Exhibit 10.2
March 10, 2009
Bhaskar Chaudhuri
Dear Bhaskar:
I am pleased to offer you a new position with Valeant Pharmaceuticals
International (the “Company”).
This letter outlines the details of your new position and your new employment
terms. Your new position is contingent upon your successful completion of a
pre-employment drug screen and background investigation.

•   Title: President, Valeant Pharmaceuticals International. You will report to
the Chief Executive Officer.   •   Base Salary: $41,666.67 per month ($500,000
annualized).   •   Effective Date: March 10, 2009.   •   Sign-On Bonus: You have
received, or will receive, a sign-on bonus of $250,000 within 30 days of the
Effective Date; provided, however, if you voluntarily terminate your employment,
other than for Good Reason, prior to the first anniversary of the Effective Date
(or you are terminated for Cause within such period), you will be required to
repay to the Company a pro rata portion of such bonus determined by multiplying
$250,000 times the quotient obtained by dividing (a) the difference obtained by
subtracting the number of days employed from 365; by (b) 365.   •   Salary
Adjustments: You will be eligible for participation in our Merit Increase
Program, based on performance, for the period beginning April 1, 2010. This
policy is subject to change as approved by the Compensation Committee of the
Valeant Board of Directors.   •   Annual Incentive: You will be eligible to
participate in Valeant’s management bonus plan beginning in the 2009 calendar
year. Your target bonus will be 60% of your Base Salary, with the potential of
120% of your Base Salary. This plan, and therefore your participation, is
subject to change at the discretion of the Board of Directors. Bonuses are
payable at the time the other management bonuses are paid. To be eligible for
any bonus payment, you must be employed by the Company on the day in which the
applicable bonus is paid to other members of Valeant management.   •   Equity
Awards: As indicated in the employment terms provided to by you by the Company’s
Chief Executive Officer, subject to the approval of the Company’s Board of
Directors, you will receive the following equity on the date of such approval
(the “Grant Date”):

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 2 of 11

  o   Stock Options – You shall be granted options to acquire a whole number of
shares of the Company common stock with a Black-Scholes value equal to
$1,500,000 as of the Grant Date (the “Options”). For purposes of the preceding
sentence, the Black-Scholes value shall be established by the Company in
accordance with its prior practices with respect to the valuation of stock
option grants for granting purposes; provided that the value of the stock shall
be determined for this purpose based on the Per Share Price on the Grant Date.
The exercise price of the Options will be priced at the fair market value at the
close of business on the Grant Date. The Options will vest over a four-year
period from the grant date of the Options (25% per year on the anniversary of
the grant date) and shall have a term of ten (10) years. If your employment is
terminated by the Company without Cause or by you for Good Reason, either in
contemplation of a Change in Control or at any time within twelve (12) months
following a Change in Control, then any Option that is not cancelled in
connection with the Change in Control in exchange for cash payment will vest on
the termination date and shall remain exercisable for one year following the
termination date (but in no event beyond the 10-year term of the Option). If
your employment is terminated by the Company for Disability or by reason of your
death, any Option outstanding shall vest in full and remain exercisable
following the termination date (but in no event beyond the 10-year term of the
Option).     o   Performance Restricted Share Units. You will also receive such
number of performance-based restricted stock units under the 2006 Plan (the
“Performance Share Units”) with a value equal to the quotient obtained by
dividing $1,500,000 by the Per Share Price on the Grant Date (such number of
Performance Share Units, the “2009 Performance Units”), which shall vest as
follows, provided that, in all events, you are continually employed by the
Company through and including the 3 year anniversary of Grant Date:

