Exhibit 10.1

GOLDMAN SACHS LENDING PARTNERS LLC

GOLDMAN SACHS BANK USA

200 West Street

New York, New York 10282

PERSONAL AND CONFIDENTIAL

May 24, 2013

Valeant Pharmaceuticals International, Inc.

2150, boul. St-Elzear Ouest, Laval,

Quebec, H7L 4A8

Valeant Pharmaceuticals International

700 Route 202/206

Bridgewater, NJ 08807

Attention: J. Michael Pearson

Project Stratos

Commitment Letter

Ladies and Gentlemen:

We are pleased to confirm the arrangements under which Goldman Sachs Bank USA
(“GS Bank”), Goldman Sachs Lending Partners LLC (“GSLP”, together with GS Bank
and any Additional Agents appointed in accordance with Section 1, collectively,
the “Commitment Parties”) is exclusively authorized by Valeant Pharmaceuticals
International, Inc., a corporation organized under the laws of Canada (the
“Parent”), and Valeant Pharmaceuticals International, a Delaware corporation
(the “Company” and, together with Parent, “you”), to act as joint lead arranger,
joint bookrunner and sole syndication agent, in connection with the financing
for certain transactions described herein, in each case on the terms and subject
to the conditions set forth in this amended and restated commitment letter and
the attached Annexes A, B and C hereto (collectively, this “Commitment Letter”).
Capitalized terms used but not defined herein have the respective meanings given
in the Annexes hereto.

You have informed the Commitment Parties that the Company intends to consummate
the acquisition (the “Acquisition”) of 100% of the capital stock (the “Shares”)
of an entity previously identified to us and referred to as “Stratos” (the
“Target,” and together with its subsidiaries, the “Acquired Business”) pursuant
to the agreement and plan of merger, dated as of May 24, 2013, among the Company
and a wholly-owned subsidiary of the Company (“Acquisition Sub”) and the Target
(together with the schedules and exhibits thereto, the “Acquisition Agreement”).
The Acquisition will be consummated pursuant to the Acquisition Agreement
whereby Acquisition Sub will be merged with and into Target, with Target
surviving the merger as a wholly owned subsidiary of the Company, in which case
all of the outstanding Shares of Target on the date of consummation of the
Acquisition (the “Closing Date”) will be converted into the right to receive on
the Closing Date the cash consideration per Share set forth in the Acquisition
Agreement in cash. You have informed us that (a) the Acquisition, (b) the
repayment of all outstanding loans and termination of commitments under any
credit facility to which the Target or any of

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

its subsidiaries is a party (the “Target Credit Facilities”), and, (c) the
tender offer for or defeasance or irrevocable call for redemption and deposit of
cash in an amount necessary to effect such defeasance or redemption of Target’s
9.875% Senior Notes due 2015 (the “Notes Refinancing”) (the Notes Refinancing,
together with the repayment of outstanding loans and termination of commitments
under the Target Credit Facilities and all other outstanding indebtedness of the
Target (other than an aggregate amount of indebtedness to be agreed between you
and the Arrangers) are herein referred to collectively as the “Refinancing”) and
(d) the payment of fees and expenses in connection with the Acquisition and the
Refinancing, including any premiums payable in connection with the Refinancing,
will be financed from the following sources:

 

  •  

the issuance by Borrower (as defined in Annex B) or the Company, as agreed
between you and the Arrangers (as defined below) of $9,275 million of high yield
securities (the “Securities”) pursuant to a Rule 144A (without registration
rights) or other private placement (the “Notes Offering”) or, in the event some
or all of the Securities are unable to be issued at the time the Acquisition is
consummated, borrowings by the Parent of unsecured senior increasing rate bridge
loans in an aggregate principal amount of $9,275 million, less the gross
proceeds from the sale of Securities issued on or prior to the Closing Date (the
“Bridge Loans”, the “Facility” and the “Bridge Facility”) having the terms set
forth on Annex B. The Bridge Loans shall consist of two tranches: (i) Tranche 1
Bridge Loans (as defined in Annex B hereto) in an amount up to $7,575 million
and (ii) Tranche 2 Bridge Loans (as defined in Annex B hereto) in an amount up
to $1,700 million. The amount of Tranche 2 Bridge Loans shall be automatically
reduced by the aggregate principal amount of net proceeds received by the
Borrower or the Company from the issuance and sale after the date hereof of
equity of the Company or the Borrower in an amount up to $1,700 million, such
reduction to become effective as of the date of receipt of such net proceeds
(the aggregate principal amount of such reduction, the “Equity Proceeds
Amount”).

 

1. Commitments: Titles and Roles.

GSLP (together with any Additional Arrangers appointed in accordance with this
Section 1, collectively, the “Bridge Lead Arrangers” or, the “Arrangers”) is
pleased to confirm its commitment to act, and you hereby appoint GSLP to act as
joint lead arranger, joint bookrunner and sole syndication agent (the
“Syndication Agent”), and GSLP and GS Bank are pleased to advise you of their
joint but not several commitment to provide the entire aggregate principal
amount of the Bridge Loans as follows: (x) GSLP commits to provide $6,775
million of the Tranche 1 Bridge Loans and (y) GS Bank commits to provide $800
million of the Tranche 1 Bridge Loans and $1,700 million of the Tranche 2 Bridge
Loans, in each case on terms and subject to the conditions contained in this
Commitment Letter and the Fee Letter (referred to below). In addition, you
hereby appoint GSLP to act as administrative agent (the “Bridge Administrative
Agent”) for the Bridge Facility. You agree that GSLP will have “left” placement
in any and all marketing materials or other documentation used in connection
with the Facility or other documentation used in connection with the Facility.
You further agree that no other titles will be awarded and no compensation
(other than that expressly contemplated by this Commitment Letter and the Fee
Letter referred to below) will be paid in connection with the Facility unless
you and we shall so agree; provided, that, you may, within 14 days following the
date hereof, appoint additional agents, co-agents, lead arrangers, bookrunners,
managers or arrangers or confer other titles in respect of the Bridge Facility
(each such agent, co-agent, lead arranger, bookrunner, manager, arranger or
titled institution, an “Additional Agent”) in a manner and with economics
determined by you in consultation with the applicable Additional Agent and
reasonably acceptable to you and such Additional Agents; provided, further, that
(w) you may not appoint more than five (5) additional arrangers and bookrunners
(such additional arrangers and bookrunners, the “Additional Arrangers”), (x) you
may not allocate any of the economics or assign any roles or titles in respect
of the Tranche 2 Bridge Loans, nor may you allocate

 

2

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

more than 62.5% of the total economics in respect of the Tranche 1 Bridge Loans
to the applicable Additional Agents (or their affiliates), (y) each such
Additional Agent (or its affiliate) shall assume a proportion of the commitments
with respect to the Tranche 1 Bridge Loans that is equal to the proportion of
the economics allocated to such Additional Agent (or its affiliates), and (z) to
the extent you appoint (or confer titles on) Additional Agents, the economics
allocated to, and the commitment amounts of, GSLP and GS Bank will be
proportionately reduced by the amount of the economics allocated to, and the
commitment amount of, each such Additional Agent (or its affiliate), in each
case upon the execution and delivery by such Additional Agent of customary
joinder documentation (which may be in the form of an amendment and restatement
of this Commitment Letter and the Fee Letter) reasonably acceptable to you and
us and, thereafter, each such Additional Agent shall constitute a “Commitment
Party,” and a “Bridge Lead Arranger,” as applicable, under this Commitment
Letter and under the Fee Letter. Our fees for our commitment and for services
related to the Facility are set forth in one or more separate fee letters (the
“Fee Letter”) entered into by the Company and the Commitment Party on the date
hereof.

