Exhibit 10.21

 

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J. Michael Pearson

 

14 Main St., Suite 140, Madison, New Jersey 07940

Chairman and Chief Executive Officer

 

973-549-5314 FAX 949-315-3590

 

 

www.valeant.com

 

November 10, 2011

 

Mr. Howard Schiller

 

Dear Howard:

 

This letter outlines the details of your employment with Valeant Pharmaceuticals
International, Inc. (the “Company”), and your Company assignment.  Your
employment with the Company will commence on December 1, 2011.

 

·      Title: Executive Vice President and Chief Financial Officer, reporting to
the Chief Executive Officer.

 

·      Offices Location: You shall be based in the Company’s offices located in
Bridgewater, New Jersey and Madison, New Jersey.

 

·      Base Salary:  $83,333.34 per month ($1,000,000 annualized) or such higher
amount as established by the Board of Directors from time to time.

 

·      Annual Incentive:  You will be eligible to participate in the Company’s
management bonus plan (and any successor thereto), including for the 2011
calendar year on a pro rata basis.  Your target bonus will be 60%, with the
potential of 120%, of your base salary.  This plan is subject to change at the
discretion of the Board of Directors, but your targets and potential bonus
levels shall not be reduced.  Bonuses are payable at the time the other
management bonuses are paid. To be eligible for any bonus payment, you must be
employed by the Company, and you must not have given or received notice of the
termination of your employment (other than a termination by the Company without
Cause or a termination by you for Good Reason or as a result of death or a
Disability termination) on the day on which the applicable bonus is paid to
other members of the Company management.

 

·      Equity Awards:  You will receive the equity awards set forth below,
effective on the date that is the later of your employment start date or the
date (not later than fifteen (15) days following your employment start date)
that the Talent and Compensation Committee approves the applicable awards set
forth in this letter (the “Grant Date”):

 

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Stock Options — On the Grant Date, you shall be granted options (the “Options”)
under the Company’s 2011 Omnibus Incentive Plan (the “Plan”) to acquire 200,000
shares of the Company common stock (“Shares”).  The Options will vest over a
four-year period (25% per year on each anniversary of the Grant Date), provided
that, except as set forth herein, you are employed by the Company on the
applicable vesting date, and shall have a term of ten (10) years.  Except as set
forth below, if your employment terminates for any reason prior to the vesting
date, your unvested Options will be forfeited (and, in the case of a termination
of your employment for Cause, your vested Options will also be forfeited). 
Notwithstanding anything to the contrary in the Plan, (i) if your employment is
terminated by the Company without Cause or by you for Good Reason, all Options
outstanding not previously vested will vest on the Termination Date (as defined
below) and all Options shall remain exercisable for one year following the
Termination Date (but in no event beyond the 10-year term of the Option) and
(ii) if your employment is terminated by reason of your death or Disability, any
Option outstanding shall vest in full and remain exercisable for the remainder
of the term of the Option.  The exercise price of the Options shall be equal to
the Market Price (as defined in the Plan) on the Grant Date.

 

The Company shall enter into a stock option award agreement with you for the
above grant of Options, incorporating the terms set forth in this letter
agreement and in the form of stock option award agreement annexed hereto as
Exhibit A.

 

Performance Restricted Share Units. On the Grant Date you will also receive
90,000 performance-based restricted stock units under the Plan (the “Performance
Share Units”), which shall vest as follows, provided that, except as set forth
herein, you are continually employed by the Company through the applicable
vesting date:

 

(i)         Single Vesting Share Price.

 

If at the date that is 3 months prior to the third anniversary of the Grant Date
(the “First Primary Measurement Date”), the Adjusted Share Price (as defined
below) equals or exceeds the Single Vesting Share Price (as defined below), you
shall vest in 25% of the Performance Share Units.

 

If at the date that is the third anniversary of the Grant Date (the “Second
Primary Measurement Date”), the Adjusted Share Price equals or exceeds the
Single Vesting Share Price, you shall vest in an additional 50% of the
Performance Share Units.

 

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If at the date that is 3 months following the third anniversary of the Grant
Date (the “Third Primary Measurement Date”), the Adjusted Share Price equals or
exceeds the Single Vesting Share Price, you shall vest in an additional 25% of
the Performance Share Units.

 

(ii)        Double Vesting Share Price.

 

If at the First Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Double Vesting Share Price (as defined below), you shall vest in 50%
of the Performance Share Units.

 

If at the Second Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Double Vesting Share Price, you shall vest in an additional 100% of
the Performance Share Units.

 

If at the Third Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Double Vesting Share Price, you shall vest in an additional 50% of
the Performance Share Units.

 

(iii)       Triple Vesting Share Price.

 

If at the First Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Triple Vesting Share Price (as defined below), you shall vest in 75%
of the Performance Share Units.

 

If at the Second Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Triple Vesting Share Price, you shall vest in an additional 150% of
the Performance Share Units.

 

If at the Third Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Triple Vesting Share Price, you shall vest in an additional 75% of
the Performance Share Units.

 

(iv)       Performance Share Units that could have been vested under either of
paragraphs (i), (ii), or (iii) that do not become vested on the First Primary
Measurement Date, the Second Primary Measurement Date or the Third Primary
Measurement Date, may become vested on each of the applicable dates that is one
year following each such date, respectively, based upon the Adjusted Share Price
on the applicable

 

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measurement date, provided that you are employed by the Company on such
applicable vesting date. Any Performance Share Units that are not vested as of
the date that is three months following the fourth anniversary of the Grant Date
shall be immediately forfeited.

 

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

 

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

 

(vii)      “Single Vesting Share Price,” “Double Vesting Share Price” and
“Triple Vesting Share Price” means the Adjusted Share Prices equal to a compound
annual share price appreciation (the “Annual Compound TSR”) of 15%, 30% and 45%,
respectively, as measured from a base price equal to the average of the closing
prices of Shares during 20 consecutive trading days immediately prior to the
Grant Date over a measurement period from the Grant Date to the last trading day
of the period used to calculate the Adjusted Share Price. Such base price shall
be subject to equitable adjustment to reflect stock splits, stock dividends and
other capital adjustments (such price, as adjusted, the “Base Price”).

 

(viii)     Notwithstanding the foregoing vesting provisions of the Performance
Share Units, if on any date between the date that is one year following

 

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the Grant Date and the Second Primary Measurement Date, the Adjusted Share Price
on such date:

 

(A) exceeds a 30% Annual Compound TSR as measured through the Second Primary
Measurement Date, then you will become vested in 90,000 of the Performance Share
Units that could have been earned under clause (i) above;

 

(B) exceeds a 45% Annual Compound TSR as measured through the Second Primary
Measurement Date, then you will become vested in the additional 90,000 of the
Performance Share Units that could have been earned under clause (ii) above; and

 

(C) exceeds a 60% Annual Compound TSR as measured through the Second Primary
Measurement Date, then you will become vested in the additional 90,000 of the
Performance Share Units that could have been earned under clause (iii) above;

 

provided, however, that the vesting that takes place pursuant to this clause
(viii) if the Adjusted Share Price target is achieved shall only take place the
first time such Adjusted Share Price target is achieved on such vesting date,
there is no interpolation of vesting pursuant to this clause (viii), and to vest
in any of the Performance Share Units pursuant to this clause (viii) you must
remain employed by the Company through the applicable vesting date.

 

(ix)       The Company shall distribute to you a number of Shares equal to the
number of Performance Shares Units that become vested as soon as practicable
(but in any event no later than 45 days) following the vesting date of such
Performance Shares Units.

 

(x)        Notwithstanding anything to the contrary in the Plan, in the event of
your death, the performance measures applicable to the Performance Share Units
will be applied as though the date of death was the end of the 20 consecutive
trading-day average measurement period, with the number of units calculated in a
manner consistent with the vesting schedule described above, but based on the
Annual Compound TSR determined through the date of death.  Notwithstanding the
immediately preceding sentence, if death occurs prior to the date that is the
one-year anniversary of the Grant Date, the measurement date will still be the
date of death, but the Annual Compound TSR will be determined based on an
assumed measurement period of one year.

 

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Any Performance Share Units that did not become vested prior to the date of
death for a reason set forth in this clause (x) or that do not become vested as
a result of this clause (x) shall be forfeited immediately following the date of
death.

 

(xi)       Subject to clause (xii) below, and notwithstanding anything to the
contrary in the Plan, in the event of an involuntary termination of your
employment by the Company without Cause or by you with Good Reason, or in the
event of your Disability (each as defined below), in each case, following the
date that is the one-year anniversary of the Grant Date, the performance
measures applicable to the Performance Share Units will be applied as though
your employment Termination Date was the end of the 20 consecutive trading-day
average measurement period, with the number of units calculated in a manner
consistent with the vesting schedule described above, but based on the Annual
Compound TSR determined through your Termination Date, provided, however, only a
pro rata portion of such calculated Performance Share Units will vest upon
termination.  Any Performance Share Units that did not become vested prior to
your termination of employment for a reason set forth in this clause (xi) or
that do not become vested as a result of this clause (xi) shall be forfeited
immediately following the date of your termination of employment.  In the event
of a termination of employment for a reason set forth in this clause (xi) that
occurs prior to the date that is the one-year anniversary of the Grant Date, the
award of Performance Share Units shall be forfeited.