  1.   If at the third anniversary of the Effective Date (the “First Measurement
Date”), the Adjusted Share Price (as defined below) equals the Single Vesting
Share Price (as defined below), you shall vest in 100% of the 2009 Performance
Units (1 x the 2009 Performance Units).     2.   If at the First Measurement
Date the Adjusted Share Price equals the Double Vesting Share Price (as defined
below), you shall vest in 200% of the 2009 Performance Units (2 x the 2009
Performance Units).     3.   If at the First Measurement Date the Adjusted Share
Price equals the Triple Vesting Share Price (as defined below) you shall vest in
300% of the 2009 Performance Units (3 x the 2009 Performance Units).     4.  
Performance Share Units that could have been earned under any of subclauses 1,
2, or 3 above that are not earned on the First Measurement Date may be earned on
the fourth anniversary of the Effective Date (the “Second Measurement Date”),
subject to your continued employment through that date, based upon the Adjusted
Share Price on such Second Measurement Date.     5.   If the Adjusted Share
Price on a measurement date 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, you shall vest in, and the Company shall deliver, a
number of Performance Share Units that is the mathematical interpolation between
the number of shares which would vest at defined ends of the spectrum.

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 3 of 11

  6.   The Company shall distribute to you a number of shares of its common
stock equal to the number of Performance Shares Units that become vested as soon
as practicable (but in any event no later than 45 days) following the vesting
date of such Performance Shares Units. You shall not be permitted to sell,
assign, transfer, or otherwise dispose of more than fifty percent (50%) of the
Net Shares (as defined below) acquired upon settlement of the Performance Share
Units until the expiration of the two-year period following receipt, or, if
sooner, until a Change in Control or until you experience a termination of
employment. For purposes of this letter, Net Shares shall mean the net number of
shares acquired by you upon settlement of the Performance Share Units after
subtracting any such shares withheld by the Company in payment of withholding
obligations applicable to such settlement.     7.   In the event of the
occurrence of a Change in Control or termination of your employment by death or
Disability, the performance measures applicable to the Performance Share Units
will be applied as though the date of the Change in Control, or employment
termination date, as applicable, were the end of the measurement period, with
the number of units calculated in a manner consistent with the vesting schedule
described above (e.g., in the event of a Change in Control occurs or your
employment is terminated by death or Disability prior to the First Measurement
Date, 100% will vest at the date of such termination if the Adjusted Share Price
is the Single Vesting Share Price; 200% will vest if the Adjusted Share Price is
the Double Vesting Share Price; and 300% will vest if the Adjusted Share Price
is the Triple Vesting Share Price; and if the Adjusted Share Price on such
measurement date 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, you shall vest in, and the Company shall deliver, a number
of Performance Share Units that is the mathematical interpolation between the
number of shares which would vest at defined ends of the spectrum).

    “Adjusted Share Price” means the sum of (i) the average closing prices of a
share for the twenty trading days prior the applicable measurement date (the
“Per Share Price”), and (ii) the value that would be derived from the number of
shares (including fractions thereof) that would have been purchased had an
amount equal to each dividend paid on a share of common stock after the 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 stock on
such dividend payment date.

      “Single Vesting Share Price,” “Double Vesting Share Price,” and “Triple
Vesting Share Price” mean the Adjusted Share Prices equal to a compound annual
share price appreciation (the “Annual Compound TSR”) of 15%, 30% and 45%,
respectively, as measured between the Per Share Price on the Grant Date and the
applicable measurement date.

    Grant Notices and Grant Agreements shall be prepared consistent with the
terms set forth above and providing such other terms and conditions as are in
the Company’s standard such agreements.   •   Share Purchase Commitment: You
also agree to purchase at least $500,000 worth of shares of the Company’s common
stock on or before the first anniversary of the Effective Date or such later
date as determined by the Company (the “Purchased Shares”). You shall not be
permitted to sell any of the Purchased Shares until the earlier of one year
after the Final Purchase Date (as defined below) and your date of termination of
employment for any reason. As long as you remain employed by the Company, you
shall retain ownership of at least (i) seventy-five percent (75%) of the
Purchased

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 4 of 11

    Shares until the second anniversary of the Effective Date, (ii) fifty
percent (50%) of the Purchase Shares until the third anniversary of the
Effective Date, and (iii) twenty-five percent (25%) of the Purchased Shares
until the fourth anniversary of the Effective Date (the holding requirements in
this and the immediately preceding sentence shall be referred to as the
“Purchase Obligations”). Notwithstanding the foregoing, the Purchase Obligations
shall be waived upon the occurrence of a Change of Control. The “Final Purchase
Date” shall mean the date on which you have purchased shares that, together with
other shares purchased by you on or after the Effective Date, have an aggregate
purchase price of $500,000.