 

2. Conditions Precedent.

Each Commitment Party’s commitment and agreements hereunder are subject to the
conditions set forth on Annex C hereto and the following conditions: except
(x) as disclosed in the (i) Schedules (as defined in the Acquisition Agreement)
or (ii) selected sections of the draft dated May 24, 2013 of Amendment No. 2 to
the Registration Statement set forth in Section 3.03(b) of the Acquisition
Agreement (to the extent the relevance of such sections is reasonably apparent
but excluding any risk factor contained in the “Risk Factors” section thereof,
any similarly cautionary statements or any predictive statements or
forward-looking statements therein) and (y) for the transactions contemplated by
the Acquisition Agreement, since December 29, 2012, there shall not have
occurred any event that has had, or would reasonably be expected to have, a
Target Material Adverse Effect (as defined below). Since the date hereof, there
shall not have occurred any fact, circumstance, development, event or change
that has had or would reasonably be expected to have, individually or in the
aggregate, a Target Material Adverse Effect. Each Commitment Party’s commitment
and agreements hereunder are subject to the satisfactory negotiation, execution
and delivery of appropriate definitive loan documents relating to the Facility
including, without limitation, credit agreements, guarantees, opinions of
counsel and other related definitive documents (collectively, the “Facility
Documentation”) to be based upon and substantially consistent with the terms set
forth in this Commitment Letter (it being agreed that the Facility Documentation
shall not contain any conditions precedent to the initial borrowing under the
Facility on the Closing Date other than the conditions precedent expressly set
forth herein, in Annex B under the heading “Conditions Precedent to Borrowing”
and in Annex C hereto, and the terms of the Facility Documentation will be such
that they do not impair the availability of the Facility on the Closing Date if
such conditions are satisfied). Each Commitment Party’s commitment is also
subject to the Company having entered into an engagement letter with one or more
investment banks (the “Investment Banks”) reasonably acceptable to the
Commitment Parties, pursuant to which you engaged the Investment Banks in
connection with a potential issuance of Securities or other financing).
Notwithstanding anything in this Commitment Letter, the Fee Letter or the
Facility Documentation to the contrary, the only representations the accuracy of
which will be a condition to the availability of the Bridge Loans on the Closing
Date will be (i) the representations and warranties made by the Acquired
Business in the Acquisition Agreement that are material to the interests of the
Lenders, in their capacities as such, but only to the extent that you have the
right to terminate your obligations under the Acquisition Agreement or to
decline to consummate the Acquisition (in each case in accordance with the terms
of the Acquisition Agreement) as a result of a breach of such representation or
warranty (“Specified Acquisition Agreement Representations”) and (ii) the
Specified Representations (as defined below).

As used herein, “Specified Representations” means representations relating to
incorporation or formation; organizational power and authority to enter into the
documentation relating to the Bridge

 

3

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

Loans; due execution, delivery and enforceability of such documentation;
solvency; no conflicts with charter documents or material debt agreements,
Federal Reserve margin regulations; the Investment Company Act, Patriot Act, and
status of the Bridge Loans as senior debt.

As used in this Section 2, “Target Material Adverse Effect” means any fact,
circumstance, development, event or change that results in a material adverse
effect on the business, results of operations, assets, liabilities or condition
(financial or otherwise) of Target and its Subsidiaries, taken as a whole, but
excluding any such fact, circumstance, development, event or change to the
extent resulting from, relating to or arising from (a) the execution of the
Acquisition Agreement or the announcement or existence thereof, the identity of
Company and its Affiliates or the compliance by Target or any of its
Subsidiaries with any of the terms of this Agreement (other than compliance with
Section 5.01 of the Acquisition Agreement), (b) Company’s announcement or other
disclosure of its plans or intentions with respect to the conduct of the
business (or any portion thereof) of Target or any of its Subsidiaries after the
Closing, (c) changes in global or United States or foreign national or regional
economic, financial, regulatory or geopolitical conditions or events,
(d) changes in the credit, debt, financial or capital markets or changes in
interest or exchange rates, in each case, in the United States or elsewhere in
the world, (e) changes or proposed changes in Laws affecting the Target or GAAP
or any other relevant generally accepted accounting principles or the
interpretation of any of the foregoing, (f) changes in Target’s and its
Subsidiaries’ industries or the segments thereof in general or the markets they
operate in, or changes in the general business or economic conditions affecting
such industries or markets, (g) any military conflict, outbreak or escalation of
hostilities or declared or undeclared war or act of foreign or domestic
terrorism, (h) any failure by Target or any of its Subsidiaries to meet internal
or published projections, forecasts or estimates of Target or any such
Subsidiary (provided, however, that any effect that caused or contributed to
such failure to meet projections, forecasts or estimates shall not be excluded
under this clause (h)), or (i) any matter disclosed in Schedule 1.01(e) to the
Acquisition Agreement, except, in the cases of clauses (c), (d), (e), (f) and
(g), to the extent such fact, circumstance, development, event or change
materially and disproportionately affect Target and its Subsidiaries, taken as a
whole, as compared to other Persons engaged in the same industries.

 

3. Syndication.

The Arrangers intend, and reserve the right, to syndicate the Facility to the
Lenders promptly following the date hereof, and you acknowledge and agree that
the commencement of syndication shall occur in the discretion of the Arrangers.
The Arrangers will select the Lenders after consultation with you. The Arrangers
will lead the syndication, including determining the timing of all offers to
potential Lenders, any title of agent or similar designations or roles awarded
to any Lender and the acceptance of commitments, the amounts offered and the
compensation provided to each Lender from the amounts to be paid to the
Arrangers pursuant to the terms of this Commitment Letter and the Fee Letter.
The Arrangers will, in consultation with you, determine the final commitment
allocations and will notify the Company of such determinations. You agree to use
commercially reasonable efforts to ensure that the Arrangers’ syndication
efforts benefit from the existing lending relationships of Parent, the Company
and Target and their respective subsidiaries. To facilitate an orderly and
successful syndication of the Facility, you agree that, until the earliest of
(x) the termination of the syndication as determined by the Arrangers, (y) the
consummation of a Successful Syndication (as defined in the Fee Letter) and
(z) 60 days after the Closing Date, neither the Company, Parent nor Target
(including, in each case, their respective subsidiaries) will syndicate or
issue, attempt to syndicate or issue, announce or authorize the announcement of
the syndication or issuance of, any debt facility or any debt or equity security
of the Parent or the Company or Target or any of their respective subsidiaries
or affiliates other than (a) the Facility and other indebtedness contemplated
hereby to remain outstanding after the Closing Date, (b) the issuance of the
Securities (if any), (c) equity of Borrower up to an amount and applied as
described in the definition of “Equity Proceeds Amount”, (d) equity issued
pursuant to employee stock plans of the Company, Parent, Target or

 

4

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

their respective subsidiaries and other similar arrangements to be mutually
agreed upon by you and the Arrangers without the prior written consent of the
Arrangers (such consent not to be unreasonably withheld or delayed) (it is
understood the Parent’s, the Company’s and the Target’s deferred purchase price
obligations, ordinary course working capital facilities and ordinary course
capital leases, purchase money and equipment financings and any renewals of
existing revolving credit facilities that mature prior to the Closing Date will
not be deemed to materially and adversely impair the primary syndication of the
Facility) and (e) refinancing of indebtedness of the Target outstanding under
Target’s existing bridge loans (or indebtedness issued in exchange therefor) so
long as GS has determined that such refinancing would not impair the syndication
of the Facility.

