Exhibit 10.46

 

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
UNIT GRANT NOTICE (PERFORMANCE VESTING)
(PERFORMANCE RESTRICTED SHARE UNITS)
(2007 Equity Compensation Plan)

 

Valeant Pharmaceuticals International, Inc. (the “Company”), pursuant to
Section 5(a) of the Company’s 2007 Equity Compensation Plan (including the
Addendum thereto) (the “Plan”), hereby awards to Participant a Unit in the
amount set forth below convertible into an equivalent number of Common Shares
(the “Award”).  This Award will be evidenced by a Unit Agreement (the “Unit
Agreement”). This Award is subject to all of the terms and conditions as set
forth herein and in the applicable Unit Agreement (attached hereto) and the
Plan, both of which are incorporated herein in their entirety.  Capitalized
terms not otherwise defined herein or in the Unit Agreement shall have the
meanings set forth in the Plan.  In the event of any conflict between the terms
in the Award and the Plan, the terms of the Plan shall control, except as
otherwise specifically provided herein or in the Unit Agreement.

 

Participant:

 

Equity Grant Date:

November 11, 2010

Vesting Commencement Date:

 

Number of Units Subject to Award:

 

Consideration:

Participant’s employment

 

Vesting Schedule:        The Units subject to this Award shall vest in
accordance with the following performance thresholds, provided that
Participant’s employment continues until each vesting date:

 

(i)  Single Vesting Share Price.

 

If at June 28, 2013, the Adjusted Share Price (as defined below) equals the
Single Vesting Share Price (as defined below), Participant shall vest in 25% of
the Units subject to the Award.

 

If at September 28, 2013, the Adjusted Share Price equals the Single Vesting
Share Price, Participant shall vest in an additional 50% of the Units subject to
the Award.

 

If at December 28, 2013, the Adjusted Share Price equals the Single Vesting
Share Price, Participant shall vest in an additional 25% of the Units subject to
the Award.

 

(ii) Double Share Vesting Price.

 

If at June 28, 2013, the Adjusted Share Price equals the Double Vesting Share
Price (as defined below), Participant shall vest in 50% of the Units subject to
the Award.

 

If at September 28, 2013, the Adjusted Share Price equals the Double Vesting
Share Price, Participant shall vest in an additional 100% of the Units subject
to the Award.

 

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If at December 28, 2013, the Adjusted Share Price equals the Double Vesting
Share Price, Participant shall vest in an additional 50% of the Units subject to
the Award.

 

(iii) Triple Vesting Share Price.

 

If at June 28, 2013, the Adjusted Share Price equals the Triple Vesting Share
Price (as defined below), Participant shall vest in 75% of the Units subject to
the Award.

 

If at September 28, 2013, the Adjusted Share Price equals the Triple Vesting
Share Price, Participant shall vest in an additional 150% of the Units subject
to the Award.

 

If at December 28, 2013, the Adjusted Share Price equals the Triple Vesting
Share Price, Participant shall vest in an additional 75% of the Units subject to
the Award.

 

(iv) Additional Vesting

 

Any Units that could have been vested under any of clauses (i), (ii) or
(iii) above that do not become vested on June 28, 2013, September 28, 2013 or
December 28, 2013, may become vested on June 28, 2014, September 28, 2014 or
December 28, 2014, respectively, based upon the Adjusted Share Price on the
applicable measurement date, provided that Participant remains employed by the
Company through the applicable vesting date.

 

(v) Interpolation

 

If the Adjusted Share Price on a measurement date set forth in clauses (i),
(ii) and (iii) is between the Single Vesting Share Price and the Double Vesting
Share Price or is between the Double Vesting Share Price and the Triple Vesting
Share Price, Participant shall vest in a number of Units that is the
mathematical linear interpolation between the number of Units which would vest
at defined ends of the applicable spectrum.

 

(vi) Accelerated Vesting

 

Notwithstanding the foregoing vesting provisions, if on any date between the
Equity Grant Date and October 25, 2013, the Per Share Price on such date:

 

(A) exceeds $58.24, then Participant will become vested in [Insert # of Units
subject to the Award] of the Units that could have been earned under clause
(i) above;

 

(B) exceeds $80.82, then Participant will become vested in the additional
[Insert # of Units subject to the Award] of the Units that could have been
earned under clause (ii) above; and

 

(C) exceeds $108.58, then Participant will become vested in the additional
[Insert # of Units subject to the Award] of the Units that could have been
earned under clause (iii) above;

 

provided, that the vesting that takes place pursuant to this clause (vi) if the
Per Share Price target is achieved shall only take place the first time such
Price Per Share

 

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target is achieved on such vesting date, there is no interpolation of vesting
pursuant to this clause (vi), and to vest in any of the Units pursuant to this
clause (vi) the Participant must remain employed by the Company on the
applicable vesting date.