  •   Matching Grants for Share Purchases: The Company shall make matching
grants with respect to the Purchased Shares and any additional shares of the
Company’s common stock you purchase (up to an aggregate purchased amount of
$1,000,000 inclusive of the Purchased Shares) on or before the first anniversary
of the Effective Date. Such matching grants shall be credited to you as soon as
practicable after the end of any month in which you purchase Company shares, in
a number of restricted share units equal to the number of shares purchased in
such month (the “Matching Share Units”). The Matching Share Units shall vest and
be settled in shares on the following schedule: Twenty-five percent (25%) of the
Matching Share Units shall vest and be settled on the first anniversary of the
Final Purchase Date and an additional 25% of the Matching Share Units shall vest
and be settled on each of the second, third and fourth anniversaries of the
Final Purchase Date, provided you are employed on the relevant vesting date and
you have not violated the Purchase Obligations prior to such vesting date. If
your employment is terminated by the Company without Cause or by you for Good
Reason, either in contemplation of a Change in Control or at any time within
twelve (12) months following a Change in Control, or if your employment is
terminated by the Company at any time for Disability or by reason of your death,
then, your Matching Share Units shall immediately vest and be settled in shares
as soon as practicable (but not more than 60 days) thereafter.     •   Until the
expiration of the two-year period following the date on which any portion of the
Matching Share Units are settled, you shall not be permitted to sell, assign,
transfer, or otherwise dispose of more than fifty percent (50%) of the net
number of shares acquired by you upon such settlement of such portion of the
Matching Share Units after subtracting any such shares withheld by the Company
in payment of withholding obligations applicable to such settlement acquired
upon settlement of the Matching Share Units. This restriction shall cease to
apply upon a Change in Control or your earlier termination of employment.

•   Good Reason. You may terminate your employment for Good Reason (as defined
below) by delivering to the Company a Notice of Termination (as defined below)
not less than thirty (30) days prior to the termination of your employment for
Good Reason. The Company shall have the option of terminating your duties and
responsibilities prior to the expiration of such thirty-day notice period,
subject to the payment by the Company of the benefits provided in this letter,
as may be applicable. For purposes of this letter, Good Reason shall mean the
occurrence of any of the events or conditions described in clauses (i) through
(iii) immediately below which are not cured by the Company (if susceptible to
cure by the Company) within thirty (30) days after the Company has received
written notice from you within ninety (90) days of the initial existence of the
event or condition constituting Good Reason specifying the particular events or
conditions which constitute Good Reason and the specific cure requested by you.

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 5 of 11

  (i)   Diminution of Responsibility. (A) any material reduction in your duties
or responsibilities as in effect immediately prior thereto, or (B) removal of
you from the position of President, Valeant Pharmaceuticals International. For
the avoidance of doubt, the term “Diminution of Responsibility” shall not
include any such removal resulting from your death or disability, the
termination of your employment for Cause, or your termination of your employment
other than for Good Reason. In addition, notwithstanding anything herein to the
contrary, the reduction or removal from you, in part or in whole, from time to
time, of any duties or responsibilities related to the Company’s business in
Europe and/or Latin America shall not by itself be deemed to be a “Diminution of
Responsibility”;     (ii)   Compensation Reduction. Any material reduction in
your base salary or target bonus opportunity which is not comparable to
reductions in the base salary or target bonus opportunity of other
similarly-situated senior executives at the Company; or     (iii)   Company
Breach. Any other material breach by the Company of any material provision of
this letter.

