EXHIBIT 10.2
SEPARATION AGREEMENT
     THIS SEPARATION AGREEMENT (“Agreement”), dated as of February 1, 2008
between VALEANT PHARMACEUTICALS INTERNATIONAL (the “Company”), and TIMOTHY C.
TYSON (the “Executive”).
W I T N E S S E T H:
     WHEREAS, the Executive and the Company are parties to an Amended and
Restated Executive Employment Agreement, effective as of October 24, 2002 and
amended as of March 21, 2005 (the “Employment Agreement”);
     WHEREAS, the Executive and the Company have mutually agreed to the
termination of the Executive’s employment as Chief Executive Officer and
President of the Company; and
     WHEREAS, the Executive and the Company desire to set forth herein their
respective rights and obligations in connection with the termination of the
Executive’s employment with the Company.
     NOW, THEREFORE, in consideration of the mutual promises, representations
and warranties set forth herein, and for other good and valuable consideration,
it is hereby agreed as follows:
     1. Termination of Employment. The Executive shall remain employed by the
Company as Chief Executive Officer and President of the Company, until
February 1, 2008 (the “Termination Date”). The Executive shall execute a letter,
effective as of the Termination Date, resigning as an officer and/or director of
the Company and each of its subsidiaries and affiliates.
     2. Consulting Services.
               (a) For a period of three months following the Termination Date
(the “Consulting Period”), the Executive shall provide such consulting services
to the Company as the Chief Executive Officer of the Company shall reasonably
request and at such times and at such locations that are mutually agreeable to
the Executive and the Company; provided, however, that such consulting services
to be provided by the Executive shall not unreasonably interfere with the
Executive’s other business commitments. The parties hereby agree that it is
anticipated that the level of services provided by the Executive to the Company
during the Consulting Period shall be not more than 20% of the average level of
services provided by the Executive to the Company over the thirty-six month
period preceding the Termination Date.

 

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               (b) In exchange for providing such consulting services during the
Consulting Period, the Executive shall receive a monthly consulting fee equal to
$29,800, payable in accordance with the Company’s normal payroll practices.
               (c) The Consulting Period may be terminated, and no further
consulting payments shall be due to the Executive (other than unpaid fees for
consulting services performed prior to the date of termination), upon 10 days
written notice by either party. At the conclusion of the three-month Consulting
Period, the Executive and the Company may mutually agree to extend the
Consulting Period for an additional three months at the same rate of
compensation.
     3. Payments. In connection with the Executive’s termination of employment
and, together with the treatment of the Executive’s equity awards as provided in
Section 4 hereof, in complete satisfaction of the Company’s obligations to the
Executive under Section 7(c) of the Employment Agreement:
               (a) the Company shall pay or provide to the Executive the
“Accrued Compensation” (as defined in the Employment Agreement) in accordance
with the Company’s normal payroll practices. The parties have agreed that no
bonus has been earned or is payable with respect to services performed during
2007.
               (b) provided that the Executive signs a general release
substantially in the form attached hereto as Exhibit A (the “Release”) within
21 days following the Termination Date and fails to revoke such Release (the
“Release Condition”), the Company shall pay the Executive a lump sum amount
equal to $3,577,600, less applicable amounts withheld in accordance with
Section 13 of this Agreement, representing two times the sum of the Executive’s
2008 annual base salary and 2008 target annual bonus (the “Severance Amount”).
Notwithstanding Section 7(c)(iii) of the Employment Agreement, payment of the
Severance Amount shall be made on the first business day following expiration of
six months following the Termination Date.
               (c) provided that the Release Condition is satisfied, the Company
shall pay the Executive a lump sum amount equal to $78,198, less applicable
amounts withheld in accordance with Section 13 of this Agreement, representing
the Executive’s “Pro-Rata Bonus” (as defined in the Employment Agreement).
Payment of the Pro-Rata Bonus shall be made on the first business day following
expiration of six months following the Termination Date.
               (d) through the second anniversary of the Termination Date, the
Executive and his dependents shall continue to be eligible to participate in the
Company health, medical, dental, or vision plans in which he is currently
eligible to participate on terms no less favorable to the Executive and his
dependents (including with respect to payment for the costs thereof) than those
in effect immediately prior to the Termination Date. Such two-year period shall
run concurrently with the health plan

