputed License Payment is not then due and owing to the Claiming Party, the
Other Party shall be entitled to keep such Disputed License Payment and the
Claiming Party shall promptly pay the fees and expenses of the Accounting Firm.

                                   ARTICLE IX
                                 CONFIDENTIALITY

            9.1 Licensor's Obligation. Except for the proper exercise of any
rights granted or reserved under other provisions of this Agreement, Licensor
agrees that it shall keep confidential, and shall cause its officers, employees,
directors and counsel to keep confidential and shall not publish or otherwise
divulge to a Third Party, other than any agents or representatives of Licensor
(provided that such agents and representatives are informed of the confidential
and proprietary nature of such information and agree in writing to the
conditions set forth in this Article IX; and provided, further, that Licensor
shall be responsible for any breach of this Section by such representatives and
agents), or use for itself, unless Licensee shall have given its prior written
approval, any information (and all tangible and intangible embodiments thereof)
of a confidential and proprietary nature relating to Licensee's and its
Affiliates' business or operations, including non-public information concerning
Licensee's products, processes,

                                       30



customers and suppliers and the products and processes of Licensee's customers
and suppliers furnished to Licensor by Licensee in connection with this
Agreement or the Supply Agreement but excluding Licensed Know-How, Licensed
Regulatory Data and Licensee Regulatory Materials which are addressed in Section
9.3 below (any of the foregoing, "CONFIDENTIAL LICENSEE INFORMATION"); provided,
however, that Licensor shall have the right to disclose any Confidential
Licensee Information provided hereunder if such disclosure is necessary (a) in
connection with the securing of any Regulatory Approvals or other governmental
approval necessary for the performance by Licensor of any of its obligations
hereunder or under any other agreement with Licensee, (b) for the purpose of
complying with applicable Laws and governmental regulations or (c) by Law or
legal process. Licensor shall promptly notify Licensee of Licensor's intent to
make any disclosure of Confidential Licensee Information prior to making such
disclosure so as to allow Licensee adequate time to take whatever action
Licensee may deem to be appropriate to protect the confidentiality of the
Confidential Licensee Information and Licensor will cooperate and provide any
assistance that the Licensee may reasonably request in connection with the
foregoing. For the avoidance of confusion, all information provided by Licensee
to Licensor in connection with this Agreement shall be deemed Confidential
Licensee Information unless Licensor can demonstrate that such information is
available to it from sources other than Licensee that are not under a duty of
confidentiality with respect thereto. Licensor shall use Confidential Licensee
Information only in connection with and for the purposes reflected in this
Agreement and the other Transaction Agreements and for no other purpose. The
confidentiality obligations set forth in this Section shall continue in effect
during the Term and for a period of ten (10) years after the end of the Term
except that the confidentiality obligations with respect to any Confidential
Licensee Information that constitutes a trade secret shall continue in effect
for so long as such information remains a trade secret.

            9.2 Licensee's Obligation. Except for the proper exercise of any
rights granted or reserved under other provisions of this Agreement, Licensee
agrees that it shall keep confidential, and shall cause its officers, employees,
directors and counsel to keep confidential and shall not publish or otherwise
divulge to a Third Party, other than any agents or representatives of Licensee
(provided that such agents and representatives are informed of the confidential
and proprietary nature of such information and agree in writing to the
conditions set forth in this Article IX; and provided, further, that Licensee
shall be responsible for any breach of this Section by such representatives and
agents), or use for itself, unless Licensor shall have given its prior written
approval, any information (and all tangible and intangible embodiments thereof)
of a confidential and proprietary nature relating to Licensor's and its
Affiliates' business or operations, including non-public information concerning
the Licensed Rights, Licensed Regulatory Data, Licensor's products, processes,
customers and suppliers and the products and processes of Licensor's customers
and suppliers, furnished to Licensee by Licensor in connection with this
Agreement or the Supply Agreement but excluding Licensed Know-How, Licensed
Regulatory Data and Licensee Regulatory Materials which are addressed in Section
9.3 below (any of the foregoing, "CONFIDENTIAL LICENSOR INFORMATION"); provided,
however, that Licensee shall have the right to disclose any Confidential
Licensor Information provided hereunder if such disclosure is necessary (a) in
connection with the securing of any Regulatory Approvals or other governmental
approval necessary for the performance by Licensee of any of its obligations
hereunder or under any other agreement with Licensor, (b) for the purpose of
complying with Applicable Laws and government regulations, or (c) by Law or
legal process.

                                       31



Licensee shall promptly notify Licensor of Licensee's intent to make any
disclosure of Confidential Licensor Information prior to making such disclosure
so as to allow Licensor adequate time to take whatever action Licensor may deem
to be appropriate to protect the confidentiality of Confidential Licensor
Information and Licensee will cooperate and provide any assistance that the
Licensor may reasonably request in connection with the foregoing. For the
avoidance of confusion, all information provided by Licensor to Licensee in
connection with this Agreement shall be deemed Confidential Licensor Information
unless Licensee can demonstrate that such information is available to it from
sources other than Licensor that are not under a duty of confidentiality with
respect thereto. Licensee shall use Confidential Licensor Information only in
connection with and for the purposes reflected in this Agreement and the other
Transaction Agreements and for no other purpose. The confidentiality obligations
set forth in this Section shall continue in effect during the Term and for a
period of ten (10) years after the end of the Term except that the
confidentiality obligations with respect to any Confidential Licensor
Information that constitutes a trade secret shall continue in effect for so long
as such information remains a trade secret.