•   Change in Control. For purposes of this letter, a “Change in Control” shall
mean any of the following events:

      (i) the acquisition (other than from the Company) by any person (as such
term is defined in Section 13(c) or 14(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 1934 Act) of thirty percent (30%) or more of
the combined voting power of the Company’s then outstanding voting securities;  
      (ii) the individuals who, as of the date hereof, are members of the Board
(the “Incumbent Board”), cease for any reason to constitute at least a majority
of the Board, unless the election, or nomination for election by the Company’s
stockholders, of any new director was approved by a vote of at least a majority
of the Incumbent Board, and such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; or

  (iii)   the closing of:

  (1)   a merger or consolidation involving the Company if the stockholders of
the Company, immediately before such merger or consolidation, do not, as a
result of such merger or consolidation, own, directly or indirectly, more than
fifty percent (50%) of the combined voting power of the then outstanding voting
securities of the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the combined voting
power of the voting securities of the Company outstanding immediately before
such merger or consolidation; or     (2)   a complete liquidation or dissolution
of the Company or an agreement for the sale or other disposition of all or
substantially all of the assets of the Company.

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 6 of 11

      Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because thirty percent (30%) or more of the combined voting power
of the Company’s then outstanding securities is acquired by (i) a trustee or
other fiduciary holding securities under one or more employee benefit plans
maintained by the Company or any of its subsidiaries or (ii) any corporation
which, immediately prior to such acquisition, is owned directly or indirectly by
the stockholders of the Company in the same proportion as their ownership of
stock in the Company immediately prior to such acquisition.         Upon the
occurrence of a Change in Control, at the election of the Company, either
(i) the unvested Options and Matching Share Units shall vest and all Options and
Matching Share Units shall be cancelled in exchange for a cash payment based in
the case of any merger transaction on the price received by shareholders in the
transaction constituting the Change in Control or in the case of any other event
that constitutes a Change in Control, the closing price of a Share on the date
such Change in Control occurs (minus, in the case of Options, the applicable
exercise price per share) or (ii) all Options and Matching Share Units shall be
converted into options or units, as applicable, in respect of the common stock
of the acquiring entity (in a merger or otherwise) on the basis of the relative
values of such stock and the Shares at the time of the Change in Control,
reflecting and continuing the same vesting schedule in place immediately prior
to the Change in Control; provided that subclause (ii) shall only be applicable
if the common stock of the acquiring entity is publicly traded on an established
securities market on the date on which such Change in Control is effected.     •
  Disability. The Company may terminate your employment, on written notice to
you after having established your Disability and while you remain Disabled,
subject to the payment by the Company to you of the applicable benefits provided
pursuant to this letter. For purposes of this letter, “Disability” shall mean
your inability to substantially perform your duties and responsibilities
hereunder by reason of any physical or mental incapacity for two or more periods
of ninety (90) consecutive days each in any three hundred and sixty (360) day
period, as determined by a physician with no history of prior dealings with the
Company or you, as reasonably agreed upon by the Company and you. You shall be
entitled to the compensation and benefits provided for under this letter for any
period prior to your termination by reason of Disability during which you are
unable to work due to a physical or mental infirmity in accordance with the
Company’s policies for similarly-situated executives.     •   Cause. The Company
may terminate your employment for “Cause”, subject to the payment by the Company
to you of the applicable benefits provided in this letter. “Cause” shall mean,
for purposes of this letter: (1) conviction of any felony (other than one
related to a vehicular offense) or other criminal act involving fraud;
(2) willful misconduct that results in a material economic detriment to the
Company; (3) material violation of Company policies and directives, which is not
cured after written notice and an opportunity for cure, (4) continued refusal by
you to perform your duties after written notice identifying the deficiencies and
an opportunity for cure; and (5) a material violation by you of any material
covenants to the Company. No action or inaction shall be deemed willful if not
demonstrably willful and if taken or not taken by you in good faith and with the
understanding that such action or inaction was not adverse to the best interests
of the Company. Reference in this paragraph to the Company shall also include
direct and indirect subsidiaries of the Company, and materiality shall be
measured based on the action or inaction and the impact upon the Company taken
as a whole. The Company may suspend, with pay, you

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 7 of 11

      upon your indictment for the commission of a felony as described under
clause (A) above. Such suspension may remain effective until such time as the
indictment is either dismissed or a verdict of not guilty has been entered.

•   Employee and Executive Benefits: You will be eligible to participate in the
employee benefit plans and programs generally made available to employees (on
the terms and conditions applicable generally to all employees) and the
Valeant’s Executive Benefit Program:

  1)   Executive medical program   2)   Executive medical reimbursement program
up to $10,000 per year   3)   Executive Vacation Program   4)   Executive Annual
Physical Program

•   Reimbursement of Certain Expenses: The Company shall fully reimburse the
reasonable fees of your counsel and financial advisor incurred in connection
with the development and implementation of the terms of your employment.