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continuation coverage period provided for under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”).
     4. Equity Awards. In accordance with Section 7(c)(v) of the Employment
Agreement, (i) all long-term equity incentive awards (including restricted stock
awards, restricted stock units, performance shares and stock options) granted to
the Executive that are outstanding as of the Termination Date (“Eligible
Awards”) will become vested as of the Termination Date, (ii) any Eligible Award
which is a stock option shall remain outstanding and exercisable for a period of
two years following the Termination Date (but not beyond its original expiration
date), and (iii) any Eligible Award which is a restricted stock unit or
performance share shall be settled in accordance with the terms of the
applicable award agreement (or, in the absence of an award agreement, in
accordance with the terms of the award as granted by the Compensation Committee
of the Company’s Board of Directors).
     5. No Mitigation. The Executive shall be under no obligation to seek other
employment in order to be eligible to receive the payments and benefits set
forth herein.
     6. Return of Property. On the Termination Date, the Executive shall return
all company property to the Company, including any identification cards, any
computer hardware and software, all paper or computer-based files, business
documents, and/or other records as well as all copies thereof, credit cards,
keys and any other Company supplies or equipment in his possession.
     7. Restrictive Covenants. The Executive shall continue to be bound by the
covenants set forth in Sections 10 and 11 of the Employment Agreement and the
Company shall continue to be entitled to the benefits of Section 12 of the
Employment Agreement, and such Sections shall survive the termination of the
Employment Agreement. The Executive shall not be bound by the covenants relating
to “Prohibited Activities” set forth in Article 7(c) of the Employment
Agreement. The Executive shall take no action which is intended or would
reasonably be expected to damage or otherwise diminish the reputation of the
Company or any of its subsidiaries, affiliates, officers or directors, or lead
to unwanted or unfavorable publicity to the Company or any of its subsidiaries,
affiliates, officers or directors; provided that, nothing in this Agreement
shall prohibit the Executive from providing truthful and accurate information if
required by any court or government agency or body, provided that the Executive
notifies the Company promptly of the receipt by him of any request that he
provide such information. In addition, the Company shall make no public
statement which is intended, or would reasonably be expected, to damage or
otherwise diminish the Executive’s reputation, or lead to unwanted or
unfavorable publicity to the Executive.
     8. Certain Obligations of the Company. The Company shall continue to be
bound by the obligations set forth in Section 13(d) of the Employment Agreement
and such Section shall survive the termination of the Employment Agreement. In
addition, Section 9 of the Employment Agreement (and Exhibit A thereto) shall
survive

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the termination of the Employment Agreement; provided, however, that
notwithstanding anything to the contrary in the Employment Agreement (and
Exhibit A thereto), the Executive shall not be entitled to the payment of any
amount thereunder unless and until such time as the Executive receives a claim
that is described in the first sentence of Section (c) of Exhibit A (or such
earlier time as the Company, based on advice of independent accountants or its
legal counsel, deems appropriate in its sole discretion).
     9. Severability. Should any provision of this Agreement be held, by a court
of competent jurisdiction, to be invalid or unenforceable, such invalidity or
unenforceability shall not render the entire Agreement invalid or unenforceable,
and this Agreement and each individual provision hereof shall be enforceable and
valid to the fullest extent permitted by law.
     10. Successors and Assigns. (a) This Agreement and all rights under this
Agreement are personal to the Executive and shall not be assignable other than
by will or the laws of descent. All of the Executive’s rights under this
Agreement shall inure to the benefit of his heirs, personal representatives,
designees or other legal representatives, as the case may be.
               (b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns. Any person succeeding to the
business of the Company by merger, purchase, consolidation or otherwise shall
assume by contract or operation of law the obligations of the Company under this
Agreement.
     11. Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of California, without regard to the conflicts
of laws rules thereof.
     12. Notices. All notices, requests and demands given to or made upon the
respective parties hereto shall be deemed to have been given or made three
(3) business days after the date of mailing when mailed by registered or
certified mail, postage prepaid, or on the date of delivery if delivered by
hand, or by any nationally-recognized overnight delivery service, addressed to
the parties at their addresses set forth below or to such other addresses
furnished by notice given in accordance with this Section 11: (a) if to the
Company, Attn: General Counsel, One Enterprise, Aliso Viejo, CA 92656 and (b) if
to the Executive, the address last on file with the Company with a copy to Henry
Morgenbesser, Allen & Overy LLP, 1221 Avenue of the Americas, New York, New York
10020.
     13. Withholding. All payments required to be made by the Company to the
Executive under this Agreement shall be subject to withholding, employment,
social security, medicare, unemployment and other payroll taxes and deductions
in accordance with the Company’s policies applicable to senior executives of the
Company and the provisions of any applicable employee benefit plan or program of
the Company.