 

(xii)      Notwithstanding anything to the contrary in the Plan, in the event of
a Change in Control, the Performance Share Units will be converted into a number
of time-based restricted stock units (the “Resulting RSUs”) determined by
applying the performance measures applicable to the Performance Share Units as
though the sum of (i) fair market value of the Company common stock on the date
of the Change in Control and (ii) the value that would be derived from the
number of Shares (including fractions thereof) that would have been purchased
had an amount equal to each dividend paid on a Share after the Grant Date and on
or prior to the applicable measurement date been deemed invested on the dividend
payment date, based on the closing price of the Shares on such dividend payment
date was the Adjusted Share Price, with the number of Resulting RSUs equal to
the number of Performance Share Units that would have vested based on the Annual
Compound TSR determined through the Change in Control.  Notwithstanding the
immediately preceding sentence, if termination following a Change in Control
occurs prior to the date that is the one-year anniversary of the Grant Date, the
measurement date will still be

 

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the date of Change in Control, but the Annual Compound TSR will be determined
based on an assumed measurement period of one year.  The Resulting RSUs will
vest on Second Primary Measurement Date, subject to your continued employment;
provided that in the event of an involuntary termination of your employment by
the Company without Cause or a voluntary termination of your employment by you
with Good Reason within the twelve (12) months following a Change in Control,
the vesting and payment of such Resulting RSUs will be accelerated to your
Termination Date.  Any Performance Share Units that did not become Resulting
RSUs shall be forfeited on the Change in Control.  Any Resulting RSUs that did
not become vested prior to your termination of employment for a reason set forth
in this clause (xii) or that do not become vested as a result of this clause
(xii) shall be forfeited immediately following the date of your termination of
employment.

 

(xiii)     The Company shall enter into a restricted share unit award agreement
with you for the above grant of Performance Share Units, incorporating the terms
set forth in this letter agreement in the form of performance-based restricted
share unit award agreement annexed hereto as Exhibit B.

 

Share Ownership Commitment.  Prior to the first anniversary of your start date,
you shall purchase Shares with an aggregate purchase price of not less than
$3,200,000. You also agree to comply with any future share ownership
requirements adopted by the Company applicable to you, which shall be on the
same terms as similarly situated executives of the Company.

 

Matching Grants for Share Purchases. In connection with such share ownership,
you shall also be eligible to receive one matching share unit for each Share
that you purchase, up to an aggregate purchase date Share value of $5,000,000. 
Any such matching share units shall be granted under the Company’s matching
share unit program in accordance with its terms as applied for similarly
situated executives of the Company. The matching grant program grant form is
annexed as Exhibit C.

 

·      Good Reason. You may terminate your employment for Good Reason (as
defined below) by delivering to the Company a Notice of Termination (as defined
below) not less than thirty (30) days prior to the termination of your
employment for Good Reason. The Company shall have the option of terminating
your duties and responsibilities prior to the expiration of such thirty-day
notice period, subject to the payment by the Company of the compensation and
benefits provided in this letter, on a termination without Cause. For purposes
of this letter, “Good Reason” shall mean the occurrence of any of the events or
conditions described in clauses (i) through (iii) immediately below which are
not cured by the Company (if susceptible to cure by the Company) within thirty
(30) days after the Company has received a “Notice of

 

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Termination,” which means a written notice provided by you within ninety (90)
days of the initial existence of the event or condition constituting Good Reason
specifying the particular events or conditions which constitute Good Reason and
the specific cure requested by you.

 

(i)            Diminution of Responsibility. (A) any material reduction in your
position, duties, responsibilities or authority as in effect immediately prior
thereto, or (B) you reporting to anyone other than the Chief Executive Officer.
For the avoidance of doubt, the term “Diminution of Responsibility” shall not
include any such removal resulting from an agreed upon promotion, your death or
Disability, the termination of your employment for Cause, or your termination of
your employment other than for Good Reason;

 

(ii)           Compensation Reduction.  Any reduction in your then base salary
or target bonus opportunity which is not comparable to reductions in the base
salary or target bonus opportunity of other similarly situated senior executives
at the Company;

 

(iii)          Company Breach. Any other material breach by the Company of any
material provision of this letter, including but not limited to, relocation of
your office to a location more than 50 miles from the Company’s office located
in Madison, New Jersey.

 

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

 

(i)            the acquisition (other than from the Company), by any person (as
such term is defined in Section 13(c) or 14(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”)) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the 1934 Act) of fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding voting securities;

 

(ii)           the individuals who, as of the date hereof, are members of the
Board (the “Incumbent Board”), cease for any reason to constitute at least a
majority of the Board, unless the election, or nomination for election by the
Company’s stockholders, of any new director was approved by a vote of at least a
majority of the Incumbent Board, and such new director shall, for purposes of
this Agreement, be considered as a member of the Incumbent Board; or

 

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(iii)          the closing of:

 

1.             a merger or consolidation involving the Company if the
stockholders of the Company, immediately before such merger or consolidation, do
not, as a result of such merger or consolidation, own, directly or indirectly,
more than fifty percent (50%) of the combined voting power of the then
outstanding voting securities of the corporation resulting from such merger or
consolidation in substantially the same proportion as their ownership of the
combined voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation; or

 

2.             a complete liquidation or dissolution of the Company or an
agreement for the sale or other disposition of all or substantially all of the
assets of the Company.

 

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
pursuant to this letter agreement, solely because fifty percent (50%) or more of
the combined voting power of the Company’s then outstanding securities is
acquired by (i) a trustee or other fiduciary holding securities under one or
more employee benefit plans maintained by the Company or any of its subsidiaries
or (ii) any corporation which, immediately prior to such acquisition, is owned
directly or indirectly by the stockholders of the Company in the same proportion
as their ownership of stock in the Company immediately prior to such
acquisition.

 

·      Disability. The Company may terminate your employment, on written notice
to you after having established your Disability and while you remain Disabled,
subject to the payment by the Company to you of the applicable compensation and
benefits provided pursuant to this letter agreement. For purposes of this letter
agreement, “Disability” shall mean your inability to perform your material
duties for 180 days in any 365-day period.

 

·      Cause. The Company may terminate your employment for “Cause”, subject to
the payment by the Company to you of the applicable compensation and benefits
provided in this letter agreement. “Cause” shall mean, for purposes of this
letter and any grant agreements: (1) conviction of any felony (other than one
related to a vehicular offense) or other criminal act involving fraud;
(2) willful misconduct that results in a material economic detriment to the
Company; (3) material violation of Company policies and directives, which is not
cured after written notice and an opportunity for cure; (4) continued refusal by
you to perform your duties after written notice identifying the deficiencies and
an opportunity for cure; or (5) a material violation by you of any material
covenants to the Company. No action or inaction shall be, or be deemed to be,
willful if not demonstrably willful and if taken or not taken by you in good
faith and with the understanding that such action or inaction was not adverse to
the best interests of the Company. Reference in this paragraph to the Company
shall also include direct and indirect subsidiaries of the Company, and
materiality shall be measured based on the action or inaction and the impact
upon the

 

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Company taken as a whole. The Company may suspend you, with pay, upon your
indictment for the commission of a felony or indictable offense as described
under clause (1) above. Such suspension may remain effective until such time as
the indictment is either dismissed or a verdict of not guilty has been entered.

 

·      Employee and Executive Benefits. You will be eligible to participate in
the employee benefit plans and programs generally made available to similarly
situated employees of the Company on the terms and conditions applicable
generally to such employees.  In addition, the Company shall reimburse you for
incremental taxes incurred by you outside of the United States because of any
services you provide to the Company outside of the United States or any business
that the Company conducts outside of the United States, if such incremental
amount during any tax year exceeds 1% or more of your average base salary for
such tax year.  You shall be required to participate in any tax equalization
program the Company may have in effect from time to time in order to qualify for
the benefit described in the preceding sentence.

 

·      Reimbursement of Certain Expenses. The Company shall fully reimburse the
reasonable fees of your counsel and financial advisor incurred in connection
with the development and implementation of the terms of your employment and if
such reimbursement is taxable income to you, an additional amount (paid at the
same time) such that you have no out-of-pocket cost for the reimbursement of the
additional payment.

 

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

 

(i)    The amount of reimbursements (or in-kind benefits) to which you may
become entitled in any one calendar year shall not affect the amount of expenses
eligible for reimbursement (or in-kind benefits) hereunder in any other calendar
year.

 

(ii)   Each reimbursement to which you become entitled shall be made by the
Company as soon as administratively practicable following your submission of the
supporting documentation, but in no event later than the close of business of
the calendar year following the calendar year in which the reimbursable expense
is incurred.

 

(iii)  Your right to reimbursement (or in-kind benefits) cannot be liquidated or
exchanged for any other benefit or payment.

 

·      At-Will Employment. Your employment with the Company is “at will”. This
means that you or the Company have the option to terminate your employment at
any time, with or without advance notice, and with or without Cause or with or
without Good Reason. This offer of employment does not constitute an express or
implied agreement of continuing or long term employment. The at will nature of
your

 

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employment can be altered only by a written agreement specifying the altered
status of your employment. Such written agreement must be signed by both you and
the Chief Executive Officer.

 

·                  Severance Benefits. Notwithstanding the immediately preceding
bullet paragraph, if your employment is terminated by the Company without Cause
or by you for Good Reason, the Company shall have the following obligations:

 

(i)    The Company will pay you in a lump sum an amount equal to two times the
sum of (A) your annual salary as of the date of termination, plus (B) your
annual target bonus as of the date of your termination, provided that, if your
termination occurs either in contemplation of a Change in Control or at any time
within twelve (12) months following a Change in Control, the Company shall
instead pay you an amount equal to three times the sum of (A) your annual salary
as of the date of termination, plus (B) your annual target bonus as of the date
of your termination. In the event your annual salary or annual target bonus had
been reduced within the 180 days prior to your termination of employment, the
pre reduction amount shall be deemed your annual salary or annual target bonus,
as the case may be, for purposes of this subsection.