            9.3 Protection of Licensed Know-How, Licensed Regulatory Data and
Licensee Regulatory Materials. Each Party shall use protective measures that are
commercially reasonable and in no event less stringent than those used by such
Party within the Party's own business to protect its comparable know-how to
maintain the confidentiality of the Licensed Know-How, Licensed Regulatory Data
and Licensee Regulatory Materials and shall cause its officers, employees,
directors and counsel to keep confidential and shall not publish or otherwise
divulge to a Third Party, other than any licensees, Affiliates, agents or
representatives under appropriate confidentiality agreements during the Term and
after the end of the Term unless the Licensed Know-How, Licensed Regulatory Data
or Licensee Regulatory Materials: (a) is or has become known to the public other
than through a breach of this Agreement; or (b) lawfully was disclosed to the
disclosing Party on a non-confidential basis by a Third Party not prohibited
from disclosing such information by a legal, contractual or fiduciary
obligation, provided, however, such exception only applies to such portion of
the Licensed Know-How, Licensed Regulatory Data or Licensee Regulatory Materials
that falls within one or more of the above-cited exceptions. Licensee shall have
the right to disclose any Licensed Know-How or Licensed Regulatory Data if such
disclosure is necessary (i) in connection with the securing of any Regulatory
Approvals or other governmental approval necessary for the performance by
Licensee of any of its obligations hereunder, under the other Transaction
Agreements or under any other agreement with Licensor, (ii) for the purpose of
complying with applicable Laws and government regulations, or (iii) by Law or
legal process, provided however, that the foregoing shall not alter the Parties'
rights and obligations with respect to regulatory matters and compliance
therewith as more fully set out in the Supply Agreement. For the avoidance of
confusion, all Licensed Know-How, Licensed Regulatory Data and Licensee
Regulatory Materials shall be deemed confidential information subject to this
Section 9.3 unless the Party receiving the information can demonstrate that such
information falls within one or more of the above-cited exceptions. Licensee
shall use the Licensed Know-How and Licensed Regulatory Data only in connection
with and for the purposes reflected in this Agreement and the other Transaction
Agreements and for no other purpose. Licensor shall use the Licensee Licensed
Rights only in connection with and for the purposes reflected in this Agreement
and the other Transaction Agreements and for no other purpose.

                                       32



            9.4 Permitted Disclosure or Use of Information. Nothing in this
Article IX shall prevent the disclosure or use of Confidential Licensee
Information or Confidential Licensor Information, as the case may be, that (a)
is or has become known to the public other than through a breach of this
Agreement or (b) lawfully was disclosed to the disclosing Party on a
non-confidential basis by a Third Party not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation.

            9.5 Use of Information to Perform Obligations under this Agreement.
Within the limits set forth in this Article IX, each Party shall be entitled at
all times to use all Confidential Licensee Information or Confidential Licensor
Information, as the case may be, provided by the other Party to the extent
necessary to perform its obligations under this Agreement or any other
Transaction Agreement.

                                   ARTICLE X
                                 INDEMNIFICATION

            10.1 Licensor

      (a) Licensor shall indemnify, defend and hold harmless Licensee, its
Affiliates and their respective officers, directors, stockholders, employees,
agents and representatives (the "LICENSEE INDEMNIFIED PERSONS") from and against
any Losses that they may incur resulting from any Action to the extent arising
out of or due to (i) any breach of any representation, warranty, covenant or
other agreement under this Agreement by Licensor or any of its Affiliates to the
extent such Affiliate is bound under this Agreement (provided, that for purposes
of this Section 10.1(a)(i), Section 5.1(d)(ii) shall be read without regard to
qualification with respect to knowledge); or (ii) the infringement,
misappropriation or impairment of or damage to any Third Party's intellectual
property rights arising out of the Licensee's exercise of the Licensed Rights,
use of the Licensed Regulatory Data or the Licensee's marketing, use,
distribution, importation, offer for sale, sale, commercialization, or
disposition of Licensed Products, or the Licensee's use of the Confidential
Licensor Information.

      (b) Licensor shall not have any liability under Section 10.1(a) unless the
aggregate of all Losses relating thereto for which Licensor would, but for
Section 10.1(b), be liable exceeds on a cumulative basis an amount equal to
U.S.$159,000, and then only to the extent of any such excess, after which the
entire amount of such Losses which is payable pursuant to the provisions of
Section 10.1 shall be paid by Licensor subject to the Cap (as such term is
defined below); provided that Licensor shall not have any liability under
Section 10.1(a) for any individual item where the Loss relating to such item is
less than U.S.$10,000; provided, further, however, that Licensor's aggregate
liability under Section 10.1(a) shall in no event exceed the greater of (i)
U.S.$ 100 million, or (ii) as of the date which is the third anniversary of the
date of receipt of Regulatory Approval in the United States for the first
Licensed Product (the "THIRD ANNIVERSARY"), the amount actually paid out to
Licensor under Article VIII of this Agreement, plus the amounts described in the
next sentence (the "CAP"). In the event that amounts which were deposited as of
the Third Anniversary into the Account in accordance with Article VIII are
actually paid out to Licensor under Article VIII of this Agreement from the
Account after the Third Anniversary (a "SUBSEQUENT ACCOUNT DISTRIBUTION"), the
Cap shall include the amount of such Subsequent Account Distribution, if
applicable under the terms of the definition of Cap. If

                                       33



prior to any such Subsequent Account Distribution, if applicable, Licensee
suffered Losses for indemnifiable claims which in the aggregate exceeded the Cap
as calculated on the Third Anniversary, Licensor shall pay to Licensee from such
Subsequent Account Distribution, within five (5) Business Days of its receipt
thereof, an amount equal to such excess.