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     14. Counsel Fees. The Company shall pay all reasonable legal fees and
expenses, up to a maximum of $25,000, incurred by Executive in connection with
the negotiation of this Separation Agreement.
     15. Complete Understanding. This Agreement supersedes any prior contracts,
understandings, discussions and agreements relating to employment between the
Executive and the Company, including but not limited to the Employment Agreement
(except to the extent provided in Sections 7 and 8 hereof), and constitutes the
complete understanding between the parties with respect to the subject matter
hereof. No statement, representation, warranty or covenant has been made by
either party with respect to the subject matter hereof except as expressly set
forth herein.
     16. Modification; Waiver. (a) This Agreement may be amended or waived if,
and only if, such amendment or waiver is in writing and signed, in the case of
an amendment, by the Company and the Executive or in the case of a waiver, by
the party against whom the waiver is to be effective. Any such waiver shall be
effective only to the extent specifically set forth in such writing.
               (b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
     17. Headings. The headings in this Agreement are for convenience of
reference only and shall not control or affect the meaning or construction of
this Agreement.
     18. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement
shall become effective when each party hereto shall have received counterparts
hereof signed by the other party hereto.
     18. Arbitration. (a) Any controversy, dispute or claim arising out of or
relating to this Agreement or the breach hereof which cannot be settled by
mutual agreement (other than with respect to the matters covered by Section 7
for which the Company may, but shall not be required to, seek injunctive relief)
shall be finally settled by binding arbitration in accordance with the Federal
Arbitration Act (or if not applicable, the applicable state arbitration law) as
follows: Any party who is aggrieved shall deliver a notice to the other party
setting forth the specific points in dispute. Any points remaining in dispute
twenty (20) days after the giving of such notice may be submitted to arbitration
in Orange County, to the American Arbitration Association, before a single
arbitrator appointed in accordance with the arbitration rules of the American
Arbitration Association, modified only as herein expressly provided. After the
aforesaid twenty (20) days, either party, upon ten (10) days notice to the
other, may so

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submit the points in dispute to arbitration. The arbitrator may enter a default
decision against any party who fails to participate in the arbitration
proceedings.
               (b) The decision of the arbitrator on the points in dispute shall
be final, unappealable and binding, and judgment on the award may be entered in
any court having jurisdiction thereof.
               (c) Except as otherwise provided in this Agreement, the
arbitrator shall be authorized to apportion its fees and expenses and the
reasonable attorneys’ fees and expenses of any such party as the arbitrator
deems appropriate. In the absence of any such apportionment, the fees and
expenses of the arbitrator shall be borne equally by each party, and each party
shall bear the fees and expenses of its own attorney.
               (d) The parties agree that this Section 19 has been included to
rapidly and inexpensively resolve any disputes between them with respect to this
Agreement, and that this Section 19 shall be grounds for dismissal of any court
action commenced by either party with respect to this Agreement, other than
post-arbitration actions seeking to enforce an arbitration award. In the event
that any court determines that this arbitration procedure is not binding, or
otherwise allows any litigation regarding a dispute, claim, or controversy
covered by this Agreement to proceed, the parties hereto hereby waive any and
all right to a trial by jury in or with respect to such litigation.
               (e) The parties shall keep confidential, and shall not disclose
to any person, except as may be required by law, the existence of any
controversy hereunder, the referral of any such controversy to arbitration or
the status or resolution thereof.
(The remainder of this page is intentionally left blank.)

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     IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed in its corporate name, and the Executive has manually signed his name
hereto, all as of the day and year first above written.