•   Conditions to Reimbursement. The following provisions shall be in effect for
any reimbursements (and in-kind benefits) to which you otherwise become under
this Agreement, in order to assure that such reimbursements (and benefits) do
not create a deferred compensation arrangement subject to Section 409A of the
Internal Revenue Code of 1986, as amended (“Section 409A”):

      (i) The amount of reimbursements (or in-kind benefits) to which you may
become entitled in any one calendar year shall not affect the amount of expenses
eligible for reimbursement (or in-kind benefits) hereunder in any other calendar
year.         (ii) Each reimbursement to which you become entitled shall be made
by the Company as soon as administratively practicable following your submission
of the supporting documentation, but in no event later than the close of
business of the calendar year following the calendar year in which the
reimbursable expense is incurred.         (iii) Your right to reimbursement (or
in-kind benefits) cannot be liquidated or exchanged for any other benefit or
payment.

•   At-Will Employment. Your employment with Valeant is “at will”. This means
that you or Valeant have the option to terminate your employment at any time,
with or without advance notice, and with or without cause. Valeant also may
change your position, title, pay, benefits, and other terms and conditions of
your employment (except for the at will nature of your employment and the terms
of the Mediation and Arbitration Agreement) at any time, for any reason, with or
without notice. This offer of employment does not constitute an express or
implied agreement of continuing or long term employment. The at will nature of
your employment can be altered only by a written agreement specifying the
altered status of your employment. Such written agreement must be signed by both
you and the Chief Executive Officer.   •   Severance Benefits. Notwithstanding
the immediately preceding bullet paragraph, if your employment is terminated by
the Company without Cause or by you for Good Reason, the Company shall have the
following obligations:

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 8 of 11

  •   The Company will pay you 150% of the sum of an amount equal to your annual
salary as of the date of your termination, plus an amount equal to your annual
target bonus as of the date of your termination, provided that, if your
termination occurs either in contemplation of a Change in Control or at any time
within twelve (12) months following a Change in Control, the Company shall pay
you an amount which is 200% of the sum otherwise determined under this bullet;  
  •   The Company will pay you any accrued but unpaid salary or vacation pay and
any deferred compensation. In addition, the Company will pay you any bonus
earned but unpaid in respect of any fiscal year preceding the termination date,
plus any pro-rata bonus for the year of termination based on a target-level
bonus.     •   The Company will provide you with continued coverage under any
health, medical, dental or vision program or policy in which you were eligible
to participate at the time of your employment termination for 12 months
following such termination on terms no less favorable to you and your dependents
(including with respect to payment for the costs thereof) than those in effect
immediately prior to such termination;     •   The performance measures
applicable to the Performance Share Units will be applied as though the
termination date were the end of the measurement period, with the number of
units calculated in a manner consistent with the vesting schedule described
above (e.g., in the event of your termination prior to the First Measurement
Date, 100% will vest at the date of such termination if the Adjusted Share Price
is the Single Vesting Share Price; 200% will vest if the Adjusted Share Price is
the Double Vesting Share Price; and 300% will vest if the Adjusted Share Price
is the Triple Vesting Share Price; and if the Adjusted Share Price on such
measurement date 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, you shall vest in, and the Company shall deliver, a number
of Performance Share Units that is the mathematical interpolation between the
number of shares which would vest at defined ends of the spectrum); provided,
however, that in the event you are entitled to payment under this bullet point,
only a pro rata portion of such calculated units will vest upon your termination
(based on the number of completed months elapsed from the date of grant to the
date of termination divided by 36 months). The Company shall deliver shares in
respect of such vested Performance Share Units, if any, as soon as practicable
(but not later than sixty (60) days) following your termination date, and all
other Performance Share Units will be forfeited.     •   The Company shall
provide outplacement services through one or more outside firms of your choosing
up to an aggregate of $20,000, which services shall extend until the earlier of
(i) 12 months following the termination of your employment or (ii) the date that
you secure full time employment.     •   You shall have three months following
the termination date to exercise vested Options (but in no event beyond the
expiration of the 10-year Option term). Any unvested portion of the Option, any
unvested Performance Share Units and any unvested Matching Share Units shall be
forfeited.