You agree to cooperate with the Commitment Parties, in connection with (i) the
preparation of one or more information packages regarding the business,
operations and financial projections of Parent, the Company and the Acquired
Business (collectively, the “Confidential Information Memorandum”) including,
without limitation, all information relating to the transactions contemplated
hereunder prepared by or on behalf of the Company deemed reasonably necessary by
the Arrangers to complete the syndication of the Facility including, without
limitation, using commercially reasonable efforts to obtain, prior to the launch
of syndication, (a) a public corporate family rating from Moody’s Investors
Service, Inc. (“Moody’s”) for Parent or the Company, (b) a public corporate
credit rating from Standard & Poor’s Ratings Group, a division of The McGraw
Hill Corporation (“S&P”) for Parent or the Company and (c) a public credit
rating for the Facility and any Securities issued in lieu thereof from each of
Moody’s and S&P, and (ii) the presentation of one or more information packages
reasonably acceptable in format and content to the Commitment Parties
(collectively, the “Lender Presentation”) in meetings and other communications
with prospective Lenders or agents in connection with the syndication of the
Facility (including, without limitation, direct contact between senior
management and representatives, with appropriate seniority and expertise, of
Parent and the Company with prospective Lenders and participation of such
persons in meetings upon reasonable advance notice and at mutually agreed
times). You will be solely responsible for the contents of any such Confidential
Information Memorandum and Lender Presentation (other than, in each case, any
information contained therein that has been provided for inclusion therein by
the Commitment Parties solely to the extent such information relates to the
Commitment Parties) and all other information, documentation or materials
delivered to the Arrangers in connection therewith (collectively, the
“Information”) and you acknowledge that the Commitment Parties will be using and
relying upon the Information without independent verification thereof. You agree
that Information regarding the Facility and Information provided by the Company
and Target or their respective representatives to the Arrangers in connection
with the Facility (including, without limitation, draft and execution versions
of the Facility Documentation, the Confidential Information Memorandum, the
Lender Presentation, publicly filed financial statements, and draft or final
offering materials relating to contemporaneous securities issuances by the
Company or Parent) may be disseminated to potential Lenders and other persons
through one or more internet sites (including an IntraLinks, SyndTrak or other
electronic workspace (the “Platform”)) created for purposes of syndicating the
Facility or otherwise, in accordance with the Arrangers’ standard syndication
practices, and you acknowledge that neither the Arrangers nor any of its
affiliates will be responsible or liable to you or any other person or entity
for damages arising from the use by others of any Information or other materials
obtained on the Platform, except, in the case of damages to you but not to any
other person, to the extent such damages are found by a final judgment of a
court of competent jurisdiction to arise from the gross negligence or willful
misconduct of any Arranger or any of their affiliates or any of their respective
directors, employees, advisors or agents. Notwithstanding the Arranger’s right
to syndicate the Facility and receive commitments with respect thereto, it is
agreed that syndication of, or receipt of commitments or participations in
respect of, all or any portion of the Commitment Party’s commitments hereunder
prior to the Closing Date shall not be a condition to such Commitment Party’s
commitments and unless you otherwise agree in writing, each Commitment Party
shall retain exclusive control over all rights and obligations with respect to
its commitments in respect of the Facility, including all rights with respect to

 

5

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

consents, modifications, supplements, waivers and amendments, until the Closing
Date has occurred. Without limiting your obligations to assist as set forth
herein, it is understood that the commitments hereunder are not conditioned upon
the syndication of, or receipt of commitments or participations in respect of,
the Facility and in no event shall the commencement or successful completion of
syndication or the obtaining of ratings constitute a condition to the
availability of the Facility on the Closing Date.

You acknowledge that certain of the Lenders may be “public side” Lenders (i.e.
Lenders that do not wish to receive material non-public information with respect
to the Company, Parent, Target or their respective affiliates or any of its or
their respective securities) (each, a “Public Lender”). At the request of the
Arrangers, you agree to prepare an additional version of the Confidential
Information Memorandum and the Lender Presentation to be used by Public Lenders
that does not contain material non-public information concerning the Company,
Parent, the Target or their respective affiliates or securities. It is
understood that in connection with your assistance described above, at the
request of the Arrangers, you will provide, and cause all other applicable
persons to provide (including use reasonable efforts to cause the Target to
provide) authorization letters to the Arrangers authorizing the distribution of
the Information to prospective Lenders, containing a representation to the
Arrangers that the public-side version does not include material non-public
information about the Company, Parent, the Target or their respective affiliates
or its or their respective securities. In addition, you will clearly designate
as such all Information provided to the Commitment Parties by or on behalf of
the Company or the Target which is suitable to make available to Public Lenders.
You acknowledge and agree that the following documents may be distributed to
Public Lenders, unless you advise the Arrangers in writing (including by email)
within a reasonable time prior to their intended distributions that such
material should only be distributed to prospective Lenders that are not Public
Lenders: (a) drafts and final versions of the Facility Documentation;
(b) administrative materials prepared by the Arrangers for prospective Lenders
(such as a lender meeting invitation, allocations and funding and closing
memoranda); and (c) term sheets and notification of changes in the terms of the
Facility.

 

4. Information.

You represent and covenant that (i) to the best of your knowledge in the case of
Information relating to the Acquired Business, all written Information (other
than financial projections and information of a general economic or industry
specific nature) provided directly or indirectly by the Company to the
Commitment Parties or the Lenders in connection with the transactions
contemplated hereunder is and will be, when furnished and when taken as a whole
and giving effect to all supplements thereto, complete and correct in all
material respects and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were made, not
materially misleading and (ii) the financial projections that have been or will
be made available to the Commitment Parties or the Lenders in connection with
the transactions contemplated hereunder by or on behalf of the Company have been
and will be prepared in good faith based upon assumptions that are believed by
the preparer thereof to be reasonable at the time such financial projections are
furnished to the Commitment Parties or the Lenders, it being understood and
agreed that financial projections are not a guarantee of financial performance
and actual results may differ from financial projections and such differences
may be material. You agree that if at any time prior to the Successful
Syndication of the Facility, any of the representations in the preceding
sentence would be incorrect in any material respect if the Information and
financial projections were being furnished, and such representations were being
made, at such time, then you will promptly supplement, or cause to be
supplemented, the Information and financial projections so that such
representations will be correct in all material respects under those
circumstances.

 

6

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

5. Indemnification and Related Matters.

In connection with arrangements such as this, it is the Commitment Parties’
policy to receive indemnification. You agree to the provisions with respect to
our indemnity and other matters set forth in Annex A, which is incorporated by
reference into this Commitment Letter.

 

6. Assignments; Amendments.

This Commitment Letter may not be assigned by you without the prior written
consent of the Commitment Parties (and any purported assignment without such
consent will be null and void), is intended to be solely for the benefit of the
Commitment Parties and the other parties hereto and, except as set forth in
Annex A hereto, is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. Each of the
Commitment Parties, after consultation with you, may assign its commitments and
agreements hereunder, in whole or in part, to any of its affiliates (provided
that such affiliates agree to abide by the confidentiality provisions of
Section 7 of this Commitment Letter) and, as provided above, to any Lender prior
to the Closing Date; provided that, except for assignments between GSLP and GS
Bank, any assignment by a Commitment Party to any potential Lender made prior to
the Closing Date shall not relieve such Commitment Party of its obligations set
forth herein to fund that portion of the commitments so assigned and shall be
subject to the confidentiality provisions herein. Neither this Commitment Letter
nor the Fee Letter may be amended or any term or provision hereof or thereof
waived or otherwise modified except by an instrument in writing signed by each
of the parties hereto or thereto, as applicable, and any term or provision
hereof or thereof may be amended or waived only by a written agreement executed
and delivered by all parties hereto or thereto.

 

7. Confidentiality.

Please note that this Commitment Letter, the Fee Letter and any written
communications provided by, or oral discussions with, the Commitment Parties in
connection with this arrangement are exclusively for the information of the
Company and may not be disclosed to any third party or circulated or referred to
publicly without our prior written consent except, after providing written
notice to the Commitment Parties, pursuant to a subpoena or order issued by a
court of competent jurisdiction or by a judicial, administrative or legislative
body or committee; provided that we hereby consent to your disclosure of
(i) this Commitment Letter, the Fee Letter and such communications and
discussions to the Parent’s, the Company’s and (on a redacted basis reasonably
satisfactory to the Arrangers with respect to the Fee Letter) the Target’s
respective directors, employees, agents, accountants, legal counsel and other
advisors who are directly involved in the consideration of the Facility and who
have been informed by you of the confidential nature of such advice and the
Commitment Letter and Fee Letter and who have agreed to treat such information
confidentially, (ii) this Commitment Letter, the Fee Letter and such
communications and discussions as required by applicable law, rule or regulation
or compulsory legal process (in which case you agree to inform us promptly
thereof to the extent not prohibited by law) and (iii) the information contained
in Annex B to Moody’s and S&P; provided that such information is supplied only
on a confidential basis after consultation with the Commitment Parties.