      For purposes of illustration only, if (A) Licensee's Losses in respect of
an indemnifiable claim prior to the Third Anniversary are * * * and (B) as of
the Third Anniversary, (1) Licensee has paid to Licensor under this Agreement *
* * and (2) an additional * * * is held in the Account, then Licensor would bear
* * * of such Losses and Licensee would bear * * * of such Losses. If,
subsequent to the Third Anniversary, the * * * previously deposited into the
Account is actually paid out by Licensee to Licensor under Article VIII of this
Agreement, then (I) the Cap would include the * * * and would be * * *, (II)
Licensor would be entitled to keep * * * of such amount and would be required to
pay to Licensee with respect to Licensee's prior indemnifiable claim * * *
thereby meeting the Cap.

      (c) All amounts paid by Licensor to Licensee Indemnified Persons pursuant
to Section 10.1 of this Agreement shall be aggregated for purposes of
determining the satisfaction of the Cap. The limitations of Section 10.1(b)
shall not apply to any claim for indemnification made under Section 3.10(b)
herein. Licensor and its Affiliates shall have no liability under Section
10.1(a) to the extent a Licensee Indemnified Person has been paid pursuant to
the Supply Agreement for an indemnifiable claim involving the identical
substantive issue.

            10.2 Licensee

      (a) Licensee shall indemnify, defend and hold harmless Licensor, its
Affiliates and their respective officers, directors, stockholders, employees,
agents and representative (the "LICENSOR INDEMNIFIED PERSONS") from and against
any Losses that they may incur resulting from any Action to the extent arising
out of or due to (i) any breach, from and after the Closing, of any
representation, warranty, covenant or other agreement under this Agreement by
the Licensee or any of its Affiliates to the extent such Affiliate is bound
under this Agreement or (ii) any FDA or TPD action related to Licensee's Website
Content arising out of an act or omission by the Licensee.

      (b) Licensee shall not have any liability under Section 10.2(a) unless the
aggregate of all Losses relating thereto for which Licensee would, but for this
Section 10.2(b), be liable exceeds on a cumulative basis an amount equal to
U.S.$159,000, and then only to the extent of any such excess; provided that
Licensee shall not have any liability under Section 10.2(a) for any individual
item where the Loss relating to such item is less than U.S.$10,000; provided,
further, however, that the Licensee's aggregate liability under Section 10.2(a)
shall in no event exceed the Cap. All amounts paid by Licensee to Licensor
Indemnified Persons pursuant to Section 10.2 of this Agreement shall be
aggregated for purposes of determining the satisfaction of the Cap. The
limitations of this Section 10.2(b) shall not apply to any claim for
indemnification made under Section 3.10(b) herein. Licensee and its Affiliates
shall have no liability under Section 10.2(a) to the extent a Licensor
Indemnified Person has been paid pursuant to the Supply Agreement for an
indemnifiable claim involving the identical substantive issue.

                                       34



            10.3 Notice of Claims. If there occurs an event which any of the
Persons to be indemnified under this Article X asserts is indemnifiable pursuant
to Section 10.1 or 10.2 (the "INDEMNIFIED PARTY"), the Party or Parties seeking
indemnification shall so notify the Party from whom indemnification is sought
(the "INDEMNIFYING PARTY") promptly in writing describing such Loss, the amount
or estimated amount thereof, if known or reasonably capable of estimation, and
the method of computation of such Loss, all with reasonable particularity and
containing a reference to the provisions of this Agreement in respect of which
such Loss shall have occurred. If any Action is instituted by or against a Third
Party with respect to which the Indemnified Party intends to claim any liability
as a Loss under this Article X, the Indemnified Party shall promptly notify the
Indemnifying Party of such Action and tender to the Indemnifying Party the
defense of such Action. A failure by the Indemnified Party to give notice and to
tender the defense of the Action in a timely manner pursuant to this Section
10.3 shall not limit the obligation of the Indemnifying Party under this Article
X, except to the extent such Indemnifying Party is materially prejudiced
thereby.