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 9 of 11
Notwithstanding anything herein to the contrary, the Company shall have no
obligation to pay or provide any of the severance benefits set forth in this
letter unless you execute and deliver, within 60 days of the date of your
termination, and do not revoke, a general release in form satisfactory to the
Company and any revocation period set forth in the release has lapsed. The
Company shall pay all cash severance benefits due within 10 business days
following the satisfaction of all of the conditions set forth in the preceding
sentence. You shall not be required to mitigate the amount of any severance
payment provided for under this letter by seeking other employment or otherwise
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to you in any subsequent employment.
It is understood that, during your employment by Valeant Pharmaceuticals
International, you will not engage in any activities that constitute a conflict
of interest with the interests of Valeant, as outlined in Valeant’s conflict of
interest policies for employees and executives in effect from time to time.
Without limiting the generality of the foregoing, you expressly acknowledge and
agree that, as a former securityholder of Dow Pharmaceuticals Sciences, Inc.
(“Dow”) who may receive future payments from the Company that are contingent on
the achievement of certain approval or commercial milestones relating to the Dow
business, any action taken by you or at your direction that is reasonably likely
materially to (a) increase the likelihood of the Company achieving these
milestones, or (b) hasten their achievement, may be a conflict of interest.
Accordingly, you agree that, for so long there remains outstanding any
contingent payment obligation by the Company to the Dow securityholders, you
shall not take any such action or give any such direction without disclosing all
relevant facts to, and receiving the prior consent of, the Chief Executive
Officer and the General Counsel to take such action or give such direction.

•   Covenant Not to Solicit. To protect the confidential information and other
trade secrets of the Company and its affiliates, you agree, during your
employment with the Company or any of its affiliates and for a period of
twenty-four (24) months after your cessation of employment with the Company or
any of its affiliates, not to solicit or participate in or assist in any way in
the solicitation of any employees of the Company or any its affiliates. For
purposes of this covenant, “solicit” or “solicitation” means directly or
indirectly influencing or attempting to influence employees of the Company or
any of its affiliates to become employed with any other person, partnership,
firm, corporation or other entity. You agree that the covenants contained in
this paragraph are reasonable and desirable to protect the confidential
information and other trade secrets of the Company and its affiliates, provided,
that solicitation through general advertising or the provision of references
shall not constitute a breach of such obligations.   •   It is the intent and
desire of you and the Company (and its affiliates) that the restrictive
provisions in the preceding paragraph be enforced to the fullest extent
permissible under the laws and public policies as applied in each jurisdiction
in which enforcement is sought. If any particular provision in the preceding
paragraph shall be determined to be invalid or unenforceable, such covenant
shall be amended, without any action on the part of either party hereto, to
delete therefrom the portion so determined to be invalid or unenforceable, such
deletion to apply only with respect to the operation of such covenant in the
particular jurisdiction in which such adjudication is made. Your obligations
under the preceding paragraph shall survive the termination of your employment
with or any other employment arrangement with the Company or any of its
affiliates.

          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 10 of 11

•   Remedies for Breach of Obligations Under the Covenant Not to Solicit above.
You acknowledge that the Company or its affiliates will suffer irreparable
injury, not readily susceptible of valuation in monetary damages, if you breach
your obligations under the paragraph captioned “Covenant Not to Solicit” above.
Accordingly, you agree that the Company and its affiliates will be entitled, in
addition to any other available remedies, to obtain injunctive relief against
any breach or prospective breach by you of your obligations under such paragraph
in any Federal or state court sitting in the State of New Jersey, or, at the
Company’s (or its affiliate’s) election, in any other state in which you
maintain your principal residence or your principal place of business. You agree
that the Company or its affiliates may seek the remedies described in the
preceding sentence notwithstanding any arbitration or mediation agreement that
you may enter into with the Company or any of its affiliates. You hereby submit
to the non-exclusive jurisdiction of all those courts for the purposes of any
actions or proceedings instituted by the Company or its affiliates to obtain
that injunctive relief, and you agree that process in any or all of those
actions or proceedings may be served by registered mail, addressed to the last
address provided by you to the Company or its affiliates, or in any other manner
authorized by law.