 

(ii)   The Company will promptly pay you any accrued but unpaid salary or
vacation pay and, in accordance with the terms of the applicable plan any
deferred compensation (collectively, the “Accrued Amounts”). The Company will
also pay you pursuant to any plan or program, any amounts or benefits due
thereunder in accordance with the terms thereof (collectively, the “Other
Benefits”).  In addition, the Company will pay you any bonus earned but unpaid
in respect of any fiscal year preceding the Termination Date. The Company will
also pay you a bonus in respect of the fiscal year in which the Termination Date
occurs, payable at the time the other management bonuses are paid, as though you
had continued in employment until the payment of bonuses by the Company to its
executives for such fiscal year, in an amount equal to the product of (A) the
lesser of (x) the bonus that you would have been entitled to receive based on
actual achievement against the stated performance objectives or (y) the bonus
that you would have been entitled to receive assuming that the applicable
performance objectives for such fiscal year were achieved at “target”, and (B) a
fraction (i) the numerator of which is the number of days in such fiscal year
through Termination Date and (ii) the denominator of which is 365; provided
that, if your termination occurs either in contemplation of a Change in Control
or at any time within twelve (12) months following a Change in Control, then in
the foregoing calculation the amount under (A) shall be equal to (y).

 

(iii)  If you or your dependents elect to continue coverage under the Company’s
group health and dental plans after your termination of employment in accordance
with COBRA, you will be responsible for all premiums, provided that the Company
will reimburse you for the Company portion of all such premiums (at the rate in
effect at the time of your termination of employment) for twelve (12) months
after your termination of employment.

 

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(iv)  The Company shall provide outplacement services through one or more
outside firms of your choosing up to an aggregate of $20,000, which services
shall extend until the earlier of (i) 12 months following the termination of
your employment or (ii) the date that you secure full time employment.

 

(v)   Equity will be treated as provided in the applicable grant, provided that
any grant described herein will be treated as provided herein.

 

Notwithstanding anything herein to the contrary, the Company shall have no
obligation to pay or provide any of the severance benefits set forth in this
letter (other than Accrued Amounts and the Other Benefits) and shall have no
obligations to you in respect of the termination of your employment save and
except for obligations that are expressly established by applicable employment
standards legislation or as otherwise set forth in the release, unless you
execute and deliver, within 60 days of the date of your termination, and do not
revoke, a general release in the form annexed hereto as Exhibit D and any
revocation period set forth in the release has lapsed. The Company shall pay the
lump sum cash severance benefits due under clause (i) above within 10 business
days following the satisfaction of all of the conditions set forth in the
preceding sentence, and with respect to any payment subject to the release that
is (a) paid in installments that would otherwise commence prior to the
satisfaction of all of the conditions set forth in the preceding sentence, the
first payment of any such payment shall be made within 10 business days
following the satisfaction of all of the conditions set forth in the preceding
sentence, and will include payment of any amounts that were otherwise due prior
thereto, or (b) paid in a lump sum that would otherwise be paid prior to the
satisfaction of all of the conditions set forth in the preceding sentence, such
payment shall be made within 10 business days following the satisfaction of all
of the conditions set forth in the preceding sentence. You shall not be required
to mitigate the amount of any severance payment provided for under this letter
by seeking other employment or otherwise and no such payment shall be offset or
reduced by the amount of any compensation or benefits provided to you in any
subsequent employment.

 

Notwithstanding anything herein to the contrary, in no event shall the timing of
your execution of the general release, directly or indirectly, result in you
designating the calendar year of payment to the extent such designation would
result in a violation of Section 409A, and if a payment that is subject to
execution of the general release could be made in more than one taxable year, to
the extent required to avoid a violation of Section 409A, payment shall be made
in the later taxable year.

 

In the event of your death or Disability termination, you will receive the
Accrued Amounts and the Other Benefits, and your equity will be treated as
provided in the applicable grant, provided that any grant described herein will
be treated as provided herein.

 

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It is understood that, during your employment by the Company, you will not
engage in any activities that constitute a conflict of interest with the
interests of the Company, as outlined in the Company’s conflict of interest
policies for employees and executives in effect from time to time.

 

·                  Covenant Not to Solicit. To protect the confidential
information and other trade secrets of the Company and its affiliates, you
agree, during your employment with the Company or any of its affiliates and for
a period of twelve (12) months after your cessation of employment with the
Company or any of its affiliates, not to solicit, attempt to solicit, or
participate in or assist in any way in the solicitation or attempted
solicitation of any employees or independent contractors of the Company or any
of its affiliates. For purposes of this covenant, “solicit” or “solicitation”
means directly or indirectly influencing or attempting to influence employees of
the Company or any of its affiliates to become employed with any other person,
partnership, firm, corporation or other entity. You agree that the covenants
contained in this paragraph are reasonable and necessary to protect the
confidential information and other trade secrets of the Company and its
affiliates, provided, that solicitation through general advertising or the
provision of references shall not constitute a breach of such obligations.  For
purposes of this paragraph, an “affiliate” shall mean any direct or indirect
subsidiary of the Company or any joint venture or collaboration in which any
such entity or the Company participates.

 

·                  Remedies for Breach of Obligations Under the Covenants Not to
Solicit Above. It is the intent and desire of you and the Company (and its
affiliates) that the restrictive provisions in the paragraph captioned “Covenant
Not to Solicit” above be enforced to the fullest extent permissible under the
laws and public policies as applied in each jurisdiction in which enforcement is
sought. If any particular provision in such paragraph shall be determined to be
invalid or unenforceable, such covenant shall be amended, without any action on
the part of either party hereto, to delete therefrom the portion so determined
to be invalid or unenforceable, such deletion to apply only with respect to the
operation of such covenant in the particular jurisdiction in which such
adjudication is made. Your obligations under the two preceding paragraphs shall
survive the termination of your employment with or any other employment
arrangement with the Company or any of its affiliates.  You acknowledge that the
Company or its affiliates will suffer irreparable injury, not readily
susceptible of valuation in monetary damages, if you breach your obligations
under the paragraph captioned “Covenant Not to Solicit” above. Accordingly, you
agree that the Company and its affiliates will be entitled, in addition to any
other available remedies, to obtain injunctive relief against any breach or
prospective breach by you of your obligations under either such paragraph in any
Federal or state court sitting in the State of New Jersey, or, at the Company’s
(or its affiliate’s) election, in any other state or jurisdiction in which you
maintain your principal residence or your principal place of business. You agree
that the Company or its affiliates may seek the remedies described in the
preceding sentence notwithstanding any arbitration or mediation agreement that
you may enter into with the Company or any of its affiliates. You hereby submit
to the non-exclusive jurisdiction of all those courts for the purposes of

 

13

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any actions or proceedings instituted by the Company or its affiliates to obtain
that injunctive relief, and you agree that process in any or all of those
actions or proceedings may be served by registered mail, addressed to the last
address provided by you to the Company or its affiliates, or in any other manner
authorized by law.

 

·                  Indemnification.  The Company agrees to indemnify and hold
you harmless to the fullest extent permitted by applicable law, as in effect at
the time of the subject act or omission.  In connection therewith, Executive
shall be entitled to the protection of any insurance policies which the Company
elects to maintain generally for the benefit of the Company’s directors and
officers, against all costs, charges and expenses whatsoever incurred or
sustained by Executive in connection with any action, suit or proceeding to
which he may be made a party by reason of his being or having been a director,
officer or employee of the Company. This provision shall survive any termination
of the Employment Term.

 

·                  Section 409A. The parties intend for the payments and
benefits under this Agreement to be exempt from Section 409A or, if not so
exempt, to be paid or provided in a manner which complies with the requirements
of such section, and intend that this Agreement shall be construed and
administered in accordance with such intention. Any payments that qualify for
the “short-term deferral” exception or another exception under Section 409A
shall be paid under the applicable exception.  For purposes of the limitations
on nonqualified deferred compensation under Section 409A, each payment of
compensation under this Agreement shall be treated as a separate payment of
compensation.  Notwithstanding anything contained herein to the contrary, to the
extent required in order to avoid accelerated taxation and/or tax penalties
under Section 409A, amounts that would otherwise be payable and benefits that
would otherwise be provided pursuant to this letter during the six-month period
immediately following your separation from service shall instead be paid on the
first business day after the date that is six months following your Termination
Date (or death, if earlier), with interest from the date such amounts would
otherwise have been paid at the short-term applicable federal rate, compounded
semi-annually, as determined under Section 1274 of the Internal Revenue Code of
1986, as amended, for the month in which payment would have been made but for
the delay in payment required to avoid the imposition of an additional rate of
tax on you under Section 409A.

 

·                  Withholding Taxes.  All payments to you or your beneficiary
under this letter agreement shall be subject to withholding on account of
federal, state and local taxes as required by law.

 

·                  Consulting:  It is recognized that you have two current
consulting/advisory projects that you are currently performing. You have
discussed the details of these with the Company and you may continue to work on
these projects through December 31, 2012, so long as they do not materially
interfere with the performance of your duties to the Company.

 

14

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It is understood that you are required to read, review, agree, sign and return
the Company’s customary on-boarding documentation.