            10.4 Control of Claims.

            The Indemnifying Party under this Article X shall have the right,
but not the obligation, to conduct and control, through counsel of its choosing,
any Action for which indemnification is sought pursuant to this Article X with
respect to a Third Party claim (a "THIRD PARTY INDEMNIFIABLE CLAIM"), and if the
Indemnifying Party elects to assume the defense thereof, the Indemnifying Party
shall not be liable to the Party or Parties seeking indemnification hereunder
for any legal expenses of other counsel or any other expenses subsequently
incurred by such Party or Parties in connection with the defense thereof;
provided that if the Indemnified Party has been advised in writing by outside
counsel that there is a potential conflict between the interests of the
Indemnifying Party and the Indemnified Party, the reasonable out-of-pocket fees
and expenses of one separate counsel for the Indemnified Party shall be paid by
the Indemnifying Party and such separate counsel shall be selected by the
Indemnified Party in its sole discretion. Notwithstanding the foregoing, the
reasonable legal fees and expenses of counsel selected by the Indemnified Party
in its sole discretion in connection with a Third Party Indemnifiable Claim as
to which the Indemnifying Party does not assume the defense or is not entitled
to assume the defense shall be considered Losses for purposes of this Article X.
The Indemnifying Party may compromise or settle such Action, provided that the
Indemnifying Party shall give the Indemnified Party advance notice of any
proposed compromise or settlement, provided, further, that the Indemnifying
Party shall not compromise or settle any Third Party Indemnifiable Claim without
the prior written approval of the Indemnified Party, such approval not to be
unreasonably withheld or delayed, unless all relief provided is paid or
satisfied in full by the Indemnifying Party. No Indemnified Party may compromise
or settle any Third Party Indemnifiable Claim without the prior written approval
of the Indemnifying Party. If the Indemnifying Party elects not to control or
conduct the defense or prosecution of a Third Party Indemnifiable Claim, the
Indemnifying Party nevertheless shall have the right to participate in the
defense or prosecution of any Third Party Indemnifiable Claim and, at its own
expense, to employ counsel of its own choosing for such purpose. The Parties
hereto shall cooperate with each other and their respective counsel in the
defense, negotiation, settlement or prosecution of any Third Party Indemnifiable
Claim.

                                       35



            10.5 Survival. The representations and warranties of the Parties
contained in this Agreement shall survive until the eighteen (18) month
anniversary of the termination or expiration of this Agreement pursuant to
Section 6.1 and the covenants to be performed following the date hereof shall
survive until the date that is six (6) months after the end of the applicable
period for performance thereof.

            10.6 Indemnification Calculations. The amount of any Losses for
which indemnification is provided under this Article X shall be computed net of
any insurance proceeds received by the Indemnified Party in connection with such
Losses. If an Indemnified Party receives insurance proceeds in connection with
Losses for which it has received indemnification, such Party shall refund to the
Indemnifying Party the amount of such insurance proceeds when received, up to
the amount of indemnification received. An Indemnified Party shall use its
commercially reasonable efforts to pursue insurance claims with respect to any
Losses.

            10.7 Exclusive Remedies

            Except as otherwise set forth herein and for any available equitable
remedies, the remedies set forth in this Article X will be the exclusive
remedies available to the Parties hereto with respect to any Losses or any other
damages, costs or expenses of any kind or nature or any other claim or remedy
directly or indirectly resulting from, arising out of or relating to any of this
Agreement (including alleged breaches of representation, warranty, covenant or
any other term or provision or for any alleged misrepresentation), the Licensed
Rights, Licensed Regulatory Data, Licensee Licensed Rights and the transactions
contemplated hereby; provided that nothing herein shall limit in any way either
Party's remedies in respect of fraud by the other Party in connection herewith
or in connection with the transactions contemplated hereby. Notwithstanding
anything to the contrary in this Agreement, the Parties hereby agree that any
and all Actions resulting from, arising out of or based upon the provisions of
this Agreement may be asserted or brought solely under and in accordance with
the terms of this Agreement.

                                   ARTICLE XI
                               DISPUTE RESOLUTION

            11.1 Purpose. It is the objective of the Parties to establish
procedures to facilitate the resolution of disputes arising under this Agreement
in an expedient manner by mutual cooperation and without resort to litigation.
To accomplish this objective, the Parties agree to follow the procedures set
forth in this Article XI if and when a dispute arises under this Agreement.

            11.2 Arbitration. The Parties agree that any dispute arising out of
or in connection with this Agreement, or the breach, termination, or invalidity
hereof, shall be resolved as follows. In the event of a dispute between the
Parties, either Party may initiate the dispute resolution procedures of this
Section 11.2 by providing written notice (the "NOTICE OF CLAIM") to the other
Party identifying the dispute and stating the desire to resolve the dispute.
After receiving the Notice of Claim, respondent will respond in writing by
stating its position and setting forth a proposed resolution of the dispute. If
claimant and respondent are not able to

                                       36



resolve the dispute within twenty (20) days thereafter, the matter in dispute
shall be settled by arbitration in accordance with the Rules of Arbitration of
the International Chamber of Commerce (the "ICC"). The arbitral tribunal shall
be comprised of three arbitrators; the Party-nominated arbitrators shall be
appointed in accordance with the Rules of the ICC. The Party-nominated
arbitrators will have thirty (30) days to appoint a chair who shall have
relevant expertise in the subject matter of the dispute and the applicable laws
of the Territory. If they are unable to make such appointment within that time,
then the chair shall be appointed in accordance with the Rules of the ICC,
provided that the chair appointed by the ICC shall have relevant expertise in
the subject matter of the dispute and the applicable laws of the Territory. The
place of arbitration shall be Stockholm, Sweden. The language to be used in the
arbitral proceedings shall be English. The Parties agree that the losing Party
shall bear the cost of the arbitration filing and hearing fees, the cost of the
arbitrators and the ICC administrative expenses and the attorney's fees and
reasonable associated costs and expenses of each Party. The Parties agree to
reasonable document discovery provided the requesting Party makes a showing of
relevance and need to the tribunal. Notwithstanding the foregoing, either Party
may seek an immediate injunction from a court of competent jurisdiction (i) to
prevent the disclosure of Confidential Licensor Information or Confidential
Licensee Information, as applicable, in violation of Article IX herein or (ii)
to prevent an assignment of this Agreement in violation of Section 12.1 herein.