 

(vii) Forfeiture

 

Any Units that are not vested as of December 28, 2014 shall be immediately
forfeited.

 

(ix) Definitions

 

For purposes of this Grant Notice and the Unit Agreement, the following terms
shall have the following meanings:

 

(A)        “Adjusted Share Price” means the sum of (x) the average of the
closing prices of the Common Shares during the 20 consecutive trading days
starting on the specified measurement date (or if such measurement date does not
fall on a trading day, the immediately following trading day) (“Average Share
Price”); and (y) the value that would be derived from the number of Common
Shares (including fractions thereof) that would have been purchased had an
amount equal to each dividend paid on a Common Share after the Equity Grant Date
and on or prior to the applicable measurement date been deemed invested on the
dividend payment date, based on the closing price of the Common Shares on such
dividend payment date.  The Adjusted Share Price and the Average Share Price
shall be subject to equitable adjustment to reflect stock splits, stock
dividends and other capital adjustments.

 

(B)         “Single Vesting Share Price,” “Double Vesting Share Price” and
“Triple Vesting Share Price” means the Adjusted Share Prices equal to a compound
annual share price appreciation (the “Annual Compound TSR”) of 15%, 30% and 45%,
respectively, as measured from a base price of $26.51 over a measurement period
from October 25, 2010 to the last trading day of the period used to calculate
the Adjusted Share Price.

 

(C)         “Per Share Price” means the average of the closing prices of the
Common Shares during 20 consecutive trading days.

 

Conversion to Common Shares:

 

Any Units that become vested as described above shall be settled into an
equivalent number of Common Shares and delivered to Participant within forty
five (45) days following the date of vesting.

 

Special Tax Withholding Right:

 

Participant may direct the Company to (i) withhold, from Common Shares otherwise
issuable upon settlement of the Award, a portion of those Common Shares with an
aggregate Market Price (defined as in Section 2.1(b) of the Plan but measured as
of the delivery date) equal to the amount of the applicable withholding taxes;
provided, however, that the number of such Common Shares so withheld shall not
exceed the amount necessary to satisfy the Company’s required tax withholding
obligations using the minimum statutory withholding

 

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tax rates, and (ii) make a cash payment equal to such fair market value directly
to the appropriate taxing authorities, as provided in the Unit Agreement.

 

Additional Terms/Acknowledgements:  The undersigned acknowledges receipt of, and
understands and agrees to, this Unit Grant Notice, the Unit Agreement and the
Plan.  Participant further acknowledges that as of the Equity Grant Date, this
Unit Grant Notice, the Unit Agreement and the Plan set forth the entire
understanding between Participant and the Company regarding this Award and
supersede all prior oral and written agreements with respect to this Award with
the exception of the following agreement only:

 

Other Agreement:               Participant’s Offer Letter, dated November 11,
2010

 

 

VALEANT PHARMACEUTICALS INTERNATIONAL, INC. PARTICIPANT:

 

 

 

By:

 

 

 

 

Signature

 

Signature

 

 

 

 

Title:

 

 

 

 

 

 

ATTACHMENT:

Unit Agreement

 

 

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ATTACHMENT

 

UNIT AGREEMENT

 

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

2007 EQUITY COMPENSATION PLAN

UNIT AGREEMENT

EXECUTIVE MANAGEMENT (PERFORMANCE VESTING)
(LONG-TERM PERFORMANCE UNITS)

 

Pursuant to the Unit Grant Notice (“Grant Notice”) and this Unit Agreement
(“Agreement”), Valeant Pharmaceuticals International, Inc. (the “Company”) has
awarded you a Unit pursuant to Section 5 of the Company’s 2007 Equity
Compensation Plan (including the Addendum thereto) (the “Plan”) convertible into
the number of Common Shares corresponding to the number of Units indicated in
the Grant Notice (collectively, the “Award”).  Capitalized terms not explicitly
defined in the Grant Notice or this Agreement but defined in the Plan shall have
the same definitions as in the Plan.  However, notwithstanding the foregoing,
for purposes of this Agreement, the terms “Cause,” “Change in Control,”
“Termination Date,” “Resulting RSUs” and “Good Reason” shall have the same
meanings as such terms are defined in your Offer Letter dated November 11, 2010
(the “Offer Letter”).