 

Except as specifically described in the following sentence, the terms of this
letter constitute the entire agreement between the Company and you with respect
to the subject matter hereof, superseding all prior agreements and negotiations 
This letter is governed by the laws of the State of New Jersey. This agreement
may not be modified or terminated orally but only by a written document signed
by the party to be charged.  The agreement may not be assigned by either party
without the consent of the other, except it may be assigned by the Company to a
successor, or an acquirer of all or substantially all of its assets, in each
case, who assumes the agreement in a writing delivered to you.  All currency
amounts set forth in the letter agreement refer to U.S. dollars.

 

As confirmation of acceptance of this employment offer, please sign this letter
indicating your agreement and acceptance of the terms and conditions of
employment. In addition, please mail the original signed offer letter in the
envelope provided. A duplicate copy of this offer letter is included for your
records.

 

 

 

Sincerely,

 

 

 

 

 

Valeant Pharmaceuticals International, Inc.

 

 

 

 

 

 

By:

/s/ J. Michael Pearson

 

 

J. Michael Pearson

 

 

Chairman and Chief Executive Officer

 

 

 

 

 

 

 

 

/s/ Howard Schiller

 

 

Howard Schiller

 

15

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Exhibit A

 

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
STOCK OPTION GRANT AGREEMENT
(NONSTATUTORY STOCK OPTION)
2011 OMNIBUS INCENTIVE PLAN

 

Valeant Pharmaceuticals International, Inc. (the “Company”), pursuant to its
2011 Omnibus Incentive Plan (the “Plan”), hereby grants to Optionholder an
option to purchase the number of Common Shares set forth below (the “Award”). 
This Award is subject to all of the terms and conditions as set forth herein
(the “Agreement”) and in the Plan, which is incorporated herein in its
entirety.  Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Plan.  In the event of any conflict between the terms
in the Agreement and the Plan, the terms of the Plan shall control.  For the
avoidance of doubt, any terms contained in the Agreement but are not in the Plan
shall not constitute a conflict and such terms in the Agreement shall control.

 

Optionholder:

 

 

Equity Grant Date:

 

 

Number of Shares Subject to Option:

 

 

Exercise Price (Per Share):

 

$

 

Total Exercise Price:

 

$

 

Expiration Date:

 

 

 

Type of Grant:

x Nonstatutory Stock Option

 

 

Exercise Schedule:

Same as Vesting Schedule

 

 

Vesting Schedule:

The option subject to this Award shall vest in accordance with the following
vesting schedule, provided that Optionholder’s employment shall continue until
each vesting date:

 

 

 

· 1/4th of the shares vest on the first anniversary of the Equity Grant Date.

 

· 1/4th of the shares vest on the second anniversary of the Equity Grant Date.

 

· 1/4th of the shares vest on the third anniversary of the Equity Grant Date.

 

· 1/4th of the shares vest on the fourth anniversary of the Equity Grant Date.

 

 

Payment:

By one or a combination of the following methods of payment (described in the
Stock Option Agreement):

 

 

 

x

Cash or check

 

x

Bank draft or money order payable to the Company

 

x

Pursuant to a Regulation T program (cashless exercise) if the shares are
publicly traded

 

x

Delivery of already-owned shares if the shares are publicly traded

 

x

Net exercise

 

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The details of your option are as follows:

 

1.                                      VESTING.

 

(a)                                  In General.  Subject to the provisions of
the Plan and the limitations contained herein, your option will vest as provided
above, provided that vesting will cease upon the termination of your employment,
and unvested options will be forfeited (and, in the case of termination for
Cause, your vested options will also be forfeited).

 

(b)                                  Vesting Acceleration.  Notwithstanding the
foregoing and any other provisions of the Plan to the contrary, in the event
that (i) your employment is terminated (x) by the Company without Cause or
(y) by you for Good Reason, or (ii) your employment is terminated by the Company
due to your death or your Disability, then the vesting and exercisability of
100% of the then unvested Common Shares subject to your option shall be
accelerated in full.

 

2.                                      NUMBER OF SHARES AND EXERCISE PRICE. 
The number of Common Shares subject to your option and your exercise price per
share referenced above may be adjusted from time to time for capital
adjustments.

 

3.                                      METHOD OF PAYMENT.  Payment of the
exercise price is due in full upon exercise of all or any part of your option. 
You may elect to make payment of the exercise price of your option in cash or by
check or in any other manner permitted above, which may include one or more of
the following:

 

(a)                                  Bank draft or money order payable to the
Company.

 

(b)                                  Provided that at the time of exercise the
Common Shares are publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board that, prior to the issuance of Common Shares, results
in either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company from
the sales proceeds.

 

(c)                                  Provided that at the time of exercise the
Common Shares are publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation)
of already-owned Common Shares either that you have held for the period required
to avoid a charge to the Company’s reported earnings (generally six (6) months)
or that you did not acquire, directly or indirectly from the Company, that are
owned free and clear of any liens, claims, encumbrances or security interests,
and that are valued at Market Price on the date of exercise.  “Delivery” for
these purposes, in the sole discretion of the Company at the time you exercise
your option, shall include delivery to the Company of your attestation of
ownership of such Common Shares in a form approved by the Company. 
Notwithstanding the foregoing, you may not exercise your option by tender to the
Company of Common Shares to the extent such tender would violate the provisions
of any law, regulation or agreement restricting the redemption of the Company’s
stock.

 

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

 

(d)                                  By a “net exercise” arrangement pursuant to
which the Company will reduce the number of Common Shares issued upon exercise
of your option by the largest whole number of Common Shares with a Market Price
that does not exceed the aggregate exercise price; provided, however, that the
Company shall accept a cash or other payment from you to the extent of any
remaining balance of the aggregate exercise price not satisfied by such
reduction in the number of whole Common Shares to be issued; provided further,
however, that Common Shares will no longer be outstanding under your option and
will not be exercisable thereafter to the extent that (i) Common Shares are used
to pay the exercise price pursuant to the “net exercise,” (ii) Common Shares are
delivered to you as a result of such exercise, and (iii) Common Shares are
withheld to satisfy tax withholding obligations.

 

4.                                      WHOLE SHARES.  You may exercise your
option only for whole Common Shares.

 

5.                                      SECURITIES LAW COMPLIANCE. 
Notwithstanding anything to the contrary contained herein, you may not exercise
your option unless the Common Shares issuable upon such exercise are then
registered under the Securities Act of 1934 as amended (the “Securities Act”)
or, if such Common Shares are not then so registered, the Company has determined
that such exercise and issuance would be exempt from the registration
requirements of the Securities Act.  The exercise of your option also must
comply with other applicable laws and regulations governing your option, and you
may not exercise your option if the Company determines that such exercise would
not be in material compliance with such laws and regulations.

 

6.                                      TERM.  You may not exercise your option
before it becomes vested and exercisable or after the expiration of its term. 
The term of your option commences on the Equity Grant Date and, except as
provided otherwise in Section 7(a) of the Plan, expires upon the earliest of the
following:

 

(a)                                  the Expiration Date indicated above;

 

(b)                                  your termination of employment, in the
event your employment is terminated for Cause;

 

(c)                                  the Expiration Date indicated above, in the
event your employment is terminated due to your death or your Disability; or

 

(d)                                  twelve (12) months following your
termination of employment, in the event your employment is terminated (x) by the
Company without Cause or (y) by you for Good Reason.

 

7.                                      EXERCISE.  You may exercise the vested
portion of your option during its term by delivering a notice (in a form
designated by the Company) together with the exercise price to the Company’s
Plan administrator, or to such other person as the Company may designate, during
regular business hours, together with such additional documents as the Company
may then require.

 

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

 

8.                                      TRANSFERABILITY.

 

(a)                                  Restrictions on Transfer.  Your option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Company’s Board of Directors (the “Board”) may, in
its sole discretion, permit you to transfer your option in a manner consistent
with applicable tax and securities laws upon your request.

 

(b)                                  Domestic Relations Orders.  Notwithstanding
the foregoing, your option may be transferred pursuant to a domestic relations
order.

 

(c)                                  Beneficiary Designation.  Notwithstanding
the foregoing, you may, by delivering written notice to the Company, in a form
provided by or otherwise satisfactory to the Company, designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
option.

 

9.                                      CHANGE OF CONTROL.  Upon the occurrence
of a Change of Control, at the election of the Company, your option shall either
be (i) cancelled in exchange for a cash payment based in the case of any merger
transaction on the price received by shareholders in the transaction
constituting the Change of Control or in the case of any other event that
constitutes a Change of Control, the closing price of a share on the date such
Change of Control occurs (minus the applicable exercise price per share) or
(ii) converted into options in respect of the common stock of the acquiring
entity (in a merger or otherwise) on the basis of the relative values of such
stock and the shares at the time of the Change of Control; provided that clause
(ii) shall only be applicable if the common stock of the acquiring entity is
publicly traded on an established securities market on the date on which such
Change of Control is effected.

 

10.                               OPTION NOT A SERVICE CONTRACT.  Your option is
not an employment or service contract, and nothing in your option shall be
deemed to create in any way whatsoever any obligation on your part to continue
in the employ of the Company, or of the Company to continue your employment.  In
addition, nothing in your option shall obligate the Company, their respective
stockholders, boards of directors or employees to continue any relationship that
you might have as an employee for the Company.

 

11.                               WITHHOLDING OBLIGATIONS.

 

(a)                                  At the time you exercise your option, in
whole or in part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts payable to you,
and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company, if any, which arise in connection with
the exercise of your option.