                                   ARTICLE XII
                                  MISCELLANEOUS

            12.1 Assignment and Sublicense. The Parties may only sublicense or
Transfer their respective rights and obligations hereunder in accordance with
this Section 12.1.

      (a) Commencing on the date hereof each of Licensor and Licensee shall be
entitled to sublicense its rights or obligations under this Agreement without
the written consent of the other Party hereto to a Permitted Transferee for so
long as such Affiliate continues to be a Permitted Transferee. A sublicensing
Party shall remain directly liable for the performance by its Permitted
Transferee of all obligations of such sublicensing Party under this Agreement
and no sublicense to a Permitted Transferee hereunder shall relieve Licensor or
Licensee of its obligations pursuant to this Agreement.

      (b) Commencing on the date hereof, each of Licensor and Licensee shall be
entitled to Transfer its rights or obligations under this Agreement without the
written consent of the other Party hereto, to a Permitted Transferee of Licensor
or Licensee, as applicable; provided, that such Transfer shall be null and void
ab initio and of no further force and effect unless (i) such Transfer was
effected in accordance with the terms and conditions of this Agreement, (ii) in
connection with such Transfer, Licensor executes and delivers to Licensee a
guarantee substantially in the form attached hereto as Exhibit A, and (ii) the
Permitted Transferee, if not already a Party hereto, shall have executed and
delivered to the other Party hereto, as a condition precedent to such Transfer,
an instrument or instruments reasonably satisfactory to the other Party hereto,
confirming that the Permitted Transferee shall be bound by the terms of this
Agreement to the same extent applicable to the transferring Party, as if such
Permitted Transferee was originally a Party hereto. Any such Permitted
Transferee shall and the transferring Party shall cause such Permitted
Transferee to Transfer back to the transferring Party

                                       37



(or to another Permitted Transferee of the transferring Party), its rights and
obligations hereunder prior to such Permitted Transferee ceasing to be a
Permitted Transferee of the transferring Party. Upon such Permitted Transferee
ceasing to be a Permitted Transferee hereunder, any Transfer of rights and
obligations hereunder shall be null and void from inception and of no further
force or effect. A transferring Party shall remain directly liable for the
performance by its Permitted Transferee of all obligations of such transferring
Party under this Agreement. No Transfer to a Permitted Transferee hereunder
shall relieve Licensor or Licensee of its obligations pursuant to this
Agreement.

      (c) Except as otherwise provided in Section 2.1 hereof, commencing on the
date on which all of the One Time Payments (other than the * * * Payment, which
payment shall only be required to be paid and received as a condition to
Transfer if as of the date of Transfer, such payment is then due and payable
under the terms of this Agreement) and the First Milestone Payment to be paid
pursuant to Section 8.1 hereof have been paid to and received by the Licensor or
its Affiliates (provided that all such One Time Payments and Milestone Payments
may be pre-paid at any time, regardless of whether such One Time Payments and
Milestone Payments are then due under Section 8.1 or 8.2 hereof), Licensee or
its Permitted Transferees shall be entitled in accordance with this clause (c)
to Transfer or sublicense its rights and obligations under this Agreement to a
Third Party, subject to the prior written consent of Licensor; provided,
further, that (i) in the event of a Volitional Change in Control such Transfer
shall be null and void ab initio and of no further force and effect unless (A)
such Transfer was effected in accordance with the terms and conditions of this
Agreement and (B) the Third Party shall have executed and delivered to Licensor
as a condition precedent to such Transfer, an instrument or instruments
reasonably satisfactory to Licensor confirming that the Third Party shall be
bound by the terms of this Agreement to the same extent applicable to the
Licensee or its Permitted Transferee as if such Third Party was originally a
Party hereto and that such Third Party is, or as of the date of the proposed
Transfer will be, a party to the Supply Agreement and (ii) in the event of a
Change in Control (other than a Volitional Change in Control) such Transfer
shall give rise to a right of termination pursuant to Section 6.2(b) herein
unless such Transfer was effected in accordance with the terms and conditions of
this Agreement. The Parties agree that Licensor may only withhold its consent in
the event that Licensor reasonably determines (such determination to be made
without unreasonable delay, and such consent, or the withholding thereof, to be
promptly communicated once determined) that the proposed Third Party transferee
or sublicensee * * *, (iv) does not have financial condition at least comparable
to that of Licensee as of the Closing Date hereunder or (v) has been or is
currently debarred under the authority of the FDCA or the Food and Drugs Act
and/or regulations thereunder.