 

The details of your Award are as follows.

 

1.             CONSIDERATION.  Consideration for this Award is satisfied by your
services to the Company.

 

2.             VESTING.

 

(a)           In General. Subject to the provisions of the Plan and the
acceleration provisions contained herein, your Award will vest as provided in
the Grant Notice, provided that vesting will cease upon termination of your
employment.  Any Units that did not become vested prior to your termination of
employment or that do not become vested according to the provisions in this
Section 2 shall be forfeited immediately following the date of your termination
of employment.

 

(i)            Vesting Acceleration in Event of Death.  Notwithstanding the
foregoing and any other provisions of the Plan to the contrary, in the event
that your employment is terminated by the Company due to your death after
October 25, 2011, the performance thresholds applicable to the Units will be
applied as though the date of termination was the end of the twenty consecutive
trading-day average measurement period and the Units so earned will vest in a
manner consistent with the vesting thresholds described in your Grant Notice
(e.g., the number of Units subject to the Award specified in the Grant Notice at
an Annual Compound TSR of 15%, two times the number of Units subject to the
Award specified in the Grant Notice at an Annual Compound TSR of 30%, and three
times the number of Units subject to the Award specified in the Grant Notice at
an Annual Compound TSR of 45%; provided that you will vest in a number of Units
that is the mathematical linear interpolation between the number of Units which
would vest for performance between the Annual Compound TSR thresholds), but
based on the Annual Compound TSR determined through the date of termination. 
Notwithstanding the immediately preceding sentence, if death occurs prior to
October 25, 2011, the measurement date will still be the date of termination,
but the Annual Compound TSR will be determined based on an assumed measurement
period of one year.

 

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(ii)           Vesting Acceleration in Event of Disability or Termination by the
Company Without Cause or by You for Good Reason.  Notwithstanding the foregoing
and any other provisions of the Plan to the contrary and subject to clause
(iii) below, in the event that your employment is terminated after October 25,
2011 by the Company without Cause or by you for Good Reason, or in the event of
your Disability, the performance thresholds applicable to the Units will be
applied as though your Termination Date was the end of the twenty consecutive
trading-day average measurement period and the Units so earned will vest in a
manner consistent with the vesting thresholds described in your Grant Notice,
but based on the Annual Compound TSR determined through your Termination Date,
provided, however, that in the event you are entitled to benefits pursuant to
this clause (ii), only a pro rata portion of such calculated Units will vest
upon termination based on a fraction, the numerator of which is the number of
days from the Equity Grant Date through the Termination Date, and the
denominator of which is the number of days from the Equity Grant Date through
October 25, 2013.  Notwithstanding the immediately preceding sentence, if
termination of employment for a reason set forth in this clause (ii) occurs
prior to October 25, 2011, the Units will be forfeited.

 

(iii)         Treatment of Units in Event of Change in Control. Notwithstanding
the foregoing and any other provisions of the Plan to the contrary, in the event
of a Change in Control, the Units will be converted into Resulting RSUs,
determined by applying the performance thresholds applicable to the Units as
though the sum of (i) fair market value of the Common Shares on the date of the
Change in Control and (ii) the value that would be derived from the number of
Common Shares (including fractions thereof) that would have been purchased had
an amount equal to each dividend paid on a Common Share after the Equity Grant
Date and on or prior to the applicable measurement date been deemed invested on
the dividend payment date, based on the closing price of the Common Shares on
such dividend payment date was the Adjusted Share Price, with the number of
Resulting RSUs equal to the number of Units that would have vested based on the
Annual Compound TSR determined through the Change in Control.  Notwithstanding
the immediately preceding sentence, if termination following a Change in Control
occurs prior to October 25, 2011, the measurement date will still be the date of
the Change in Control, but the Annual Compound TSR will be determined based on
an assumed measurement period of one year.  The Resulting RSUs will vest on
October 25, 2013, subject to your continued employment; provided that in the
event of involuntary termination of your employment by the Company without Cause
or by you with Good Reason within the twelve (12) months following a Change in
Control, the vesting and payment of such Resulting RSUs will be accelerated to
your Termination Date.  Any Units that did not become Resulting RSUs will be
forfeited on a Change in Control.

 

(b)           Timing of Settlement.  Vested Units will be settled and delivered
to you as Common Shares at the time set forth in Section 4.