            VALEANT PHARMACEUTICALS INTERNATIONAL
      By:   /s/ Norma Provencio       Name:   NORMA PROVENCIO       Title:  
Chair — Compensation Committee
Board of Directors    

                     /s/ Timothy C. Tyson       TIMOTHY C. TYSON           

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EXHIBIT A
RELEASE AGREEMENT
               Valeant Pharmaceuticals International (the “Company”) has agreed
that, in return for my signing this Release Agreement, dated as of February ___,
2008 (the “Agreement”), the Company will provide me with the benefits described
in the Separation Agreement, dated as of February 1, 2008 between me and the
Company (the “Separation Agreement”). I understand that I am not entitled to
severance benefits unless I sign this Agreement. I understand that, regardless
of whether I sign this Agreement, the Company will pay me any accrued salary and
vacation to which I am entitled by law. In consideration for the benefits I am
receiving under this Agreement:
     (1) I hereby release the Company and its parent, subsidiaries,
predecessors, successors, and affiliates, and their officers, directors,
employees, shareholders, and agents from any and all claims, liabilities, or
obligations of every kind, but only to the extent (a) actually known by me or,
if unknown, are of such a nature that a prudent person acting under similar
circumstances would know of such claims; and (b) arising at any time prior to
and through the date I sign this Agreement. This general release includes, but
is not limited to: all federal and state statutory and common law claims; claims
related to my employment, termination of my employment, breach of contract,
tort, discrimination, harassment, retaliation, fraud, emotional distress,
compensation or benefits; and claims for any form of equity or compensation. In
releasing claims potentially unknown to me at present, I acknowledge that I have
understood and waived all rights and benefits under Section 1542 of the
California Civil Code, and any law or legal principle of similar effect in any
jurisdiction. California Civil Code Section 1542 provides as follows: “ A
general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him must have materially affected his settlement with the debtor.”
     (2) I acknowledge that I am knowingly and voluntarily waiving and releasing
any rights that I may have under the Age Discrimination in Employment Act of
1967, as amended (“ADEA”), and that the consideration given for the waiver and
release in the preceding paragraph is in addition to anything of value to which
I was already entitled and provided to me in order to obtain a full release of
all claims, including claims for age discrimination. I further acknowledge that
I have been advised by this writing that: (a) my waiver and release do not apply
to any rights or claims that may arise after the execution date of this
Agreement; (b) I have the right to consult with an attorney prior to executing
this Agreement; (c) I have twenty-one (21) days to consider this Agreement
(although I may choose voluntarily to execute this Agreement earlier); (d) I
have seven (7) days following the execution of this Agreement to revoke the
Agreement as to only any claim I may have for age discrimination under the ADEA
by providing written notice to the head of the Company’s Human Resources
department which is received by 5:00 p.m. on the seventh day following my
execution of this Agreement (I acknowledge that I

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do not have a right to revocation with respect to any other claims); and
(e) this Agreement will be effective upon my execution of it, but that no
benefits will be owed to me any sooner than the payment date set forth in the
Separation Agreement. I further acknowledge that 90% of the benefits provided to
me by this Agreement are for the release of any potential claim for age
discrimination I may have under the ADEA.
     (3) Notwithstanding anything herein to the contrary, I am not releasing:
(a) any claims that relate to my right to enforce this Agreement or the
Separation Agreement, (b) my rights of indemnification and directors and
officers liability insurance coverage (or replacements therefor) to which I was
entitled immediately prior to the date of this Agreement with regard to my
service on behalf of the Company and its affiliates (including, without
limitation, under Section 13(d) of the Executive Employment Agreement); (c) my
rights under any tax-qualified pension or claims for accrued vested benefits
under any other employee benefit plan, policy or arrangement maintained by the
Company or under COBRA; (d) my rights under the provisions of the Executive
Employment Agreement which are intended to survive the termination of my
employment; or (e) my rights as a stockholder.
* * *
               This Agreement constitutes the complete, final and exclusive
embodiment of the entire agreement between the Company and me with regard to my
release of all known and unknown claims against the Company. I acknowledge and
understand that certain provisions in my Amended and Restated Executive
Employment Agreement dated as of January 1, 2005 are intended to and do survive
the termination of my employment and the execution of the Separation Agreement
and this Agreement. I am not relying on any promise or representation, written
or oral, that is not expressly stated herein. This Agreement may only be
modified by a written agreement signed by both me and a duly authorized officer
of the Company and approved by the Company’s Board of Directors.

     
UNDERSTOOD AND AGREED:
     

 
 
   
Timothy C. Tyson
  Date
 
   

 
 
   
Valeant Pharmaceuticals International
  Date

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