      (d) Licensor or its Permitted Transferee shall be entitled to Transfer or
sublicense its rights and obligations under this Agreement to a Third Party,
subject to the prior written consent of Licensee; provided that (i) in the event
of a Volitional Change in Control such Transfer shall be null and void ab initio
and of no further force and effect, unless (A) such Transfer was effected in
accordance with the terms and conditions of this Agreement and (B) the Third
Party shall have executed and delivered to Licensee as a condition precedent to
such Transfer, an instrument or instruments reasonably satisfactory to Licensee
confirming that the Third Party shall be bound by the terms of this Agreement to
the same extent applicable to Licensor or its Permitted Transferee as if such
Third Party was originally a Party hereto and (ii) in the event of a Change in
Control (other than a Volitional Change in Control) such Transfer shall give
rise to a

                                       38



right of termination pursuant to Section 6.2(b) herein unless such Transfer was
effected in accordance with the terms and conditions of this Agreement. The
Parties agree that Licensee may only withhold its consent in the event that
Licensee reasonably determines (such determination to be made without
unreasonable delay, and such consent, or the withholding thereof, to be promptly
communicated once determined) that (i) the proposed Third Party transferee or
sublicensee does not have the financial condition to perform Licensor's
obligations under this Agreement, (ii) if Licensor is not to be the surviving
entity upon the consummation of such proposed Transfer, upon the consummation of
such proposed Transfer the successor entity will not have manufacturing capacity
at least comparable to Licensor's manufacturing capacity immediately prior to
such proposed Transfer, (iii) such Transfer has not received all required
Regulatory Approvals, or if Licensor is not to be the surviving entity upon the
consummation of such proposed Transfer, upon the consummation of such proposed
Transfer, the proposed Third Party transferee will not have all Regulatory
Approvals required for its performance of this Agreement or (iv) such proposed
Third Party transferee or sublicensee has been or is currently debarred under
the authority of the FDCA or the Food and Drugs Act and/or regulations
thereunder.

      (e) Licensor and Licensee, as the case may be, and each of their
respective present and former officers, directors, employees and Affiliates
shall be released and discharged of its respective rights and obligations
pursuant to this Agreement and from any and all claims, rights, causes of
actions or suits and recoveries related thereto upon the consummation of a
Transfer to a Third Party in accordance with the terms and conditions set forth
herein.

      (f) Subject to the foregoing provisions of this Section 12.1, this
Agreement shall be binding upon and inure to the benefit of the successors and
assigns of each of the Parties.

            12.2 Notices. All notices or other communications hereunder shall be
deemed to have been duly given and made if in writing and if served by personal
delivery upon the Party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service, or
if sent by facsimile, provided that the facsimile is promptly confirmed by
telephone confirmation thereof, to the Person at the address set forth below, or
such other address as may be designated in writing hereafter, in the same
manner, by such Person.

If to Licensor:
                   Q-Med AB
                   Seminariegatan 21
                   752 28 Uppsala, Sweden
                   Attention: Carina Bolin
                   Telephone No.: * * *
                   Facsimile No.: * * *

         with a copy to (which shall not constitute notice):

                   Simpson Thacher & Bartlett LLP
                   Attention: Richard Miller
                   425 Lexington Avenue

                                       39



                   New York, New York 10017
                   Telephone No.: (212) 455-2000
                   Facsimile No.: (212) 455-2502

If to Licensee:

                   Medicis Aesthetics Holdings Inc.
                   c/o Medicis Pharmaceutical Corporation
                   8125 N. Hayden Road
                   Scottsdale Arizona, 85258-2463
                   Attention: Jonah Shacknai
                   Telephone No.: * * *
                   Facsimile No.: * * *

         with a copy to (which shall not constitute notice):

                   Akin Gump Strauss Hauer & Feld LLP
                   Attention:  Susan Cohen
                   590 Madison Avenue
                   New York, NY 10022
                   Telephone No.: (212) 872-1066
                   Facsimile No.: (212) 407-3266

         with a copy to (which shall not constitute notice):

                   Covington & Burling
                   Attention:  Andrea Reister
                   1201 Pennsylvania Ave., N.W.
                   Washington, D.C. 20004
                   Telephone No.: (202) 662-5141
                   Facsimile No.: (202) 778-5141

            12.3 Governing Law. This Agreement shall in all respects be governed
by and construed in accordance with the Laws of the State of New York, excluding
any Law that would result in the application of the Laws of any jurisdiction
other than the State of New York.

            12.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same agreement.

            12.5 Headings. The heading references herein are for convenience
purposes only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect any of the provisions hereof.

            12.6 Entire Agreement. The Transaction Agreements, each of their
appendices, exhibits, schedules and certificates, and all documents and
certificates delivered or contemplated in connection herewith and therewith
constitute the entire agreement between the

                                       40



Parties with respect to the subject matter hereof and supersede all prior
agreements or understandings of the Parties relating thereto.

            12.7 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
Parties shall negotiate in good faith with a view to the substitution therefor
of a suitable and equitable solution in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid provision;
provided, however, that the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be in any way impaired thereby, it being intended that all of
the rights and privileges of the Parties shall be enforceable to the fullest
extent permitted by Law.

            12.8 Expenses. Each Party will bear its own expenses incurred in
connection with the negotiation and preparation of this Agreement and, except as
set forth in this Agreement, the performance of the obligations contemplated
hereby.

            12.9 Further Actions. Each Party hereby agrees to use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things reasonably necessary or proper and execute and deliver such
documents and other papers as may be required to make effective the transactions
contemplated by this Agreement.