 

(b)                                  Upon your request and subject to approval
by the Company, in its sole discretion, and compliance with any applicable legal
conditions or restrictions, the Company may withhold from fully vested Common
Shares otherwise issuable to you upon the exercise of

 

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

 

your option a number of whole Common Shares having a Market Price, determined by
the Company as of the date of exercise, not in excess of the minimum amount of
tax required to be withheld by law (or such lower amount as may be necessary to
avoid variable award accounting).  Any adverse consequences to you arising in
connection with such share withholding procedure shall be your sole
responsibility.

 

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

 

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

 

14.                               AMENDMENT.  Nothing in this Agreement shall
restrict the Company’s ability to exercise its discretionary authority pursuant
to Section 4 of the Plan; provided, however, that no such action may, without
your consent, adversely affect your rights under your option.  Without limiting
the foregoing, the Board (or appropriate committee thereof) reserves the right
to change, by written notice to you, the provisions of this Agreement in any way
it may deem necessary or advisable to carry out the purpose of the grant as a
result of any change in applicable laws or regulations or any future law,
regulation, ruling, or judicial decision, provided that any such change will be
applicable only to rights relating to that portion of the Award which is then
subject to restrictions as provided herein.

 

15.                               MISCELLANEOUS.

 

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

 

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

 

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

 

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

 

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

 

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

 

16.                               GOVERNING PLAN DOCUMENT.  Your option is
subject to all the provisions of the Plan, the provisions of which are hereby
made a part of your option, and is further subject to all interpretations,
amendments, rules and regulations, which may from time to time be promulgated
and adopted pursuant to the Plan.  In the event of any conflict between the
provisions of your option and those of the Plan, the provisions of the Plan
shall control.  The Board (or appropriate committee thereof) will have the power
to interpret the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Board (or appropriate committee
thereof) will be final and binding upon you, the Company and all other
interested persons. No member of the Board (or appropriate committee thereof)
will be personally liable for any action, determination or interpretation made
in good faith with respect to the Plan or this Agreement.

 

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

 

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

 

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

 

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Exhibit B

 

VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
SHARE UNIT GRANT AGREEMENT (PERFORMANCE VESTING)
(PERFORMANCE RESTRICTED SHARE UNITS)
(2011 Omnibus Incentive Plan)

 

Valeant Pharmaceuticals International, Inc. (the “Company”), pursuant to
Section 7(c)(v) of the Company’s 2011 Omnibus Incentive Plan (including the
Addendum thereto) (the “Plan”), hereby awards to Participant a Share Unit in the
amount set forth below convertible into an equivalent number of Common Shares
(the “Award”).  This Award is subject to all of the terms and conditions as set
forth herein (the “Agreement”) and in the Plan, which is incorporated herein in
its entirety.  Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Plan.  In the event of any conflict between the terms
in the Agreement and the Plan, the terms of the Plan shall control.  For
avoidance of doubt, any terms contained in the Agreement but are not in the Plan
shall not constitute a conflict and such terms in the Agreement shall control.

 

Participant:

 

Equity Grant Date:

 

Number of Share Units Subject to Award:

 

 

The details of your Award are as follows.

 

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

 

2.                                      VESTING.

 

(a)                                  In General. Subject to the provisions of
the Plan and the acceleration provisions contained herein, your Award will vest
as follows, provided that vesting will cease upon termination of your
employment.  Any Share Units that did not become vested prior to your
termination of employment or that do not become vested according to the
provisions in this Section 2 shall be forfeited immediately following the date
of your termination of employment.  The Share Units subject to this Award shall
vest in accordance with the following performance thresholds, provided that
Participant’s employment continues until each vesting date:

 

(i)                 Single Vesting Share Price

 

If at the date that is 3 months prior to the third anniversary of the Equity
Grant Date (the “First Primary Measurement Date”), the Adjusted Share Price (as
defined below) equals or exceeds the Single Vesting Share Price (as defined
below), Participant shall vest in 25% of the Share Units subject to the Award.

 

If at the date that is the third anniversary of the Equity Grant Date (the
“Second Primary Measurement Date”), the Adjusted Share Price equals or exceeds
the Single Vesting Share Price, Participant shall vest in an additional 50% of
the Share Units subject to the Award.

 

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

 

If at the date that is 3 months following the third anniversary of the Equity
Grant Date (the “Third Primary Measurement Date”), the Adjusted Share Price
equals or exceeds the Single Vesting Share Price, Participant shall vest in an
additional 25% of the Share Units subject to the Award.

 

(ii)              Double Share Vesting Price

 

If at the First Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Double Vesting Share Price (as defined below), Participant shall
vest in 50% of the Share Units subject to the Award.

 

If at the Second Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Double Vesting Share Price, Participant shall vest in an additional
100% of the Share Units subject to the Award.

 

If at the Third Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Double Vesting Share Price, Participant shall vest in an additional
50% of the Share Units subject to the Award.

 

(iii)           Triple Vesting Share Price

 

If at the First Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Triple Vesting Share Price (as defined below), Participant shall
vest in 75% of the Share Units subject to the Award.

 

If at the Second Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Triple Vesting Share Price, Participant shall vest in an additional
150% of the Share Units subject to the Award.

 

If at the Third Primary Measurement Date, the Adjusted Share Price equals or
exceeds the Triple Vesting Share Price, Participant shall vest in an additional
75% of the Share Units subject to the Award.

 

(iv)          Additional Vesting

 

Any Share Units that could have been vested under any of clauses (i), (ii) or
(iii) above that do not become vested on the First Primary Measurement Date, the
Second Primary Measurement Date or the Third Primary Measurement Date, may
become vested on each of the applicable dates that is one year following each
such date, respectively, based upon the Adjusted Share Price on the applicable
measurement date, provided that Participant remains employed by the Company
through the applicable vesting date.

 

(v)             Interpolation

 

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

 

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

 

(vi)          Accelerated Vesting

 

Notwithstanding the foregoing vesting provisions, if on any date between the
date that is one year following the Equity Grant Date and the Second Primary
Measurement Date, the Adjusted Share Price on such date:

 

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

 

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

 

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

 

provided, that the vesting that takes place pursuant to this clause (vi) if the
Adjusted Share Price target is achieved shall only take place the first time
such Adjusted Share Price target is achieved on such vesting date, there is no
interpolation of vesting pursuant to this clause (vi), and to vest in any of the
Share Units pursuant to this clause (vi) the Participant must remain employed by
the Company on the applicable vesting date.

 

(vii)       Forfeiture

 

Any Share Units that are not vested as of the date that is one year following
the Third Primary Measurement Date shall be immediately forfeited.

 

(viii) Definitions

 

For purposes of this Agreement, the following terms shall have the following
meanings:

 

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

 

(B)  “Single Vesting Share Price,” “Double Vesting Share Price” and “Triple
Vesting Share Price” means the Adjusted Share Prices equal to a compound annual
share price appreciation (the “Annual Compound TSR”) of 15%, 30% and 45%,

 

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

 

respectively, as measured from a base price of $[XX](1) over a measurement
period from the Equity Grant Date to the last trading day of the period used to
calculate the Adjusted Share Price.  Such base price shall be subject to
equitable adjustment to reflect stock splits, stock dividends and other capital
adjustments.

 

(b)                                  Vesting Acceleration in Event of Death. 
Notwithstanding the foregoing and any other provisions of the Plan to the
contrary, in the event that your employment is terminated by the Company due to
your death after the first anniversary of the Equity Grant Date, the performance
thresholds applicable to the Share Units will be applied as though the date of
termination was the end of the twenty consecutive trading-day average
measurement period and the Share Units so earned will vest in a manner
consistent with the vesting thresholds described in Section 2(a) of this
Agreement (e.g., the number of Share Units subject to the Award specified above
at an Annual Compound TSR of 15%, two times the number of Share Units subject to
the Award specified above at an Annual Compound TSR of 30%, and three times the
number of Share Units subject to the Award specified above at an Annual Compound
TSR of 45%; provided that you will vest in a number of Share Units that is the
mathematical linear interpolation between the number of Share Units which would
vest for performance between the Annual Compound TSR thresholds), but based on
the Annual Compound TSR determined through the date of termination. 
Notwithstanding the immediately preceding sentence, if death occurs prior to the
first anniversary of the Equity Grant Date, the measurement date will still be
the date of termination, but the Annual Compound TSR will be determined based on
an assumed measurement period of one year.

 

(c)                                  Vesting Acceleration in Event of Disability
or Termination by the Company Without Cause or by You for Good Reason. 
Notwithstanding the foregoing and any other provisions of the Plan to the
contrary and subject to Section 2(d) below, in the event that your employment is
terminated by the Company without Cause or by you for Good Reason, or in the
event of your Disability, in each case, following the date that is the one-year
anniversary of the Equity Grant Date, the performance thresholds applicable to
the Share Units will be applied as though your Termination Date was the end of
the twenty consecutive trading-day average measurement period and the Share
Units so earned will vest in a manner consistent with the vesting thresholds
described in Section 2(a) of this Agreement, but based on the Annual Compound
TSR determined through your Termination Date, provided, however, that in the
event you are entitled to benefits pursuant to this Section 2(c), only a pro
rata portion of such calculated Share Units will vest upon termination based on
a fraction, the numerator of which is the number of days from the Equity Grant
Date through the Termination Date, and the denominator of which is the number of
days from the Equity Grant Date through the third anniversary of the Equity
Grant Date.  Notwithstanding the immediately preceding sentence, if termination
of employment for a reason set forth in this Section 2(c) occurs prior to the
first anniversary of the Equity Grant Date, the Share Units will be forfeited.