Each Commitment Party agrees that it will treat as confidential all information
provided to it hereunder by or on behalf of you or any of your respective
subsidiaries or affiliates; provided that nothing herein will prevent any
Commitment Party from disclosing any such information (a) pursuant to the order
of any court or administrative agency or in any pending legal or administrative
proceeding, or otherwise as required by applicable law or compulsory legal
process (in which case such person agrees (except with respect to any routine or
ordinary course audit or examination conducted by bank accountants or any
governmental bank regulatory authority exercising examination or regulatory
authority) to inform you

 

7

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

promptly thereof to the extent not prohibited by law), (b) upon the request or
demand of any regulatory authority having jurisdiction over such person or any
of its affiliates, (c) to the extent that such information is publicly available
or becomes publicly available other than by reason of improper disclosure by
such person, (d) to such person’s affiliates and their respective officers,
directors, partners, employees, legal counsel, independent auditors and other
experts or agents who need to know such information and on a confidential basis,
(e) to potential and prospective Lenders, participants and any direct or
indirect contractual counterparties to any swap or derivative transaction
relating to the Borrower and its obligations under the Facility, in each case,
who agree to be bound by similar confidentiality provisions (including, for the
avoidance of doubt, by means of a click-through or otherwise), (f) to Moody’s
and S&P; provided that such information is limited to Annexes B and C and is
supplied only on a confidential basis after consultation with you or (g) for
purposes of establishing a “due diligence” defense. Each Commitment Party’s
obligation under this provision shall remain in effect until the earlier of
(i) two years from the date hereof and (ii) the date the definitive Facility
Documentation is entered into by the Commitment Parties, at which time any
confidentiality undertaking in the definitive Facility Documentation shall
supersede this provision.

 

8. Absence of Fiduciary Relationship; Affiliates; Etc.

As you know, each Commitment Party, together with its respective affiliates
(each collectively, a “Commitment Party Group”), is a full service financial
services firm engaged, either directly or through affiliates, in various
activities, including securities trading, investment banking and financial
advisory, investment management, principal investment, hedging, financing and
brokerage activities and financial planning and benefits counseling for both
companies and individuals. In the ordinary course of these activities, each
Commitment Party Group may make or hold a broad array of investments and
actively trade debt and equity securities (or related derivative securities)
and/or financial instruments (including bank loans) for their own account and
for the accounts of their customers and may at any time hold long and short
positions in such securities and/or instruments. Such investment and other
activities may involve securities and instruments of you or the Target, as well
as of other entities and persons and their affiliates which may (i) be involved
in transactions arising from or relating to the engagement contemplated by this
Commitment Letter, (ii) be customers or competitors of you or the Target, or
(iii) have other relationships with you or the Target. In addition, each
Commitment Party Group may provide investment banking, underwriting and
financial advisory services to such other entities and persons. Each Commitment
Party Group may also co-invest with, make direct investments in, and invest or
co-invest client monies in or with funds or other investment vehicles managed by
other parties, and such funds or other investment vehicles may trade or make
investments in your securities or those of such other entities. The transactions
contemplated by this Commitment Letter may have a direct or indirect impact on
the investments, securities or instruments referred to in this paragraph.
Although each Commitment Party Group in the course of such other activities and
relationships may acquire information about the transaction contemplated by this
Commitment Letter or other entities and persons which may be the subject of the
transactions contemplated by this Commitment Letter, no Commitment Party Group
shall have any obligation to disclose such information, or the fact that such
Commitment Party Group is in possession of such information, to you or to use
such information on the Company’s behalf.

Consistent with their respective policies to hold in confidence the affairs of
its customers, no Commitment Party Group will furnish confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter to any other companies, or use such information in connection with the
performance by such Commitment Party Group of services for any other companies.
Furthermore, you acknowledge that no Commitment Party Group and none of their
respective affiliates has an obligation to use in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained or that may be obtained by them from any other
person.

 

8

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

Each Commitment Party Group may have economic interests that conflict with
yours, or those of your equity holders and/or affiliates. You agree that each
Commitment Party Group will act under this Commitment Letter as an independent
contractor and that nothing in this Commitment Letter or the Fee Letter or
otherwise will be deemed to create an advisory, fiduciary or agency relationship
or fiduciary or other implied duty between any Commitment Party Group and you or
your equity holders or affiliates. You acknowledge and agree that the
transactions contemplated by this Commitment Letter and the Fee Letter
(including the exercise of rights and remedies hereunder and thereunder) are
arm’s-length commercial transactions between the Commitment Party Groups, on the
one hand, and you on the other, and in connection therewith and with the process
leading thereto, (i) no Commitment Party Group has assumed (A) an advisory or
fiduciary responsibility in favor of you or your equity holders or affiliates
with respect to the financing transactions contemplated hereby, or in each case,
the exercise of rights or remedies with respect thereto or the process leading
thereto (irrespective of whether such Commitment Party has advised, is currently
advising or will advise you, your equity holders or your affiliates on other
matters) or any other obligation to you except the obligations expressly set
forth in this Commitment Letter and the Fee Letter and (ii) each Commitment
Party Group is acting solely as a principal and not as the agent or fiduciary of
you, your management, equity holders, affiliates, creditors or any other person.
You acknowledge and agree that you have consulted your own legal and financial
advisors to the extent you deemed appropriate and that you are responsible for
making your own independent judgment with respect to such transactions and the
process leading thereto. You agree that you will not claim that any Commitment
Party Group has rendered advisory services of any nature or respect, or owes you
a fiduciary or similar duty, in connection with such transactions or the process
leading thereto.

In addition, please note that Goldman, Sachs & Co., an affiliate of GSLP and GS
Bank has been retained by the Target as the financial advisor (in such capacity,
the “Financial Advisor”) to the Target in connection with the Acquisition. Each
of the parties hereto agree to such retention, and further agree not to assert
any claim you might allege based on any actual or potential conflicts of
interest that might be asserted to arise or result from, on the one hand, the
engagement of the Financial Advisor or GSLP and/or its affiliates’ arranging or
providing or contemplating arranging or providing financing for a competing
bidder and, on the other hand, our and our affiliates’ relationships with you as
described and referred to herein. Each of the parties hereto acknowledge that,
in such capacity, the Financial Advisor may recommend that the Target not pursue
or accept your offer or proposal for the Acquisition or advise the Target in
other manners adverse to your interests.

In addition, each Commitment Party may employ the services of its affiliates in
providing services and/or performing their obligations hereunder and may
exchange with such affiliates information concerning you and other companies
that may be the subject of this arrangement, and such affiliates will be
entitled to the benefits afforded to the Commitment Parties hereunder.

In addition, please note that the Commitment Parties do not provide accounting,
tax or legal advice. Notwithstanding anything herein to the contrary, you (and
each of your employees, representatives and other agents) may disclose to any
and all persons, without limitation of any kind, the tax treatment and tax
structure of the Facility and all materials of any kind (including opinions or
other tax analyses) that are provided to you relating to such tax treatment and
tax structure. However, any information relating to the tax treatment or tax
structure will remain subject to the confidentiality provisions hereof (and the
foregoing sentence will not apply) to the extent reasonably necessary to enable
the parties hereto, their respective affiliates, and their respective
affiliates’ directors and employees to comply with applicable securities laws.
For this purpose, “tax treatment” means U.S. federal or state income tax
treatment, and “tax structure” is limited to any facts relevant to the U.S.
federal income tax treatment of the transactions contemplated by this Commitment
Letter but does not include information relating to the identity of the parties
hereto or any of their respective affiliates.

 

9

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

9. Miscellaneous.

Each Commitment Party’s commitments and agreements hereunder will terminate upon
the first to occur of (i) the consummation of the Acquisition, (ii) the
abandonment or termination of the Acquisition Agreement and (iii) 5:00 p.m. New
York time on the six month anniversary from the date hereof, unless the closing
of (A) the Notes Offering or (B) the Bridge Loans under the Bridge Facility, as
applicable, on the terms and subject to the conditions contained herein, has
been consummated on or before such date. Subject to the provisions of the next
paragraph and the terms of the Fee Letter, you may terminate this Commitment
Letter and/or each Commitment Party’s commitments hereunder. In addition, each
Commitment Party’s commitments hereunder to provide and arrange the Bridge Loans
will be reduced (x) to the extent of any issuance of the Securities (in escrow
or otherwise) and (y) with respect to commitments in respect of Tranche 2 Bridge
Loans, by the Equity Proceeds Amount.