You shall be indemnified by Valeant as provided in its by-laws and Certificate
of Incorporation.
Section 409A. If any payments or benefits due to you hereunder would cause the
application of an accelerated or additional tax under Section 409A, such
payments or benefits shall be restructured in a manner which does not cause such
an accelerated or additional tax. Without limiting the foregoing and
notwithstanding anything contained herein to the contrary, to the extent
required in order to avoid accelerated taxation and/or additional tax under
Section 409A amounts that would otherwise be payable and benefits that would
otherwise be provided pursuant to this letter during the six-month period
immediately following your separation from service shall instead be paid on the
first business day after the date that is six months following the date of your
separation from service (or death, if earlier), with interest from the date such
amounts would otherwise have been paid at the short-term applicable federal
rate, compounded semi-annually, as determined under Section 1274 of the Internal
Revenue Code of 1986, as amended, for the month in which payment would have been
made but for the delay in payment required to avoid the imposition of an
additional rate of tax on you under Section 409A.
It is understood that you are required to read, review, agree, sign and return
the following documents included with this letter: 1) the Conflict of Interest
Policy and Agreement, 2) the Workers’ Compensation Fraudulent Claims
notification, 3) the Employee Agreement concerning inventions, discoveries, and
improvements, and 4) the Mediation and Arbitration Agreement, and 5) the Trading
in Company Stock Interoffice Memorandum. Additionally, the Immigration and
Reform Act 1986 requires each new employee to provide proof of eligibility to
work in the United States.
Valeant Policy will govern any other matter not specifically covered by this
letter.
By signing this letter, you agree and the Company hereby mutually agree that,
except as specifically provided herein, that certain Employment Agreement dated
December 9, 2008 between you and Valeant Pharmaceuticals North America (the “Old
Employment Agreement”) that was scheduled to terminate by its terms on the date
that is six (6) months after its effective date is terminated as of the day
immediately preceding the Effective Date and that no amounts, liabilities or
other obligations are outstanding or due by Valeant Pharmaceuticals North
America or the Company under or pursuant to the Old Employment Agreement, other
than earned but unpaid base salary through the day immediately preceding the
Effective Date. Notwithstanding the foregoing, to the extent required to comply
with the substitution rules
          JMP BC          
          Initials          

 

--------------------------------------------------------------------------------

 

Bhaskar Chaudhuri
March 10, 2009
Page 11 of 11
of Treasury regulation 1.409A-3(f) under Section 409A, severance benefits that
become payable under this Agreement with respect to a separation from service
shall be governed as to timing and manner of payment by the applicable terms of
the Old Employment Agreement. The purpose of the foregoing sentence is to comply
with the substitution rules of Treasury regulation 1.409A-3(f) under Section
409A and it shall be interpreted accordingly. Except to the limited extent
provided herein, this letter agreement is intended to supersede the Old
Employment Agreement and any other negotiations or agreements with the Company
or any of its affiliates relating to employment, severance, benefits,
compensation, change of control and any other subject matters contained in this
letter agreement; provided, however, that the Non-Compete Agreement dated
December 9, 2008 by you in favor of the Company shall remain in full force and
effect and is unaffected by this letter agreement. This letter is governed by
the laws of the State of California.
As confirmation of acceptance of this new position and the terms and conditions
set forth herein, please sign and return this letter. In addition, please mail
the original signed offer letter in the envelope provided. A duplicate copy of
this offer letter is included for your records.
Sincerely,

                 
/s/  J. Michael Pearson
               
J. Michael Pearson
Chairman and Chief Executive Officer
               

AGREED AND ACCEPTED:

                 
/s/  Bhaskar Chaudhuri
      Date:   3/10/09    
 
Bhaskar Chaudhuri
         
 
   

          JMP BC          
          Initials