            12.10 Waiver. Any term or provision of this Agreement may be waived
at any time by the Party entitled to the benefit thereof only by a written
instrument executed by such Party. No delay on the part of either Party in
exercising any right, power or privilege hereunder will operate as a waiver
thereof, nor will any waiver on the part of such Party of any right, power or
privilege hereunder operate as a waiver of any other right, power or privilege
hereunder nor will any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder.

            12.11 Amendment. This Agreement may be modified or amended only by
written agreement of the Parties hereto signed by authorized representatives of
the Parties hereto and specifically referencing this Agreement.

            12.12 No Third Party Rights. Other than as set forth in Article X
and Section 12.17 herein, no provision of this Agreement will be deemed or
construed in any way to result in the creation of any rights or obligations in
any Person not a Party to this Agreement.

            12.13 Construction. This Agreement will be deemed to have been
drafted by each Party and will not be construed against either Party as the
draftsperson hereof. Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified.

            12.14 Appendices, Exhibits, Schedules and Certificates. Each
appendix, exhibit, schedule and certificate attached hereto is incorporated
herein by reference and made a part of this Agreement.

                                       41



            12.15 Publicity. Neither Party shall issue or release any media
release or public announcement (including any announcements made via any posting
on the World Wide Web or Internet), or other similar publicity announcing the
existence of this Agreement or relating to any term or condition of this
Agreement or the relationships created by this Agreement without three (3)
Business Days' prior written notice, including by e-mail, to the other Party and
the prior agreement of the other Party on the relevant wording relating to this
Agreement or term or condition of this Agreement. Notwithstanding the foregoing,
each Party shall have the right to issue media releases, immediately and without
the prior consent of the other Party that disclose any information required by
the rules and regulations of the Securities and Exchange Commission, the
Stockholm Stock Exchange or applicable Law; provided that the disclosing Party
shall notify, including by e-mail, the other Party no later than simultaneously
with such issuance of such disclosure and shall use commercially reasonable
efforts to provide a copy of the relevant wording relating to this Agreement, or
any term or condition hereof to the other Party prior to the disclosure thereof.
As of the Closing, Licensor shall contact Licensee's Investor Relations Group
for approval and Licensee shall contact * * * for approval.

            12.16 Enforcement. The Parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms. It is accordingly agreed that
the Parties shall be entitled to specific performance of the terms of this
Agreement, this being in addition to any other remedy to which they are entitled
at law or in equity.

            12.17 Certain Affiliate Transfers. Neither Party shall (1) invest,
directly or indirectly, in an Affiliate which has operations or conducts
activities in the field of Aesthetic Enhancement, or (2) transfer or make
available any of its activities, operations or assets in the field of Aesthetic
Enhancement (including research and development, marketing, know-how or other
intellectual property, management of regulatory relations and protection of
intellectual property) to an Affiliate, without causing such Affiliate to enter
into an agreement for the benefit of the other Party by which such Affiliate
agrees to be bound by the provisions hereof in all relevant respects to the same
effect as if such Affiliate had originally been a Party hereto.

            12.18 Independent Contractor. The Parties shall each be an
independent contractor in the performance of their respective obligations
hereunder and the provisions hereof are not intended to create any partnership,
joint venture, agency or employment relationship between the Parties. Each Party
shall be responsible for and shall comply with all state, local, federal and
foreign laws pertaining to employment taxes, income withholdings and other
employment related statutes applicable to that Party. Except as expressly set
forth herein, neither Party shall have the right by virtue of this Agreement to
bind the other Party in any manner whatsoever.

            12.19 Prior Transactions. Each Party acknowledges and agrees, on
behalf of itself and each of its respective subsidiaries, that (a) nothing in
any of the Transaction Agreements or in any other agreement, instrument or other
document delivered in connection herewith or therewith (the "OTHER PAPERS"), and
(b) nothing discussed or delivered in connection with the negotiation of the
Transaction Agreements or the Other Papers, including any correspondence,
spreadsheets, notes, reports, memoranda or any full or partial drafts or prior
versions of the Transaction Agreements or the Other Papers (the matters referred
to in clause (a)

                                       42



and (b) are collectively, the "INADMISSIBLE MATTERS"), shall be admissible in
any action, suit or proceeding relating to only the Prior License Agreement or
the agreements entered into in connection therewith, unless the Parties
otherwise agree in a writing referring to this Section 12.19; provided, however,
that if an action, suit or proceeding relates in part to the Prior License
Agreement (or the agreements entered into in connection therewith) and in part
to any other matter, none of the Inadmissible Matters shall be admissible with
respect to claims or defenses relating to the Prior License Agreement (or the
agreements entered into in connection therewith). Each Party covenants and
agrees, on behalf of itself and each of its respective subsidiaries, that it and
they will not, directly or indirectly, do or cause to be done or omit to do
anything, the doing, causing or omitting of which would provide in discovery or
introduce into evidence any of the Inadmissible Matters in any action, suit or
proceeding relating to only the Prior License Agreement (or the agreements
entered into in connection therewith), except as may be required by Law pursuant
to a Third Party subpoena; provided, however, that if an action, suit or
proceeding relates in part to the Prior License Agreement (or the agreements
entered into in connection therewith) and in part to any other matter, none of
the Inadmissible Matters shall be admissible with respect to claims or defenses
relating to the Prior License Agreement (or the agreements entered into in
connection therewith), except as may be required by Law pursuant to a Third
Party subpoena.