 

3.             COMMON SHARE OWNERSHIP REQUIREMENTS.  You agree to comply with
any Common Share ownership requirements adopted by the Company applicable to
you, which shall be on the same terms as similarly situated executives of the
Company.

 

4.             DISTRIBUTION OF COMMON SHARES.  The Company will deliver to you a
number of Common Shares equal to the number of vested Units subject to your
Award as soon as practicable, but in any event no later than forty five (45)
days following the date of vesting.

 

5.             NUMBER OF SHARES.   The number of Common Shares subject to your
Award may be adjusted from time to time for capital adjustments, as provided in
the Plan.  The Company will establish a bookkeeping account to reflect the
number of Units standing to your credit from time to time.  However, you will
not be deemed to be the holder of, or to have any of the rights of a shareholder
with respect to, any Common Shares subject to your Award (including but not
limited to shareholder voting rights) unless and until the shares have been
delivered to you in accordance with Section 4 of this Agreement.

 

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6.             COMPLIANCE WITH SECTION 409A OF THE INTERNAL REVENUE CODE.  This
Agreement is intended to comply with the requirements of section 409A of the
Code and its corresponding regulations and related guidance, and shall in all
respects be administered and interpreted in accordance with such requirements. 
Notwithstanding any provision in this Agreement to the contrary, settlement of
vested Units to Common Shares may only be made under this Agreement upon an
event or in a manner permitted by section 409A of the Code.  Settlement and
delivery of Common Shares on account of a termination of employment under this
Agreement may only be made upon a “separation from service” under section 409A
of the Code and, if you are a “specified employee” (as defined in section 409A
of the Code and determined in the sole discretion of the Company in accordance
with the requirements of section 409A of the Code) at the time of your
separation from service, in no event may settlement and delivery of Common
Shares on account of your separation from service occur prior to the date which
is six months following your separation from service.  In no event may you
designate the calendar year of settlement and delivery of Common Shares.

 

7.             SECURITIES LAW COMPLIANCE.  You may not be issued any Common
Shares under your Award unless the shares are either (i) then registered under
the Securities Act of 1934 as amended (the “Securities Act”), or (ii) the
Company has determined that such issuance would be exempt from the registration
requirements of the Securities Act.  Your Award must also comply with other
applicable laws and regulations governing the Award, and you shall not receive
such shares if the Company determines that such receipt would not be in material
compliance with such laws and regulations.

 

8.             RESTRICTIVE LEGENDS.  The Common Shares issued under your Award
shall be endorsed with appropriate legends, if any, determined by the Company.

 

9.             TRANSFERABILITY.  Your Award is not transferable, except by will
or by the laws of descent and distribution.  Notwithstanding the foregoing, by
delivering written notice to the Company, in a form satisfactory to the Company,
you may designate a third party who, in the event of your death, will thereafter
be entitled to receive any distribution of Common Shares pursuant to Section 4
of this Agreement.

 

10.          AWARD NOT A SERVICE CONTRACT.  Your Award is not an employment or
service contract, and nothing in your Award will be deemed to create in any way
whatsoever any obligation on your part to continue in the service of the Company
or a Related Entity, or on the part of the Company or a Related Entity to
continue such service.  In addition, nothing in your Award will obligate the
Company or a Related Entity, their respective shareholders, boards of directors
or employees to continue any relationship that you might have as an employee of
the Company or a Related Entity.

 

11.          UNSECURED OBLIGATION.  Your Award is unfunded, and as a holder of a
vested Unit, you will be considered an unsecured creditor of the Company with
respect to the Company’s obligation, if any, to issue Common Shares pursuant to
this Agreement.  You will not have voting or any other rights as a shareholder
of the Company with respect to the Common Shares subject to your Award until
such Common Shares are issued to you pursuant to Section 4 of this Agreement. 
Upon such issuance, you will obtain full voting and other rights as a
shareholder of the Company.  Nothing contained in this Agreement, and no action
taken pursuant to its provisions, will create or be construed to create a trust
of any kind or a fiduciary relationship between you and the Company or any other
person.