 

(d)                                  Treatment of Share Units in Event of Change
of Control. Notwithstanding the foregoing and any other provisions of the Plan
to the contrary, in the event of a Change of Control, the Share Units will be
converted into a number of time-based restricted stock units (the “Resulting
RSUs”), determined by applying the performance thresholds applicable to the
Share Units as though the sum of (i) fair market value of the Common Shares on
the date of the Change of Control and (ii) the value that would be derived from
the number of Common Shares (including fractions thereof) that would have been
purchased had an amount equal to each dividend paid on a Common Share after the
Equity Grant Date

 

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(1)                                  The number is equal to the average of the
closing prices of Common Shares during 20 consecutive trading days immediately
prior to the Equity Grant Date.

 

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and on or prior to the applicable measurement date been deemed invested on the
dividend payment date, based on the closing price of the Common Shares on such
dividend payment date was the Adjusted Share Price, with the number of Resulting
RSUs equal to the number of Share Units that would have vested based on the
Annual Compound TSR determined through the Change of Control.  Notwithstanding
the immediately preceding sentence, if termination following a Change of Control
occurs prior to the first anniversary of the Equity Grant Date, the measurement
date will still be the date of the Change of Control, but the Annual Compound
TSR will be determined based on an assumed measurement period of one year.  The
Resulting RSUs will vest on the third anniversary of the Equity Grant Date,
subject to your continued employment; provided that in the event of involuntary
termination of your employment by the Company without Cause or by you with Good
Reason within the twelve (12) months following a Change of Control, the vesting
and payment of such Resulting RSUs will be accelerated to your Termination
Date.  Any Share Units that did not become Resulting RSUs will be forfeited on a
Change of Control.

 

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

 

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

 

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

 

6.                                      DIVIDEND EQUIVALENTS.  The bookkeeping
account maintained for the Award granted pursuant to this Agreement shall, until
the vesting date or termination and cancellation or forfeiture of the Share
Units pursuant to the terms of the Plan, be allocated additional Share Units on
the payment date of dividends on the Company’s Common Shares. Such dividends
will be converted into additional Common Shares covered by the Share Units by
dividing (i) the aggregate amount or value of the dividends paid with respect to
that number of Common Shares equal to the number of shares covered by the Share
Units by (ii) the Market Price per Common Share on the payment date for such
dividend. Any such additional Share Units shall have the same vesting dates and
vest in accordance with the same terms as the Share Units granted under this
Agreement

 

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

 

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date which is six months following your separation from service.  In no event
may you designate the calendar year of settlement and delivery of Common Shares.

 

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

 

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

 

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

 

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

 

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

 

13.                               WITHHOLDING OBLIGATIONS.  On or before the
time you receive a distribution of Common Shares pursuant to your Award, or at
any time thereafter as requested by the Company, you hereby authorize any
required withholding from the Common Shares, payroll and any other amounts
payable or issuable to you and/or otherwise agree to make adequate provision in
cash for any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company which arise in connection with your Award
(the “Withholding Taxes”).  Participant may direct the Company to (i) withhold,
from Common Shares otherwise issuable upon settlement of the Award, a portion of
those Common Shares with an aggregate Market Price (defined as in Section 3 of
the Plan but measured as of the delivery date) equal to the amount of the
applicable withholding taxes; provided, however, that the number of such Common
Shares so withheld shall not exceed the amount necessary to satisfy the
Company’s required tax withholding obligations using the minimum statutory
withholding tax rates, and (ii) make a cash payment equal to such fair market
value directly to the appropriate taxing authorities, as provided in the
Agreement.

 

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

 

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

 

16.                               AMENDMENT.  Nothing in this Agreement shall
restrict the Company’s ability to exercise its discretionary authority pursuant
to Section 4 of the Plan; provided, however, that no such action may, without
your consent, adversely affect your rights under your Award and this Agreement. 
Without limiting the foregoing, the Company’s Board (or appropriate committee
thereof) reserves the right to change, by written notice to you, the provisions
of this Agreement in any way it may deem necessary or advisable to carry out the
purpose of the grant as a result of any change in applicable laws or regulations
or any future law, regulation, ruling, or judicial decision, provided that any
such change will be applicable only to rights relating to that portion of the
Award which is then subject to restrictions as provided herein.

 

17.                               MISCELLANEOUS.

 

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

 

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

 

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

 

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

 

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

 

18.                               GOVERNING PLAN DOCUMENT.  Your Award is
subject to all the provisions of the Plan, the provisions of which are hereby
made a part of your Award, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan.  In the event of any conflict between the
provisions of your Award and those of the Plan, the provisions of the Plan will
control; provided, however, that Section 4 of this Agreement will govern the
timing of any distribution of Common Shares under your Award.  The Board (or
appropriate committee thereof) will have the power to interpret the Plan and
this Agreement and to adopt such rules for the administration, interpretation,
and application of the Plan as are consistent therewith and to interpret or
revoke any such rules. All actions taken and all interpretations and
determinations made by the Board (or appropriate committee thereof) will be
final and binding upon you, the Company, and all other interested

 

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

 

persons. No member of the Board (or appropriate committee thereof) will be
personally liable for any action, determination, or interpretation made in good
faith with respect to the Plan or this Agreement.

 

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

 

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

 

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

 

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Exhibit C

 

VALEANT PHARMACEUTICALS INTERNATIONAL

2011 OMNIBUS INCENTIVE PLAN

MATCHING RESTRICTED STOCK UNIT AWARD AGREEMENT
(MATCHING UNITS)

 

Valeant Pharmaceuticals International, Inc. (the “Company”), pursuant to the
Company’s 2011 Omnibus Incentive Plan (the “Plan”), hereby awards to Participant
a Restricted Stock Unit Award in the form of matching share units (the “Matching
Restricted Stock Units” or the “Award”), payable in common shares of the Company
(“Common Shares”), covering the number of Common Shares set forth below.  This
Award is subject to all of the terms and conditions as set forth herein (the
“Award Agreement”) and in the Plan, which is incorporated herein in its
entirety.  Capitalized terms not otherwise defined herein shall have the
meanings set forth in your Offer Letter, dated [  ] and if such terms are not so
defined, the terms shall have the meanings.

 

Participant:

 

Date of Grant:

 

Number of Shares Subject to Award:

 

Purchase Period:

 

 

The details of your Award are as follows.

 

1.                                      CONSIDERATION.   Consideration for this
Award is satisfied by your services to the Company and your purchase and
retention of the Purchased Shares (as defined in Section 2(b) of this Award
Agreement).

 

2.                                      VESTING.

 

(a)                                 In General.  Subject to the provisions of
the Plan and this Award Agreement (including the provisions of
Section 2(b) below), one-third (1/3rd) of the Award shall vest on the first
anniversary of the Date of Grant and an additional one-third (1/3rd) of the
Award shall vest each of the second and third anniversaries of the Date of
Grant, provided Participant is employed on the relevant vesting date. 
Settlement of vested Awards shall be pursuant to Section 4 below.

 

(b)                                 Additional Forfeiture Provisions. 
Notwithstanding the provisions of Section 2(a), if (i) prior to the third
anniversary of the Date of Grant, you sell (or otherwise dispose of in a manner
not specifically approved by the Committee) any Purchased Shares or Net Shares
(as defined in Section 3 of this Award Agreement) or (ii) prior to the date that
is six months following the Date of Grant, you sell (or otherwise dispose of in
a manner not specifically approved by the Compensation Committee) any Common
Shares held by you, whether or not Purchased Shares, in either case, an equal
number of unvested Matching Restricted Stock Units (up to the maximum number of
Matching Restricted Stock Units unvested as of the date of sale or disposition)
shall be forfeited with the Matching Restricted Stock Units

 

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next scheduled to vest being forfeited first.  In addition, to the extent,
following the Date of Grant, the Company becomes aware that you sold Common
Shares in the six month period prior to the Date of Grant, such that, had the
Company been aware of such sale prior to the Date of Grant, some or all of the
Matching Restricted Stock Units would not have been granted to you pursuant to
the terms of this Award Agreement, a number of Matching Restricted Stock Units
(whether or not vested) equal to the number of Common Shares sold shall be
forfeited, with the Matching Restricted Stock Units next scheduled to vest being
forfeited first, and should it be determined that you were aware of such
undisclosed sale or disposition at the time of the Grant Date, the Company may
terminate your employment with the Company and its affiliates and such
termination shall be deemed to be a termination for Cause for all purposes
(including without limitation, for purposes of determining your right to
separation pay under any agreement with the Company that you are a party to or
any plan or policy of the Company and for purposes of determining the treatment
of any Company equity awards that you may hold at the time of your
termination).  For purposes of this Award Agreement, “Purchased Shares” shall
mean the Common Shares that you purchase during the Purchase Period (as set
forth above), or if you exercise a previously granted option during the Purchase
Period, a number of Common Shares acquired in connection with such exercise
equal to the aggregate exercise price divided by the Market Price of a Common
Share on the date of exercise; provided, however, that the aggregate number of
Purchased Shares shall not exceed the number of Matching Restricted Stock Units
granted to you hereunder.  For the avoidance of doubt, the net settlement of any
previously granted equity awards to satisfy exercise price or tax withholding
obligations shall not be considered a sale or other disposition of Common Shares
for purposes of this Award Agreement.

 

(c)                                  Notification Requirements.  You hereby
agree to notify the Company of (i) any Common Shares that you sell prior to the
date that is six months following the Date of Grant, (ii) any Purchased Shares
that you sell prior to the third anniversary of the Date of Grant, and (iii) any
Net Shares (as defined in Section 3(a) of this Award Agreement) that you sell
prior to the third anniversary of the Date of Grant and the Company, in its sole
discretion, has the authority to determine whether such sale results in the
forfeiture of any Matching Restricted Stock Units in accordance with the terms
of this Award Agreement.  In addition, you agree that, through the third
anniversary of the Date of Grant, the Purchased Shares and Net Shares shall be
held with one or more brokers or institutions specified by the Company, that
such broker or institution may provide information to the Company with respect
to any transaction involving the Purchased Shares or Net Shares, and that the
Company shall have no responsibility or liability with respect to the actions or
creditworthiness of such broker or institution.