The provisions set forth under Sections 3, 4, 5 (including Annex A) and 7 hereof
and this Section 9 hereof will remain in full force and effect regardless of
whether the definitive Facility Documentation is executed and delivered. The
provisions set forth under Sections 5 (including Annex A) and 7 hereof, this
Section 9 and the fee and expense reimbursement provisions of the Fee Letter
will remain in full force and effect notwithstanding the expiration or
termination of this Commitment Letter or the Commitment Parties’ commitments and
agreements hereunder; provided that such provisions relating to indemnification
and reimbursement shall terminate and be superseded by the terms of the Facility
Documentation (to the extent such Facility Documentation becomes effective).

Each party hereto agrees for itself and its affiliates that any suit or
proceeding arising in respect to this Commitment Letter or the Commitment
Parties’ commitments or agreements hereunder or the Fee Letter will be tried
exclusively in the U.S. District Court for the Southern District of New York or,
if that court does not have subject matter jurisdiction, in any state or federal
court located in the Borough of Manhattan in the City of New York, and each
party hereto agrees to submit to the exclusive jurisdiction of, and to venue in,
such court. Any right to trial by jury with respect to any action or proceeding
arising in connection with or as a result of either the Commitment Parties’
commitments or agreements or any matter referred to in this Commitment Letter or
the Fee Letter is hereby waived by the parties hereto. This Commitment Letter
and the Fee Letter will be governed by and construed in accordance with the laws
of the State of New York without regard to principles of conflicts of laws;
provided that matters related to (x) any alleged Target Material Adverse Effect
or exception thereto and (y) the determination of the accuracy of any Specified
Acquisition Agreement Representation and whether, as a result of any inaccuracy
thereof, you have the right to terminate or abandon your obligations under the
Acquisition Agreement shall, in each case, be interpreted, construed and
governed by and in accordance with the law of the State of Delaware without
regard to the conflicts of law principles thereof to the extent that such
principles would direct a matter to another jurisdiction.

The Commitment Parties hereby notify you that pursuant to the requirements of
the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26,
2001)) (the “Patriot Act”) the Commitment Parties and each Lender may be
required to obtain, verify and record information that identifies the Borrower
and each of the Guarantors, which information includes the name and address of
the Borrower and each of the Guarantors and other information that will allow
the Commitment Parties and each Lender to identify the Borrower and each of the
Guarantors in accordance with the Patriot Act. This notice is given in
accordance with the requirements of the Patriot Act and is effective for the
Commitment Parties and each Lender.

This Commitment Letter may be executed in any number of counterparts, each of
which when executed will be an original, and all of which, when taken together,
will constitute one agreement. Delivery of an

 

10

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

executed counterpart of a signature page of this Commitment Letter by facsimile
transmission or electronic transmission (in pdf or tif format) will be effective
as delivery of a manually executed counterpart hereof. This Commitment Letter
and the Fee Letter are the only agreements that have been entered into among the
parties hereto with respect to the Facility and set forth the entire
understanding of the parties with respect thereto and supersede any prior
written or oral agreements among the parties hereto with respect to the
Facility.

[Remainder of page intentionally left blank]

 

11

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

Please confirm that the foregoing is in accordance with your understanding by
signing and returning to the Commitment Parties the enclosed copy of this
Commitment Letter, together, if not previously executed and delivered, with the
Fee Letter on or before the close of business on May 27, 2013, whereupon this
Commitment Letter and the Fee Letter will become binding agreements between us.
If the Commitment Letter and Fee Letter have not been signed and returned as
described in the preceding sentence by such date, this offer will terminate on
such date. We look forward to working with you on this transaction.

 

Very truly yours, GOLDMAN SACHS LENDING PARTNERS LLC By:  

 

  Name:   Title:

 

12

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

GOLDMAN SACHS BANK USA By:  

 

  Name:   Title:

 

13

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

ACCEPTED AND AGREED AS OF THE DATE FIRST WRITTEN ABOVE:

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.

 

By:  

 

  Name:   Title:

VALEANT PHARMACEUTICALS INTERNATIONAL

 

By:  

 

  Name:   Title:

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

Annex A

In the event that any Commitment Party becomes involved in any capacity in any
action, proceeding or investigation brought by or against any person, including
shareholders, partners, members or other equity holders of Parent, the Company
or the Target in connection with or as a result of either this arrangement or
any matter referred to in this Commitment Letter or the Fee Letter (together,
the “Letters”), Parent and the Company, jointly and severally, agree to
periodically reimburse each Commitment Party for its reasonable legal and other
expenses (including the cost of any investigation and preparation) incurred in
connection therewith. Parent and the Company also agree to indemnify and hold
each Commitment Party harmless against any and all losses, claims, damages or
liabilities to any such person in connection with or as a result of either this
arrangement or any matter referred to in the Letters (whether or not such
investigation, litigation, claim or proceeding is brought by you, your equity
holders or creditors or an indemnified person and whether or not any such
indemnified person is otherwise a party thereto), except to the extent that such
loss, claim, damage or liability (x) has been found by a final, non-appealable
judgment of a court of competent jurisdiction to have resulted from (i) the
gross negligence or willful misconduct of such Commitment Party in performing
the services that are the subject of the Letters or (ii) a material breach of
the obligations of such Commitment Party under the Letters or (y) has resulted
from any dispute solely among the Commitment Parties. If for any reason the
foregoing indemnification is unavailable to any Commitment Party or insufficient
to hold it harmless, then Parent and the Company will contribute to the amount
paid or payable by the Commitment Party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect the relative
economic interests of (i) Parent, the Company and their respective affiliates,
shareholders, partners, members or other equity holders on the one hand and
(ii) the Commitment Parties on the other hand in the matters contemplated by the
Letters as well as the relative fault of (i) Parent, the Company and their
respective affiliates, shareholders, partners, members or other equity holders
and (ii) the Commitment Parties with respect to such loss, claim, damage or
liability and any other relevant equitable considerations. The reimbursement,
indemnity and contribution obligations of Parent and the Company under this
paragraph will be in addition to any liability which Parent and the Company may
otherwise have, will extend upon the same terms and conditions to any affiliate
of a Commitment Party and the partners, members, directors, agents, employees
and controlling persons (if any), as the case may be, of such Commitment Party
and any such affiliate, and will be binding upon and inure to the benefit of any
successors, assigns, heirs and personal representatives of Parent, the Company,
each Commitment Party, any such affiliate and any such person. Each of Parent
and the Company also agrees that neither any indemnified party nor any of such
affiliates, partners, members, directors, agents, employees or controlling
persons will have any liability based on its or their exclusive or contributory
negligence or otherwise to Parent, the Company or any person asserting claims on
behalf of or in right of Parent, the Company or any other person in connection
with or as a result of either this arrangement or any matter referred to in the
Letters, except to the extent that any losses, claims, damages, liabilities or
expenses incurred by Parent, the Company or their respective affiliates,
shareholders, partners or other equity holders have been found by a final,
non-appealable judgment of a court of competent jurisdiction to have resulted
from the gross negligence or willful misconduct of such indemnified party in
performing the services that are the subject of the Letters; provided, however,
that in no event will such indemnified party or such other parties have any
liability for any indirect, consequential, special or punitive damages in
connection with or as a result of such indemnified party’s or such other
parties’ activities related to the Letters.

Neither Parent nor the Company will be required to indemnify any Commitment
Parties for any amount paid or payable by such Commitment Party in the
settlement of any action, proceeding or investigation without such party’s
consent, which consent will not be unreasonably withheld or delayed; provided
that the foregoing indemnity will apply to any such settlement in the event that
Parent and/or the Company, as applicable, was offered the ability to assume the
defense of the action that was the subject matter of such settlement and elected
not to so assume. The provisions of this Annex A will survive any termination or
completion of the arrangement provided by the Letters.

 

Annex A-1

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

Annex B

Summary of the Bridge Facility

This Summary outlines certain terms of the Bridge Facility referred to in the
Commitment Letter, of which this Annex B is a part. Certain capitalized terms
used herein are defined in the Commitment Letter.