 

12.          WITHHOLDING OBLIGATIONS.  On or before the time you receive a
distribution of Common Shares pursuant to your Award, or at any time thereafter
as requested by the Company, you hereby authorize any required withholding from
the Common Shares, payroll and any other amounts payable or issuable to you
and/or otherwise agree to make adequate provision in cash for any sums required
to satisfy the federal, state, local and foreign tax withholding obligations of
the Company or any

 

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Related Entity which arise in connection with your Award (the “Withholding
Taxes”).  If specified in your Grant Notice, you may direct the Company to
withhold Common Shares with a Market Price (defined as in Section 2.1(a) of the
Plan but measured as of the date Common Shares are delivered pursuant to
Section 4) equal to the amount of such Withholding Taxes; provided, however,
that the number of such Common Shares so withheld shall not exceed the amount
necessary to satisfy the Company’s required tax withholding obligations using
the minimum statutory withholding rates for federal, state, local and foreign
tax purposes, including payroll taxes, that are applicable to supplemental
taxable income.

 

13.          NOTICES.  Any notices provided for in your Award or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the mail, postage prepaid, addressed to you at the last address you provided
to the Company.

 

14.          HEADINGS.  The headings of the Sections in this Agreement are
inserted for convenience only and will not be deemed to constitute a part of
this Agreement or to affect the meaning of this Agreement.

 

15.          AMENDMENT.  Nothing in this Agreement shall restrict the Company’s
ability to exercise its discretionary authority pursuant to Section 3.1 of the
Plan; provided, however, that no such action may, without your consent,
adversely affect your rights under your Award and this Agreement.  Without
limiting the foregoing, the Company’s Board (or appropriate committee thereof)
reserves the right to change, by written notice to you, the provisions of this
Agreement in any way it may deem necessary or advisable to carry out the purpose
of the grant as a result of any change in applicable laws or regulations or any
future law, regulation, ruling, or judicial decision, provided that any such
change will be applicable only to rights relating to that portion of the Award
which is then subject to restrictions as provided herein.

 

16.          MISCELLANEOUS.

 

(a)             The rights and obligations of the Company under your Award will
be transferable by the Company to any one or more persons or entities, and all
covenants and agreements hereunder will inure to the benefit of, and be
enforceable by the Company’s successors and assigns.

 

(b)             You agree upon request to execute any further documents or
instruments necessary or desirable in the sole determination of the Company to
carry out the purposes or intent of your Award.

 

(c)             You acknowledge and agree that you have reviewed your Award in
its entirety, have had an opportunity to obtain the advice of counsel prior to
executing and accepting your Award and fully understand all provisions of your
Award.

 

(d)             This Agreement will be subject to all applicable laws, rules,
and regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

(e)             All obligations of the Company under the Plan and this Agreement
will be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company.

 

17.          GOVERNING PLAN DOCUMENT.  Your Award is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
Award, and is further subject to all interpretations,

 

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amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan, provided that notwithstanding anything to the
contrary herein, Sections 5.1(d), 5.7, 5.8, 5.9 and, except to the extent that
the application of such Section would not result in the imposition of additional
taxes under section 409A of the Code, 6.1, of the Plan shall not apply to your
Award.  In the event of any conflict between the provisions of your Award and
those of the Plan, the provisions of the Plan will control; provided, however,
that Section 4 of this Agreement will govern the timing of any distribution of
Common Shares under your Award.  The Board (or appropriate committee thereof)
will have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation, and application of the Plan as are
consistent therewith and to interpret or revoke any such rules. All actions
taken and all interpretations and determinations made by the Board (or
appropriate committee thereof) will be final and binding upon you, the Company,
and all other interested persons. No member of the Board (or appropriate
committee thereof) will be personally liable for any action, determination, or
interpretation made in good faith with respect to the Plan or this Agreement.

 

18.          EFFECT ON OTHER EMPLOYEE BENEFIT PLANS.  The value of the Award
subject to this Agreement will not be included as compensation, earnings,
salaries, or other similar terms used when calculating the employee’s benefits
under any employee benefit plan sponsored by the Company or a Related Entity
except as such plan otherwise expressly provides. The Company expressly reserves
its rights to amend, modify, or terminate any of the Company’s or any Related
Entity’s employee benefit plans.

 

19.          CHOICE OF LAW.  The interpretation, performance and enforcement of
this Agreement will be governed by the laws of the Province of Ontario and the
laws of Canada.

 

20.          SEVERABILITY.  If all or any part of this Agreement or the Plan is
declared by any court or governmental authority to be unlawful or invalid, such
unlawfulness or invalidity will not invalidate any portion of this Agreement or
the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid will, if
possible, be construed in a manner which will give effect to the terms of such
Section or part of a Section to the fullest extent possible while remaining
lawful and valid.

 

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