 

(d)                                 Vesting Acceleration. In the event that
(i) your Continuous Service is terminated (x) by the Company for any reason
other than on account of Cause or (y) by you for Good Reason, in either case
within twelve (12) months following a Change of Control or (ii) your Continuous
Service is terminated by the Company due to your death, then the Matching
Restricted Stock Units will immediately vest and be settled in shares as soon as
practicable (but not more than sixty (60) days) thereafter.

 

3.                                      SALES RESTRICTION.

 

(a)                                 In General.  Following the settlement of the
vested Matching Restricted Stock Units subject to your Award in Common Shares
pursuant to Section 4 of this Award

 

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Agreement, you may not sell, assign, transfer or otherwise dispose of the “Net
Shares” (as defined below) transferred to you upon settlement of such vested
Matching Restricted Stock Units in Common Shares until the earliest of (i) three
(3) years following the Date of Grant; (ii) a Change of Control; or (iii) the
day immediately following your last day of employment.  You may be required to
execute and deliver such other agreements as may be reasonably requested by the
Company that are consistent with the foregoing or that are necessary to give
further effect thereto.  In order to enforce the foregoing, the Company may
impose stop-transfer instructions with respect to such Common Shares until the
end of such period, or place legends on stock certificates issued pursuant to
the Plan restricting the transfer of such shares until the end of such period. 
For purposes of this Award Agreement, the term “Net Shares” shall mean the net
number of Common Shares transferred to you upon settlement of the vested
Matching Restricted Stock Units after subtracting any such Common Shares
withheld by the Company in payment of tax withholding obligations applicable to
such settlement.

 

(b)                                 Exception.  Notwithstanding the restrictions
in this Award Agreement that do not permit you to sell, assign, transfer or
otherwise dispose of the Purchased Shares, Common Shares or Net Shares, you are
permitted to transfer any such shares without penalty under either of the
foregoing circumstances: (i) you may contribute any such shares to a limited
partnership where all partners are members of your family (“Family Limited
Partnership”) or a Grantor Retained Annuity Trust (“GRAT”) or a like-vehicle,
provided that the Family Limited Partnership, GRAT, or like-vehicle (x) does not
allow the shares to be sold, assigned, transferred or otherwise disposed of
during the applicable restricted period with respect to such shares, (y) in the
case of a GRAT, you shall at all times remain the trustee of the GRAT, and
(z) in the case of a Family Limited Partnership or such like-vehicle, you retain
“beneficial ownership” (within the meaning of Rule 13d-3 promulgated under the
Securities Act) of such shares; and (ii) you may pledge such shares as
collateral for loans, provided that (A) you represent to the Company that you
will not default or otherwise cause such collateral to be liquidated,
transferred or sold during the applicable restricted period, (B) there is an
independent reasonable basis to conclude that none of the shares used as
collateral are likely to be sold to satisfy a debt during the applicable
restricted period with respect to such shares, and (C) you agree to substitute
other collateral for such shares (with collateral that is not Common Shares) in
the event that such collateral would have to be liquidated, transferred or sold
during the applicable restricted period with respect to such shares.

 

4.                                      DISTRIBUTION OF COMMON SHARES.  The
Company will deliver to you a number of Common Shares equal to (i) the number of
Matching Restricted Stock Units subject to your Award that become vested in
accordance with the terms of this Award Agreement,  plus (ii) any Matching
Restricted Stock Units resulting from dividend equivalents credited with respect
to such Matching Restricted Stock Units in accordance with Section 6 of this
Award Agreement, as soon as practicable (but, subject to Section 7(c)(vi) of the
Plan regarding blackout restrictions, in any event no later than sixty (60)
days) following the date on which such Matching Restricted Stock Units become
vested; provided, that, notwithstanding anything in the Plan to the contrary, if
the Company terminates your service for Cause prior to the date on which the
Common Shares are distributed to you, you shall forfeit any right to such
distribution of Common Shares.

 

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

 

6.                                      DIVIDEND EQUIVALENTS. The bookkeeping
account maintained for your Award shall, until the vesting date or termination
and cancellation or forfeiture of the Matching Restricted Stock Units pursuant
to the terms of this Award Agreement, be allocated additional Matching
Restricted Stock Units on the payment date of dividends on the Company’s Common
Shares. Such dividends will be converted into additional Common Shares covered
by the Matching Restricted Stock Units by dividing (i) the aggregate amount or
value of the dividends paid with respect to that number of Common Shares equal
to the number of shares covered by the Matching Restricted Stock Units by
(ii) the Market Price per Common Share on the payment date for such dividend.
Any such additional Matching Restricted Stock Units shall have the same vesting
dates and vest in accordance with the same terms as the Matching Restricted
Stock Units granted under this Award Agreement.

 

7.                                      COMPLIANCE WITH SECTION 409A OF THE
INTERNAL REVENUE CODE. The Award is intended to comply with section 409A of the
Code to the extent subject thereto, and shall be interpreted in accordance with
section 409A of the Code and treasury regulations and other interpretive
guidance issued thereunder, including without limitation any such regulations or
other guidance that may be issued after the Date of Grant.  Notwithstanding any
provision in the Plan to the contrary, no payment or distribution under this
Plan that constitutes an item of deferred compensation under section 409A of the
Code and becomes payable by reason of your termination of employment or service
with the Company shall be made to you until your termination of employment or
service constitutes a separation from service within the meaning of section 409A
of the Code.  For purposes of this Award, each amount to be paid or benefit to
be provided shall be construed as a separate identified payment for purposes of
section 409A of the Code.  Notwithstanding any provision in the Plan to the
contrary, if you are a specified employee within the meaning of section 409A of
the Code, then to the extent necessary to avoid the imposition of taxes under
section 409A of the Code, you shall not be entitled to any payments upon a
termination of your employment or service until the earlier of:  (i) the
expiration of the six (6)-month period measured from the date of your separation
from service or (ii) the date of your death.  Upon the expiration of the
applicable waiting period set forth in the preceding sentence, all payments and
benefits deferred pursuant to this Section 7 (whether they would have otherwise
been payable in a single lump sum or in installments in the absence of such
deferral) shall be paid to you in a lump sum as soon as practicable, but in no
event later than sixty (60) calendar days, following such expired period, and
any remaining payments due under this Award will be paid in accordance with the
normal payment dates specified for them herein.  Notwithstanding any provision
of the Plan to the contrary, in no event shall the Company or any affiliate be
liable to you on account of an Award’s failure to (i) qualify for favorable U.S.
or foreign tax treatment or (ii) avoid adverse tax treatment under U.S. or
foreign law, including, without limitation, section 409A of the Code.

 

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

 

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

 

10.                               TRANSFERABILITY. Except as otherwise permitted
by the Committee in accordance with the terms of the Plan, your Award is not
transferable, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, by delivering written notice to the Company, in
the form prescribed by the Company, you may designate a third party who, in the
event of your death, will thereafter be entitled to receive any distribution of
Common Shares pursuant to Section 4 of this Award Agreement.

 

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

 

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

 

13.                               WITHHOLDING OBLIGATIONS. On or before the time
you receive a distribution of Common Shares pursuant to your Award, or at any
time thereafter as requested by the Company, you hereby authorize any required
withholding from the Common Shares, payroll and any other amounts payable or
issuable to you and/or otherwise agree to make adequate provision in cash for
any sums required to satisfy the federal, state, local and foreign tax
withholding obligations of the Company or any affiliate which arise in
connection with your Award (the “Withholding Taxes”).  You may direct the
Company to withhold Common Shares with a Fair Market Value (measured as of the
date Common Shares are delivered pursuant to Section 4) equal to the amount of
such Withholding Taxes; provided, however, that the number of such Common Shares
so withheld shall not exceed the amount necessary to satisfy the Company’s
required tax withholding obligations using the minimum statutory withholding
rates for federal, state, local

 

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and foreign tax purposes, including payroll taxes, that are applicable to
supplemental taxable income.

 

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

 

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

 

16.                               AMENDMENT. Nothing in this Award Agreement
shall restrict the Company’s ability to exercise its discretionary authority
pursuant to Section 4 of the Plan; provided, however, that no such action may,
without your consent, adversely affect your rights under your Award and this
Award Agreement. Without limiting the foregoing, the Board (or appropriate
committee thereof) reserves the right to change, by written notice to you, the
provisions of this Award Agreement in any way it may deem necessary or advisable
to carry out the purpose of the grant as a result of any change in applicable
laws or regulations or any future law, regulation, ruling, or judicial decision,
provided that any such change will be applicable only to rights relating to that
portion of the Award which is then subject to restrictions as provided herein.