 

Borrower:    Valeant Pharmaceuticals International, Inc. (the “Borrower”).
Guarantors:    Each subsidiary of the Borrower that is or is required to be a
guarantor under the Credit Agreement (as defined in Exhibit C) (the
“Guarantors”) will guarantee (the “Guarantee”) all obligations of the Borrower
under the Bridge Facility. In addition, upon consummation of the Acquisition,
the entity previously identified to the Arrangers as “Stratos” (“Target”) and
its subsidiaries that would otherwise become guarantors under the Credit
Agreement will guarantee all obligations in respect of the Bridge Facility. Lead
Arrangers and    Bookrunners:    Goldman Sachs Lending Partners LLC (“GSLP”), in
its capacity as Lead Arranger and Bookrunner, (together with any Additional
Arrangers appointed in accordance with Section 1 of the Commitment Letter,
collectively, the “Bridge Lead Arrangers” or, the “Arrangers”). Sole Syndication
Agent:    GSLP, in its capacity as Syndication Agent (the “Syndication Agent”).
Bridge Administrative Agent:    GSLP, in its capacity as Administrative Agent
(the “Bridge Administrative Agent”). Lenders:    GSLP and/or other financial
institutions selected by the Bridge Lead Arrangers in consultation with Borrower
(each, a “Lender” and, collectively, the “Lenders”). Amounts of Bridge Loans:   
$9,275 million in aggregate principal amount of senior unsecured increasing rate
loans, consisting of (i) up to $7,575 million in aggregate principal amount of
tranche 1 loans (the “Tranche 1 Bridge Loans”) and (ii) up to $1,700 million
(which amount shall be automatically reduced by the Equity Proceeds Amount) in
aggregate principal amount of tranche 2 loans (the “Tranche 2 Bridge Loans” and,
together with the Tranche 1 Bridge Loans, the “Bridge Loans”), in each case less
the amount of gross proceeds from any sale of Securities received on or prior to
the Closing Date (to be applied to reduce Tranche 1 Bridge Loans and/or Tranche
2 Bridge Loans as determined by the Lead Arrangers). The terms and provisions of
the Tranche 1 Bridge Loans and Tranche 2 Bridge Loans shall be identical, except
as set forth in the “Mandatory Prepayments”

 

Annex B-1

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

   section below. In addition, 50% of each of the Tranche 1 Bridge Loans and the
Tranche 2 Bridge Loans will have a final maturity that is ten years from the
Bridge Closing Date (“10-Year Bridge Loans”) and 50% of each of the Tranche 1
Bridge Loans and the Tranche 2 Bridge Loans will have a final maturity that is
eight years from the Bridge Closing Date (“8-Year Bridge Loans”). Closing Date:
   The date on which Bridge Loans are made and the Acquisition is consummated
(the “Bridge Closing Date”). Ranking:    The Bridge Loans, the Guarantee and all
obligations with respect thereto will be senior unsecured obligations and rank
pari passu in right of payment with all of the Borrower’s and the Guarantors’
existing and future senior obligations (including the obligations under the
Credit Agreement). Maturity:    The 10-Year Bridge Loans will mature on the
tenth anniversary of the Bridge Closing Date and the 8-Year Bridge Loans will
mature on the eighth anniversary of the Bridge Closing Date. At any time and
from time to time, on or after the first anniversary of the Bridge Closing Date,
upon reasonable prior written notice and in a minimum principal amount of at
least $100.0 million, the Bridge Loans may be exchanged (each such exchange, an
“Exchange”), in whole or in part, at the option of the applicable Lender or
Lenders, for senior unsecured exchange notes (the “Exchange Notes”), in a
principal amount equal to the principal amount of the Bridge Loans so exchanged
and having the same maturity date as the Bridge Loans so exchanged.    The
Exchange Notes will be issued pursuant to an indenture (the “Indenture”) that
will have the terms set forth on Exhibit 1 to this Annex B. Demand Failure
Event:    Any failure to comply with the terms of a Bridge Takeout Notice (as
defined in the Fee Letter) for any reason will be deemed to be a “Bridge Takeout
Demand Failure Event” (as defined in the Fee Letter) under the Bridge Facility
Documentation. Interest Rate:    Until the earlier of (i) the first anniversary
of the Bridge Closing Date or (ii) the occurrence of a Bridge Takeout Demand
Failure Event (such earlier date, the “Conversion Date”), the Bridge Loans will
bear interest at a floating rate, reset quarterly, as follows: (x) for the first
three-month period commencing on the Bridge Closing Date, the Bridge Loans will
bear interest at a rate per annum equal to the reserve adjusted Eurodollar Rate
(subject to a reserve adjusted Eurodollar Rate Floor of 1.00% per annum), plus
475 basis points (collectively, the “Bridge LIBOR Rate”) and (y) thereafter,
interest on the Bridge Loans will be payable at a floating per annum rate equal
to the interest rate applicable during the prior three-month period, in each
case plus the Bridge Spread, reset at the beginning of each subsequent

 

Annex B-2

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

   three-month period. The “Bridge Spread” will initially be 50 basis points
(commencing three months after the Bridge Closing Date) and will increase by an
additional 50 basis points every three months thereafter. Notwithstanding the
foregoing, at no time will the per annum interest rate on the Bridge Loans
exceed the Total Cap (as defined in the Fee Letter) then in effect (plus default
interest, if any).    From and after the Conversion Date, the Bridge Loans will
bear interest at a fixed rate equal to the Total Cap (plus default interest, if
any).    Prior to the Conversion Date, interest will be payable at the end of
each interest period. Accrued Interest shall also be payable in arrears on the
Conversion Date and on the date of any prepayment of the Bridge Loans. From and
after the Conversion Date, interest will be payable quarterly in arrears and on
the date of any prepayment of the Bridge Loans.    As used herein, the term
“reserve adjusted Eurodollar Rate” will have the meaning customary and
appropriate for financings of this type, and the basis for calculating accrued
interest and the interest periods for loans bearing interest at the reserve
adjusted Eurodollar Rate will be customary and appropriate for financings of
this type.    After the occurrence and during the continuance of an Event of
Default, interest on all overdue amounts then outstanding will accrue at a rate
equal to the applicable rate set forth above, plus an additional two percentage
points (2.00%) per annum and will be payable on demand. Funding Protection:   
Customary for transactions of this type, including breakage costs, gross-up for
withholding, compensation for increased costs and compliance with capital
adequacy and other regulatory restrictions. Mandatory Prepayment:    Prior to
the Conversion Date and to the extent permitted by the Credit Agreement, the net
proceeds to the Borrower, Parent or any subsidiary of Parent (including the
Target) from (a) any direct or indirect public offering or private placement of
any debt or equity or equity-linked securities (other than issuances pursuant to
employee stock plans), (b) any future bank borrowings (except borrowings under
the Credit Agreement) and (c) subject to certain ordinary course exceptions and
reinvestment rights, any future asset sales or receipt of insurance proceeds
will be used to repay the Bridge Loans, as a result of an asset sale or receipt
of insurance proceeds, in each case at 100% of the principal amount of the
Bridge Loans prepaid plus accrued interest to the date of prepayment. Any
proceeds from the sale of a Bridge Takeout Financing (as defined in the Fee
Letter)

 