                                       43



      IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of
the day and year first above written.

                                      Q-MED AB

                                      By:    /s/ Bengt Agerup
                                         --------------------------------------
                                         Name: Bengt Agerup
                                         Title: CEO

                                      MEDICIS AESTHETICS HOLDINGS INC.

                                      By:    /s/ Mark A. Prygocki, Sr.
                                         --------------------------------------
                                         Name: Mark A. Prygocki, Sr.
                                         Title: Vice President

EX-12

Exhibit 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(in thousands)

	Fiscal Year Ended June 30,
	2000			2001			2002			2003			2004
EARNINGS:
Income before income tax expense	$	67,382		$	59,325		$	78,984		$	77,660		$	46,157
Add: Fixed charges		3,378			2,801			2,967			14,375			13,161
Earnings as defined	$	70,760		$	62,126		$	81,951		$	92,035		$	59,318
FIXED CHARGES:
Interest expense	$	2,246		$	1,263		$	1,376		$	10,038		$	8,663
Amortization of deferred financing fees		—			—			—			2,542			2,145
Interest expense as reported		2,246			1,263			1,376			12,580			10,808
Portion of rent expense as interest		1,132			1,538			1,591			1,795			2,353
Fixed charges as defined	$	3,378		$	2,801		$	2,967		$	14,375		$	13,161
Ratio of earnings to fixed charges		21.0	x		22.2	x		27.6	x		6.4	x		4.5	x

     For purposes of computing the ratios of earnings to fixed charges, earnings represent pretax income from continuing operations plus fixed charges. Fixed charges represent interest expense and the portion of rents representative of interest related to continuing operations.

EX-21.1

EXHIBIT 21.1

SUBSIDIARIES

		Percentage
Subsidiary	Incorporated In	Owned
Medicis, The Dermatology Company®	Delaware		100	%
Dermavest, Inc.	Nevada		100	%
Medicis Manufacturing Corporation	Delaware		100	%
GenDerm Corporation	Delaware		100	%
Medicis Canada, Ltd	Canada		100	%
Ucyclyd Pharma, Inc.	Maryland		100	%
Medicis Pediatrics, Inc.	Delaware		100	%
Medicis Aesthetics Holdings Inc.	Delaware		100	%
Medicis Aesthetics Inc.	Delaware		100	%
Dermavest Swedish Holdings AB	Sweden		100	%
HA North American Sales AB	Sweden		100	%
Medicis Aesthetics Canada Ltd.	Canada		100	%

EX-23.1

Exhibit 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 33-45573) pertaining to the 1988 and 1990 Stock Option Plans, in the Registration Statement (Form S-8 No. 33-88590) pertaining to the 1992 Stock Option Plan, in the Registration Statement (Form S-8 No. 33-311419) pertaining to the 1995 Stock Option Plan, in the Registration Statement (Form S-8 No. 33-333647) pertaining to the 1996 Stock Option Plan, in the Registration Statement (Form S-8 No. 333-81647) pertaining to the 1998 Stock Option Plan, in the Registration Statement (Form S-8 No. 333-101467) pertaining to the 2002 Stock Option Plan, and in the Registration Statements (Form S-3 No. 333-97207 and Form S-4 No. 333-107089) of Medicis Pharmaceutical Corporation of our report dated August 13, 2004, with respect to the consolidated financial statements and schedule of Medicis Pharmaceutical Corporation included in this Annual Report (Form 10-K) for the year ended June 30, 2004.

/s/ ERNST & YOUNG LLP

Phoenix, Arizona
September 10, 2004

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jonah Shacknai, certify that:

1.	I have reviewed this annual report on Form 10-K of Medicis Pharmaceutical Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 10, 2004

JONAH SHACKNAI

/s/ JONAH SHACKNAI
(Jonah Shacknai)
Chairman of the Board and
Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Mark A. Prygocki, Sr., certify that:

1.	I have reviewed this annual report on Form 10-K of Medicis Pharmaceutical Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)	Designed such controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: September 10, 2004

MARK A. PRYGOCKI, SR.

/s/ MARK A. PRYGOCKI, SR. (Mark A. Prygocki, Sr.)
Executive Vice President, Chief Financial Officer,

Corporate Secretary and Treasurer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Medicis Pharmaceutical Corporation (the “Company”) on Form 10-K for the fiscal year ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jonah Shacknai, Chief Executive Officer of the Company, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company for the periods presented.

/s/ JONAH SHACKNAI Jonah Shacknai
Chief Executive Officer
September 10, 2004

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Medicis Pharmaceutical Corporation and will be retained by Medicis Pharmaceutical Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the annual report of Medicis Pharmaceutical Corporation (the “Company”) on Form 10-K for the fiscal year ended June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mark A. Prygocki, Sr., Chief Financial Officer of the Company, to the best of my knowledge, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company for the periods presented.

/s/ MARK A. PRYGOCKI, SR. Mark A. Prygocki, Sr.
Chief Financial Officer
September 10, 2004

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Medicis Pharmaceutical Corporation and will be retained by Medicis Pharmaceutical Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies this Report on Form 10-K pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.