 

17.                               MISCELLANEOUS.

 

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

 

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

 

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

 

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

 

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

 

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18.                               GOVERNING PLAN DOCUMENT. Your Award is subject
to all the provisions of the Plan, the provisions of which are hereby made a
part of your Award, and is further subject to all interpretations, amendments,
rules and regulations which may from time to time be promulgated and adopted
pursuant to the Plan,.  In the event of any conflict between the provisions of
your Award and those of the Plan, the provisions of the Plan will control;
provided, however, for avoidance of doubt, terms contained in the Award
Agreement but not in the Plan shall not constitute a conflict and such terms in
the Award Agreement shall control.. The Committee will have the power to
interpret the Plan and this Award Agreement and to adopt such rules for the
administration, interpretation, and application of the Plan as are consistent
therewith and to interpret or revoke any such rules. All actions taken and all
interpretations and determinations made by the Committee will be final and
binding upon you, the Company, and all other interested persons. No member of
the Board or the Committee will be personally liable for any action,
determination, or interpretation made in good faith with respect to the Plan or
this Award Agreement.

 

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

 

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

 

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

 

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Exhibit D

 

General Waiver & Release

 

This Legal Release (“Release”) dated as of the last date executed below (the
“Release Date”) is between Valeant Pharmaceuticals International, Inc. (the
“Company”) and Howard Schiller (“Employee”).

 

Employee Release. For and in consideration of the severance payments and
benefits payable to Employee pursuant to the Employment Agreement, dated as of
[                      ], 2011, between the Company and Employee (the
“Employment Agreement”)), Employee, on behalf of himself, and Employee’s heirs,
executors, administrators, and/or assigns, does hereby RELEASE AND FOREVER
DISCHARGE the Company, together with its parents, subsidiaries, affiliates,
predecessors, and successor corporations and business entities, past, present
and future, and its and their agents, directors, officers, employees,
shareholders, insurers and reinsurers, and employee benefit plans (and the
trustees, administrators, fiduciaries, agents, insurers, and reinsurers of such
plans) past, present and future, and their heirs, executors, administrators,
predecessors, successors, and assigns (collectively, the “RELEASEES”), of and
from any and all legally waivable claims, causes of actions, suits, lawsuits,
debts, promises, agreements and demands whatsoever in law or in equity, known or
unknown, suspected or unsuspected, which Employee or which Employee’s heirs,
executors administrators, or assigns hereafter ever had, now have, or may have,
from the beginning of time to the date Employee executes this Release arising
out of or attributable to (i) Employee’s employment, consultancy, directorship
or other service relationship with the Company or any Releaseees or the
termination of such relationship or service or (ii) any event, condition,
circumstance or obligation that occurred, existed or arose on or prior to the
date of this Release, in each case, except as expressly set forth herein. This
general waiver and release does not include any claims, causes of actions,
suits, lawsuits, debts, and demands whatsoever in law or in equity, known or
unknown, suspected or unsuspected, which may come into existence post the date
of this Release.

 

The claims being waived and released include, without limitation:

 

a. any and all claims of violation of any foreign or United States federal,
state, provincial and local law arising from or relating to Employee’s
recruitment, hire, employment and termination of employment with the Company;

 

b. any and all claims of wrongful discharge, emotional distress, defamation,
misrepresentation, fraud, detrimental reliance, breach of contractual
obligations, promissory estoppel, negligence, assault and battery, and violation
of public policy;

 

c. all claims to disputed wages, compensation, and benefits, including any
claims for violation of applicable state laws relating to wages and hours of
work;

 

d. any and all claims for violation of any state or federal statute or
regulation relating to termination of employment, unlawful discrimination,
harassment or retaliation under applicable federal, state and local
constitutions, statutes, laws, and regulations (which includes, but is not
limited to, the Age Discrimination in Employment Act, as amended (“ADEA”), Title
VII of the

 

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Civil Rights Act of 1964, 42 U.S.C. 1981, the Employee Retirement Income
Security Act (“ERISA”), the Family and Medical Leave Act of 1993, the Americans
with Disabilities Act, the Rehabilitation Act, the Equal Pay Act, the Worker
Adjustment and Retraining Notification Act, the New Jersey Law Against
Discrimination and Conscientious Employee Protection Act, the California Fair
Employment and Housing Act and the California Family Rights Act), the Ontario
Employment Standards Act, 2000, Human Rights Code, and Workplace Safety and
Insurance Act; and

 

e. any and all claims for monetary damages and any other form of personal
relief.

 

In waiving and releasing any and all claims against the Releasees, whether or
not now known to Employee, Employee understands that this means that, if
Employee later discovers facts different from or in addition to those facts
currently known by Employee, or believed by Employee to be true, the waivers and
releases of this Release will remain effective in all respects — despite such
different or additional facts and Employee’s later discovery of such facts, even
if Employee would not have agreed to this Release if Employee had prior
knowledge of such facts.

 

Notwithstanding any provision of this Release to the contrary, by executing this
Release, Employee is not waiving and releasing any and all claims Employee may
have for:

 

a. unemployment, state disability and/or paid family leave insurance benefits
pursuant to the terms of applicable state law;

 

b. continuation of existing participation in Company-sponsored group health
benefit plans under the United States federal law known as “COBRA” and/or under
any applicable state counterpart law;

 

c. any benefit entitlements that are vested or accrued as of the date of
termination pursuant to the terms of a Company-sponsored benefit plan, policy or
other arrangement, whether or not governed by the United States federal law
known as “ERISA;”

 

e. violation of any foreign or United States federal, state or local statutory
and/or public policy right or entitlement that, by applicable law, is not
waivable;

 

f. any claims, causes of actions, suits, lawsuits, debts, or demands whatsoever
arising out of or relating to the Employee’s right to enforce the terms of this
Release, the Employment Agreement;

 

g. any rights or claims for indemnification under any written agreements with
any of the Releasees, the charter, by-laws or operating agreements of the
Company, or under applicable law or the Employment Agreement, or any rights as
an insured, or to coverage, under any director’s and officer’s liability
insurance policy;

 

h. any claims relating to Employee’s rights under the Employment Agreement that
are intended to survive the termination of Employee’s employment (including,
without limitation, any rights to receive or the Company’s obligations to pay
Employee the severance benefits under

 

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the Employment Agreement or any acceleration or other rights in respect of the
equity compensation awards contemplated thereby); and

 

i.  any wrongful act or omission occurring after the date Employee signs this
Release.

 

Nothing in this Release shall prevent Employee from filing a charge with the
Equal Employment Opportunity Commission (or similar state or local agency) or
participating in any investigation conducted by the Equal Employment Opportunity
Commission (or similar state or local agency); provided, however, that Employee
acknowledges and agrees that any claims by Employee for personal relief in
connection with such a charge or investigation (such as reinstatement or
monetary damages) hereby are barred.

 

No Admission. Nothing about the fact or content of this Release shall considered
to be or treated by Employee or the Company as an admission of any wrongdoing,
liability or violation of law by Employee or by any Releasee.

 

Consideration & Revocation Periods; Effective Date. Employee acknowledges that
(a) the Company has advised him in this writing of his right to consult with an
attorney prior to signing this Release; (b) he has carefully read and fully
understands all of the provisions of this Release, and (c) he is entering into
this Release, including the releases set forth herein, knowingly, freely and
voluntarily in exchange for good and valuable consideration (including, but not
limited to, the payments to be made under the Employment Agreement, to which he
would not be entitled in the absence of signing this Release). Employee has
twenty-one (21) calendar days to consider this Release, although Employee may
sign it sooner, but not before [   ].

 

In addition, for the period of seven (7) calendar days after the date Employee
signs this Release (“7-day Revocation Period”), Employee may revoke it by
delivering written notice of revocation to the Company by hand-delivery or by
facsimile or e-mail transmission using the street, facsimile or e-mail address
for the Company stated below.

 

Because of this 7-day Revocation Period, this Release will not become effective
and enforceable until the eighth calendar day after the date Employee signed it,
provided that Employee has delivered Employee’s signed Release to the Company,
and Employee did not revoke the Release.

 

Delivery to the Company. Employee should return this Release, signed by Employee
(and any notice of revocation, if applicable) to:

 

Valeant Pharmaceuticals International, Inc.
7150 Mississauga Road
Mississauga, Ontario
L5N 8M5
Attn: General Counsel

 

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Judicial Interpretation/Modification; Severability. In the event that this
Release shall be held to be void, voidable, unlawful or, for any reason,
unenforceable, the Release shall be voidable at the sole discretion of the
Company.

 

Changes to Release. No changes to this Release can be effective except by
another written agreement signed by Employee and by the Company’s Senior Vice
President of Human Resources.

 

Complete Agreement. Except for the Employment Agreement and any equity or other
employee benefit plans, programs or policies referenced herein or therein, this
Release, assuming it is executed and not revoked during the 7-day Revocation
Period, cancels, supersedes and replaces any and all prior agreements (written,
oral or implied-in-fact or in-law) between Employee and the Company regarding
all of the subjects covered by this Release. This Release, together with the
Employment Agreement and any equity or other employee benefit plans, programs or
policies referenced herein or therein, is the full, complete and exclusive
agreement between Employee and the Company regarding all of the subjects covered
by this Release, and neither the Employee nor the Company is relying on any
representation or promise that is not expressly stated in this Release.

 

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Dated:

 

 

By:

 

 

I HAVE READ THIS RELEASE. I UNDERSTAND THAT I AM GIVING UP IMPORTANT RIGHTS. I
AM AWARE OF MY RIGHT TO CONSULT WITH AN ATTORNEY OF MY OWN CHOOSING DURING THE
CONSIDERATION PERIOD, AND THAT THE COMPANY HAS ADVISED ME TO UNDERTAKE SUCH
CONSULTATION BEFORE SIGNING THIS RELEASE. I SIGN THIS RELEASE FREELY AND
VOLUNTARILY, WITHOUT DURESS OR COERCION.

 

 

 

 

 

Dated:

 

 

 

 

 

 

 

 

 

 

Howard Schiller

 

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