Annex B-3

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

   funded or purchased by a Lender or one or more of its affiliates will be
applied, first, to refinance the Bridge Loans held at that time by such Lender,
and second, in accordance with the pro rata provisions otherwise applicable to
prepayments. Except as set forth in the immediately preceding sentence,
mandatory prepayments of the Bridge Loans shall be applied ratably among the
outstanding Bridge Loans, provided that the proceeds from any issuance of equity
or equity-linked securities shall first be applied to prepay any outstanding
Tranche 2 Bridge Loans until all outstanding Tranche 2 Bridge Loans shall have
been repaid in full, with any remaining proceeds then applied ratably to the
outstanding Tranche 1 Bridge Loans.    Nothing in these mandatory prepayment
provisions will restrict or prevent any holder of Bridge Loans from exchanging
Bridge Loans for Exchange Notes on or after the first anniversary of the Bridge
Closing Date. Change of Control:    Upon the occurrence of a Change of Control
(to be defined), subject to the Credit Agreement, the Borrower will be required
to prepay in full all outstanding Bridge Loans at par plus accrued interest to
the date of prepayment, plus with respect to any Bridge Loans so prepaid on or
after the Conversion Date, a 1.0% prepayment premium. Prior to making any such
prepayment, the Borrower will, within 30 days of the Change of Control, repay
all obligations under the Credit Agreement or obtain any required consent of the
lenders under the Credit Agreement to make such prepayment of the Bridge Loans.
From and after the Conversion Date, each holder of Bridge Loans may elect to
accept or waive a prepayment such holder is otherwise entitled to receive
pursuant to this paragraph. Voluntary Prepayment:    Prior to the Conversion
Date, Bridge Loans may be prepaid, in whole or in part, at the option of the
Borrower, at any time (except as provided below) without premium or penalty,
upon five business days’ written notice, such prepayment to be made at par plus
accrued interest.    From and after the Conversion Date and prior to the
maturity thereof, Bridge Loans may be prepaid, in whole or in part, at the
option of the Borrower, at any time (except as provided below) upon 3 days’
prior written notice at par plus accrued interest to the date of repayment plus
the Applicable Premium. The “Applicable Premium” will be (A) with respect to the
10-Year Bridge Loans, (i) a make-whole premium based on the applicable treasury
rate plus 50 basis points prior to the fifth anniversary of the Bridge Closing
Date, (ii) one-half of the then-prevailing interest rate

 

Annex B-4

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

   on the 10-Year Bridge Loans from and including the fifth anniversary of the
Bridge Closing Date to and including the sixth anniversary of the Bridge Closing
Date and (iii) declining to one-quarter of the then-prevailing interest rate on
the 10-Year Bridge Loans on the sixth anniversary of the Bridge Closing Date, to
one-eighth of the then-prevailing interest rate on the 10-Year Bridge Loans on
the seventh anniversary of the Bridge Closing Date and to zero on the eighth
anniversary of the Bridge Closing Date and (B) with respect to the 8-Year Bridge
Loans, (i) a make-whole premium based on the applicable treasury rate plus 50
basis points prior to the third anniversary of the Bridge Closing Date,
(ii) three-quarters of the then-prevailing interest rate on the 8-Year Bridge
Loans from and including the third anniversary of the Bridge Closing Date to and
including the fourth anniversary of the Bridge Closing Date and (iii) declining
to one-half of the then-prevailing interest rate on the 8-Year Bridge Loans on
the fourth anniversary of the Bridge Closing Date, to one-quarter of the
then-prevailing interest rate on the 8-Year Bridge Loans on the fifth
anniversary of the Bridge Closing Date and to zero on the sixth anniversary of
the Bridge Closing Date. Security:    None. Bridge Facility Documentation:   
The Facility Documentation for the Bridge Facility (the “Bridge Facility
Documentation”) shall be negotiated in good faith, shall contain the terms and
conditions set forth in this Annex B and shall be based on the terms of (i) the
Credit Agreement and (ii) (a) the Indenture, dated as of September 28, 2010,
among the Borrower, Parent, The Bank of New York Mellon Trust Company, N.A., as
trustee, and the Guarantors listed therein, (b) the Indenture, dated as of
November 23, 2010, among the Borrower, Parent, The Bank of New York Mellon Trust
Company, N.A., as trustee, and the Guarantors listed therein, (c) the Indenture,
dated as of February 8, 2011, among the Borrower, Parent, The Bank of New York
Mellon Trust Company, N.A., as trustee, and the Guarantors listed therein, (d)
the Indenture, dated as of March 8, 2011, among the Borrower, Parent, The Bank
of New York Mellon Trust Company, N.A., as trustee, and the Guarantors listed
therein, (e) the Indenture, dated as of May 16, 2012, among Medicis
Pharmaceutical Corporation, a company incorporated under the laws of Delaware,
Deutsche Bank Trust Company Americas, as trustee, and the Guarantors listed
therein, as supplemented by the First Supplemental Indenture, dated as of May
16, 2012, as further supplemented by the Second Supplemental Indenture, dated as
of December 11, 2012, (f) the Indenture, dated as of October 4, 2012, among the
Borrower, Parent, The Bank of New York Mellon Trust Company, N.A., as trustee,
and the Guarantors listed therein and (g) the Indenture, dated as of October 4,
2012, among the Borrower, Parent, The Bank of New York Mellon Trust Company,
N.A., as trustee, and the Guarantors listed therein (the “Existing Indentures”),
and will take into account the terms set forth in the Commitment Letter, current
market conditions and differences related to your business since the date

 

Annex B-5

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

   of the Credit Agreement and the Existing Indentures, with such customary
changes to reflect the interim nature of the Bridge Facility (collectively, the
“Bridge Documentation Principles”). The Bridge Facility Documentation shall
contain only those payments, conditions to borrowing, mandatory prepayments,
representations and warranties, covenants and events of default expressly set
forth in this Annex B, in each case applicable to Parent, the Borrower and their
restricted subsidiaries and with standards, definitions, qualifications,
thresholds, exceptions, “baskets” and grace periods consistent with the Bridge
Documentation Principles. Representations and Warranties:    The Bridge Facility
Documentation will contain representations and warranties consistent with the
Credit Agreement with changes as are usual and customary for financings of this
kind, consistent with the Bridge Documentation Principles. Covenants:    The
Bridge Facility Documentation will contain the following covenants: (a)
affirmative covenants consistent with the Credit Agreement with changes as are
usual and customary for financings of this kind, consistent with the Bridge
Documentation Principles; (b) incurrence-based negative covenants consistent
with the Credit Agreement, with changes as are usual and customary for
financings of this kind consistent with the Bridge Documentation Principles;
provided that prior to the Conversion Date, the restricted payments and debt
incurrence covenants in the Bridge Facility Documentation shall be more
restrictive. There will not be any financial maintenance covenants in the Bridge
Facility Documentation.    The Bridge Facility Documentation will contain a
covenant requiring the Borrower to comply with the terms of the Fee Letter,
including any Take-out Notice (as defined in the Fee Letter) and any cooperation
required in connection therewith. Events of Default:    The Bridge Facility
Documentation will contain such events of default as are consistent with the
Credit Agreement with changes as are usual and customary for financings of this
kind, consistent with the Bridge Documentation Principles. Conditions Precedent
to    Borrowing:    The several obligations of the Lenders to make, or cause one
of their respective affiliates to make, the Bridge Loans will be subject to (i)
the conditions precedent referred to in Section 2 of the Commitment Letter and
those listed on Annex C attached to the Commitment Letter and (ii) prior written
notice of borrowing. Assignments and Participations:    Each of the Lenders may
assign all or (subject to minimum assignment amount requirements) any part of
its Bridge Loans to its affiliates (other than natural persons) or one or more
banks,

 

Annex B-6

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

   financial institutions or other entities that are “Eligible Assignees,” as
defined in the Bridge Facility Documentation, that are reasonably acceptable to
the Bridge Administrative Agent, such consent not to be unreasonably withheld or
delayed.    Upon such assignment, such Eligible Assignee will become a Lender
for all purposes under the Bridge Facility Documentation; provided that
assignments made to affiliates and other Lenders will not be subject to the
above described consent or any minimum assignment amount requirements. A $3,500
processing fee will be required in connection with any such assignment. The
Lenders will also have the right to sell participations, subject to customary
limitations on voting rights, in their respective Bridge Loans. Requisite
Lenders:    Lenders holding at least a majority of total Bridge Loans, with
certain amendments requiring the consent of Lenders holding a greater percentage
(or all) of the total Bridge Loans. Taxes:    The Bridge Facility Documentation
will include tax gross-up, cost and yield protection provisions substantially
similar to those provisions for tax gross-up, cost and yield protection
contained in the Credit Agreement. Indemnities:    The Bridge Facility
Documentation will provide customary and appropriate provisions relating to
indemnity and related matters in a form reasonably satisfactory to the Bridge
Lead Arrangers, the Bridge Administrative Agent and the Lenders. Governing Law
and Jurisdiction:    The Bridge Facility Documentation will provide that the
Borrower will submit to the exclusive jurisdiction and venue of the federal and
state courts of the State of New York and will waive any right to trial by jury.
New York law will govern the Bridge Facility Documentation. Counsel to the
Bridge Lead    Arrangers and the Bridge    Administrative Agent:    Cahill
Gordon & Reindel LLP.

The foregoing is intended to summarize certain basic terms of the Bridge Loans.
It is not intended to be a definitive list of all of the requirements of the
Lenders in connection with the Bridge Loans.

 

Annex B-7

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

Exhibit 1 to Annex B

Summary of Exchange Notes

This Summary of Exchange Notes outlines certain terms of the Exchange Notes
referred to in Annex B to the Commitment Letter, of which this Exhibit 1 is a
part. Capitalized terms used herein have the meanings assigned to them in
Annex B to the Commitment Letter.

Exchange Notes

At any time on or after the first anniversary of the Bridge Closing Date, upon
not less than five business days’ prior notice, Bridge Loans may, at the option
of a Lender, be exchanged for a principal amount of Exchange Notes equal to 100%
of the aggregate principal amount of the Bridge Loans so exchanged. At a
Lender’s option, Exchange Notes will be issued directly to its broker-dealer
affiliate or other third party designated by it, upon surrender by the Lender to
the Borrower of an equal principal amount of Bridge Loans. No Exchange Notes
will be issued until the Borrower receives requests to issue at least
$100.0 million in aggregate principal amount of Exchange Notes. The Borrower
will issue Exchange Notes under an indenture (the “Indenture”) that complies
with the Trust Indenture Act of 1939, as amended. The Borrower will appoint a
trustee reasonably acceptable to the Lenders.

 

Final Maturity:    Same as Bridge Loans. Interest Rate:    Each Exchange Note
will bear interest at a fixed rate equal to the Total Cap then in effect (plus
default interest, if any). Interest will be payable semiannually in arrears.   
Additional default interest on all amounts outstanding will accrue at the
applicable rate plus two percentage points (2.00%) per annum. Optional
Redemption:    The Exchange Notes may be redeemed, in whole or in part, at the
option of the Borrower, at any time (except as provided below) upon 3 days’
prior written notice at par plus accrued interest to the date of repayment plus
the Applicable Premium. The “Applicable Premium” will be (A) with respect to
Exchange Notes issued in exchange for 10-Year Bridge Loans, (i) a make-whole
premium based on the applicable treasury rate plus 50 basis points prior to the
fifth anniversary of the Bridge Closing Date, (ii) one-half of the Total Cap
from and including the fifth anniversary of the Bridge Closing Date to and
including the sixth anniversary of the Bridge Closing Date and (iii) declining
to one-quarter of the Total Cap on the sixth anniversary of the Bridge Closing
Date, to one-eighth of the Total Cap on the seventh anniversary of the Bridge
Closing Date and to zero on the eighth anniversary of the Bridge Closing Date
and (B) with respect to Exchange Notes issued in exchange for 8-Year Bridge
Loans, (i) a make-whole premium based on the applicable treasury rate plus 50
basis points prior to the third anniversary of the Bridge Closing Date,
(ii) three-quarters of the Total Cap from and including the third anniversary of
the Bridge Closing Date to and including the fourth anniversary of the

 

Annex B-1-1

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

   Bridge Closing Date and (iii) declining to one-half of the Total Cap on the
fourth anniversary of the Bridge Closing Date, to one-quarter of the Total Cap
on the fifth anniversary of the Bridge Closing Date and to zero on the sixth
anniversary of the Bridge Closing Date.    In addition, prior to the third
anniversary of the Bridge Closing Date, up to 35% of the original principal
amount of the Exchange Notes may be redeemed from the proceeds of a qualifying
equity offering by the Borrower at a redemption price equal to par plus the
Total Cap and accrued interest. Defeasance Provisions of    Exchange Notes:   
Customary. Modification:    Customary. Change of Control:    Customary at 101%.
Registration Rights:    None. Covenants:    The Indenture will include covenants
similar to those contained in an indenture governing publicly traded high yield
debt securities; provided that the Exchange Note covenants may be more
restrictive in certain respects giving due regard to, among other things, then
existing market conditions. Events of Default:    The Indenture will provide for
Events of Default similar to those contained in an indenture governing publicly
traded high yield debt securities giving due regard to, among other things, then
existing market conditions.

The foregoing is intended to summarize certain basic terms of the Exchange
Notes. It is not intended to be a definitive list of all of the requirements of
the Lenders in connection with the Exchange Notes.

 

Annex B-1-2

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

Annex C

Summary of Conditions Precedent to the Facility

This Summary of Conditions Precedent outlines the conditions precedent to the
Facility referred to in the Commitment Letter, of which this Annex C is a part.
Certain capitalized terms used herein are defined in the Commitment Letter.

The conditions to and the initial funding under the Bridge Facility shall
consist of the following (together with any other conditions to funding
expressly set forth in Section 2 of the Commitment Letter):

 

1. Acquisition: The terms of the Acquisition Agreement will be reasonably
satisfactory to the Arrangers; provided that the Arrangers acknowledge that the
Acquisition Agreement dated as of May 24, 2013 is reasonably acceptable to the
Arrangers. No conditions precedent to the consummation of the Acquisition or
other provision in the Acquisition Agreement dated as of May 24, 2013 shall have
been waived, modified, supplemented or amended (and no consent granted), in a
manner materially adverse to the Arrangers or the Lenders in their capacities as
Lenders, in each case without the consent of the Arrangers, not to be
unreasonably withheld or delayed (provided that, without limitation, any
decrease in the Acquisition consideration in excess of 10%, shall in each case
be deemed to be materially adverse and require the consent of the Arrangers).

 

2. The Refinancing shall have occurred, or shall occur on the Closing Date
substantially concurrently with the initial borrowings under the Bridge
Facility.

 

3. The Arrangers shall have received (i) audited financial statements of the
Company and Target for each of the three fiscal years immediately preceding the
initial funding ended more than 90 days prior to the Closing Date;
(ii) unaudited financial statements of the Company and the Target for any fiscal
quarter ended after the date of the most recent audited financial statements of
such person and more than 45 days prior to the Closing Date; and (iii) customary
pro forma financial statements, in each case meeting the requirements of
Regulation S-X for a Form S-1 registration statement (other than Rules 3-10 and
3-16 of Regulation S-X).

 

4. All costs, fees, expenses (including, without limitation, reasonable and
invoiced (at least two days prior to the Closing Date) out-of-pocket legal fees
and expenses, title premiums, survey charges and recording taxes and fees) and
other compensation contemplated by the Commitment Letter and the Fee Letter
payable to the Commitment Parties, the Arrangers, the Administrative Agent, the
Bridge Administrative Agent or the Lenders on the Closing Date shall have been
paid to the extent due and Parent and the Company shall have complied in all
material respects with all of their respective obligations under the Fee Letter.

 

5. The Arrangers shall be satisfied that the Company and Parent have complied
with the following closing conditions and delivered the following customary
documentation relating to the Borrower and all of the Guarantors (including
Parent): (i) the delivery of customary legal opinions, corporate records and
documents from public officials, lien searches and officer’s certificates as to
the Borrower and each of the Guarantors; (ii) evidence of authority; and
(iii) delivery of a solvency certificate from the chief financial officer of the
Borrower in form and substance consistent with Exhibit F-2 of the Credit
Agreement, as to the Borrower, Parent and the Guarantors on a consolidated
basis. The Specified Representations and the Specified Acquisition Agreement
Representations shall be true and correct in all material respects.

 

Annex C-1

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

6. The Arrangers will have received at least 5 days prior to the Closing Date
all documentation and other information required by bank regulatory authorities
under applicable “know-your-customer” and anti-money laundering rules and
regulations, including the Patriot Act, to the extent requested at least 10 days
prior to the Closing Date.

 

7. There shall have elapsed at least 20 consecutive calendar days prior to the
Closing Date during which the Borrower shall have provided to the Arrangers the
“Required Information” as defined in the Acquisition Agreement; provided, that
(i) the days from and including July 1, 2013 through July 5, 2013 shall not be
considered calendar days and (ii) if such period has not ended prior to
August 19, 2013, such period shall be deemed not to have commenced until
September 3, 2013.

 

Annex C-2